Health Industry

Health industry developments are making headlines on a daily basis, so it comes as no surprise that law firms and consultants are rushing to get involved, scrambling to catch up with the furious pace of change. By contrast, for more than 30 years, a core group of Akin Gump Strauss Hauer & Feld LLP lawyers has been devoted exclusively to representing health industry clients. These lawyers have comprehensive knowledge of this complex, highly regulated industry and the rapidly changing issues that confront it that is derived from many years of hands-on experience.

The firm’s health industry clients include major pharmaceutical companies; manufacturers of medical technology; hospital networks and health care systems; major academic medical centers; community and specialty hospitals; home care companies; physician groups and specialty associations; practice management companies; insurance companies; health maintenance organizations and other managed care entities; and lenders, investors and underwriters involved in health industry transactions.

We assist clients with issues involving:

health industry regulation
health policy and legislation
fraud & abuse and compliance
health information privacy and security
tax matters
corporate transactions
antitrust
general counsel concerns

Health Industry Regulation

The firm’s health industry practice encompasses virtually every aspect of federal and state regulation of the health care industry. The firm has extensive experience in all facets of the Medicare and Medicaid programs, including counseling, litigation and representation before federal courts, the Department of Health and Human Services (HHS), the Centers for Medicare & Medicaid Services (CMS), the HHS Office of Inspector General (OIG), the Provider Reimbursement Review Board (PRRB) and Medicare Administrative Contractors, fiscal intermediaries and carriers.

Representative engagements in regulatory matters include—

advice regarding the Medicare Part D prescription drug benefit program
advice regarding CMS coverage determinations, including approvals of new technologies
administrative appeals and federal court litigation pertaining to Medicare prospective payment issues, reasonable cost reimbursement issues and issues related to state demonstration payment systems
representation of approximately 50 hospitals, including some of the largest academic medical centers in the country, in administrative and federal court proceedings challenging the methodology used to determine Medicare outlier payments, which resulted in hundreds of millions of dollars in outlier payment shortfalls, one of the most high-stakes litigation matters in the history of the Medicare Program
representation of 70 hospitals in federal court challenging CMS’ calculation of their Medicare disproportionate share hospital (DSH) adjustments, and spearheading negotiations with the federal government that led to a settlement of over $666 million paid to 667 hospitals—the largest single reimbursement settlement in the history of the Medicare program
representation of a group of hospitals challenging the exclusion of resident research time in Medicare medical education (both IME and GME) payments
representation before the Medicare Geographic Classification Review Board and subsequent challenges of adverse determinations in federal court
applications to CMS for exceptions to TEFRA cost limits, Medicare volume adjustments, sole community hospital status and other Medicare waivers
advice regarding a strategy for obtaining Medicare coverage for off-label use of pharmaceutical products
advising hospital and health system clients on the implications of affiliations and joint ventures on Medicare payments, such as potential impacts on PPS-exempt status and calculations of direct and indirect medical education payments
conducting health regulatory due diligence in connection with the offering of securities, the extension of credit facilities, and financial restructurings
advice regarding potential causes of action for contesting exclusion of a client’s products from a state Medicaid formulary
challenges to various aspects of state reimbursement methodologies before state agency tribunals and state and federal courts
successful litigation of aspects of a state’s Medicaid rate-setting methodology that seriously disadvantaged a major cancer center client
monitoring the implementation of statewide Medicaid managed care waivers, and analyzing their impact on the pharmaceutical industry
analyzing on behalf of a pharmaceutical company whether health plan prescription drug formularies can be challenged through state law malpractice suits, particularly where the plan is governed by the federal Employee Retirement Income Security Act (ERISA).

Health Policy and Legislation

Our health industry practice group is keenly aware of the intersection between health care and policy. Our health industry practice and public law and policy attorneys and advisors work together as a team on a daily basis, providing our health industry clients with a comprehensive, integrated and seamless approach to resolving their problems. Our team routinely tracks, analyzes and drafts legislation for a number of health industry clients, including drug and device manufacturers, various types of providers, advocacy groups, private equity firms and other corporations and institutions.

