Pay close attention to the outcomes of three cases winding their way through the courts this summer, legal experts advise.

On deck are cases that could reshape Stark Law, the Anti-kickback Statute , and the 60-day federal overpayment rule. Decisions on these cases could affect billing practices and practices arrangements, as well as federal reporting obligations. Below is a selection of critical health law cases facing doctors and how they might impact practice.

1. Council for Urological Interests v. Sylvia Burwell et al.

Summary: This case centers on whether the federal Stark Law can prevent physicians from referring patients to hospitals to which the physicians lease equipment, among other things. In 2008, the U.S. Department of Health & Human Services (HHS) issued regulations that effectively prohibit physicians who lease medical equipment to hospitals from referring their Medicare patients to these same hospitals for outpatient care involving that equipment. The regulation prohibits physicians from charging hospitals for the leased equipment on a per-use basis, or a “per-click” basis as it is commonly known. In 2009, the Council for Urological Interests – a nonprofit corporation owned by urologists – sued, claiming the text and legislative history of the Stark Law preclude the HHS from enforcing the per-click ban. The regulation limits the ability of physicians who own joint ventures to refer their patients to receive services under these arrangements, the plaintiffs said. A district court ruled in favor of the HHS, and the Council appealed. A spokeswoman for the U.S. Department of Justice declined to comment for this story.

Case status: In June 2015, the U.S. Court of Appeals for the District of Columbia Circuit ruled that the HHS must reconsider its per-click referral ban. The court suggested that the agency may have misconstrued the legislative history of the Stark Law in order to enact the rule.

Why doctors should care: The ultimate outcome of the case will determine whether or not physicians can engage in per-click leases under Stark Law, said Chicago health law attorney Ericka L. Adler .

“When HHS changed the regulations to no longer allow the per-click arrangement where physicians were self-referring, it caused a lot of deals to be undone,” Ms. Adler said in an interview. “[Certainly], these lease arrangements could, in many cases, be restructured to look more like normal leases and meet the Stark equipment lease exception, but in some cases it created hardships, such as in rural areas.”

Reconsideration of the regulation could mean that the HHS creates more appropriate carve-outs to the rule, Ms. Adler noted.

In the meantime, the appeals court ruling means the per-click ban cannot be enforced while the government reconsiders, which is a positive development for physicians, said Washington health law attorney Thomas L. Mills, who represented the Council for Urological Interests.

“CMS’ permitting per-click leases to non–physician-owned companies while banning them for physician-owned entities made no sense, particularly when the medical procedure is not susceptible to overuse,” Mr. Mills said in an interview. “Perhaps more importantly, the [appeals] decision is a victory for the rule of law. It shows that CMS does not have carte blanche to disadvantage physicians by steering control of the implements of their practices to less important participants in the health care delivery system. … Physicians should be free to band together to purchase the equipment they believe will provide the most effective treatment for their patients, instead of being forced to rely on the arbitrary procurement decisions of hospitals.”

2. United States v. Continuum Health Partners Inc.

Summary: The federal government contends that three hospitals failed to return overpayments to Medicaid in violation of an Affordable Care Act requirement that they be reported and repaid within 60 days of identification. The government alleges that because of a computer glitch, three hospitals that are operated by Continuum Health Partners Inc., billed both the government and a managed care organization (MCO) for the same services. After the New York State Comptroller’s Office alerted Continuum to a possible overbilling, Continuum conducted an internal investigation and allegedly found 900 potentially improper Medicaid claims totaling $1 million, according to court documents. The government claims that Continuum failed to repay the overpayments within 60 days and instead repaid only “small batches” of the affected claims over the next 2 years. Continuum argues that the hospitals did not knowingly conceal the overpayments from the government and that the overbillings had not been officially identified. Rather, Continuum argues there is only evidence that administrators discussed potential overpayments. The “mere notice of a potential overpayment does not give rise to an established duty until 60 days after the overpayment is identified,” Continuum said in court documents. Attorneys for the government and for Continuum did not return messages seeking comment.

Case status: The case is before the U.S. District Court for the Southern District of New York.

Why doctors should care: The Continuum case will provide significant guidance to health providers about the ACA 60-day overpayment rule, said Houston health law attorney Micheal E. Clark , who chairs the America Bar Association Health Law Section. As it stands, the federal rule is somewhat unclear, leading to confusion for doctors about their reporting obligations, he said.

“The agency hasn’t really defined what is ‘knowing,’ what is reasonable knowledge of a known overpayment,” Mr. Clark said in an interview. “It’s a gray area. [The ruling] will be very informative about what this is actually going to mean.”

3. Ameritox v. Millennium Laboratories

Summary: Ameritox revolves around whether a laboratory’s giveaway of urine specimen cups to physicians amounted to an illegal kickback. In 2012, lab testing company Ameritox sued Millennium in a Florida district court alleging that Millennium harmed its business by giving the urine cups to doctors in violation of the Stark Law. Physicians used the cups – which have chemically activated strips that contain patient information – to monitor patients’ use of pain medications. Millennium unlawfully obtained physician referrals through free cup agreements, according to Ameritox’s complaint. A federal jury found Millennium had violated the Stark Law as well as the Anti-Kickback Statute by providing the free cups in exchange for referrals and Ameritox was awarded $11 million. Attorneys for both parties did not return messages seeking comment.

Case status: Millennium appealed, and the case is before the 11th U.S. Circuit Court of Appeals. The federal Justice Department has weighed in on the side of Ameritox, arguing that the cup giveaway violated Stark Law and the Anti-Kickback Statute.

Why doctors should care: The Ameritox case makes it clear that doctors should never accept free point-of-care testing cups or similar medical equipment from a lab, said health law attorney Adrienne Dresevic of Southfield, Mich. The case also highlights the broad spectrum of “remuneration,” when it comes to free items or services to doctors, she noted. Under the Anti-Kickback Statute, remuneration refers to the transfer of anything of value, directly or indirectly, overtly or covertly, in cash or in kind.

“The takeaways in Ameritox are applicable to other relationships, such as in the radiology realm,” Ms. Dresevic said in an interview. “Physicians should closely scrutinize any free items or services offered to them to ensure it falls within the exception to what is considered ‘remuneration.’ ”

Exceptions to remuneration could include payments that are a return on an investment interest, such as a dividend or interest income. However, physicians should ensure they are familiar with all exceptions to the law before entering into such agreements, experts advise.

The Ameritox case is important for physicians because more laboratories are approaching doctors with various “arrangements,” and touting that the arrangements are compliant with federal regulations, Ms. Dresevic added. Many doctors are taking the labs’ word for the arrangements’ legality, leading to serious legal risk.

“Physicians need to know how to look beyond what the laboratory representative is presenting to them and make their own determinations, sometimes with the help of health care counsel, regarding the legality of a particular arrangement,” she said.

agallegos@frontlinemedcom.com

On Twitter @legal_med

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