We have advised clients on many of the major congressional health care initiatives considered in the past 20 years, including the Patient Protection and Affordable Care Act of 2010 (PPACA), the Clinton administration health care reform proposal, the Balanced Budget Act of 1997, the Balanced Budget Refinement Act of 1999, the Benefits Improvement and Protection Act of 2000 and the Medicare Modernization Act of 2003 (MMA). In addition, the firm’s lawyers have advised health industry clients on various matters relating to the implementation of these initiatives by HHS, CMS, the Food and Drug Administration (FDA) and other federal agencies and departments. Akin Gump lawyers have the experience and the skills to navigate our clients through evolving and challenging political and regulatory environments.

Recent legislative and regulatory practice undertakings on behalf of health industry clients include—

advocacy and analysis in connection with enactment and implementation of the PPACA for health industry participants, including employers, providers and pharmaceutical companies
advocacy on behalf of pharmaceutical manufacturers with regard to Hatch-Waxman issues
advocacy and analysis on behalf of a long term care hospital system that was seeking to reverse proposed Medicare cuts
analysis of federal managed care reform legislation, and advocacy in response thereto, on behalf of hospitals and pharmaceutical manufacturers
representation of major academic medical centers and community hospitals on all Congressional health policy matters
representation of health industry clients in connection with Congressional investigations
advocacy on behalf of a coalition of pharmaceutical manufacturers, patient groups, pharmacies and health information technology organizations relating to the electronic prescribing provisions in the MMA
advocacy on behalf of community hospitals in Medicare wage index reimbursement matters and appropriations requests
representation of major academic medical centers on all health policy matters
advocacy on behalf of community hospitals in Medicare wage index reimbursement matters
counseling and advocacy for leading cancer hospitals on a variety of policy and regulatory issues, including Medicare coverage and payment matters
representation on proposed legislation that would regulate tax-exempt organizations vis-à-vis executive compensation, faculty practice plan arrangements, staff housing, acquisitions of physician practices and governing board and senior management liability
advocacy relating to Congressional action on the reimportation of prescription drugs
advocacy for health information technology vendors regarding pending HIT adoption legislation.

Fraud & Abuse and Compliance

The firm provides extensive counseling concerning compliance with fraud and abuse laws, including the False Claims Act (FCA) and qui tam provisions, the federal Anti-Kickback Law and the Stark Law physician self-referral prohibitions, as well as analogous state laws and regulations that affect business arrangements and combinations in the health industry. The firm’s experience in this area includes—

counseling on fraud and abuse issues related to the submission of Medicare and Medicaid reimbursement claims, including compliance with the false claims laws and mandatory disclosures
designing, implementing and evaluating compliance programs through our Compliance Program Advisory Service
negotiating Corporate Integrity Agreements (CIAs) imposed by the OIG and counseling health industry clients in meeting CIA obligations
conducting internal investigations regarding possible overpayments or other compliance failures
advising pharmaceutical manufacturers on whether certain discount arrangements and bundled sales of products comport with the federal Anti-Kickback Law
advising pharmaceutical manufacturers on fraud and abuse compliance policies relating to quality programs, refill reminders and other product support programs
requesting advisory opinions on behalf of pharmaceutical manufacturers from the OIG, including requests regarding the Anti-Kickback Law compliance implications of proposed discount arrangements and patient assistance programs
counseling a large retail pharmacy chain on vicarious liability for fraud and abuse violations committed by its employees under state patient brokering and anti-rebate statutes and the Anti-Kickback Law
counseling a physician practice management company acquiring interests in numerous physician practices and clinical laboratories across the United States on how to structure these transactions to conform with federal and state anti-kickback laws
evaluating independent patient assistance programs for compliance with the Anti-Kickback Law and other fraud and abuse laws, and counseling manufacturers on appropriate safeguards for such programs
structuring manufacturer-sponsored patient assistance programs to comply with the Anti-Kickback Law and other fraud and abuse laws
structuring manufacturer marketing programs with providers and managed care organizations to ensure compliance with the Anti-Kickback Law and other fraud and abuse laws
reviewing a device manufacturer’s consulting and royalty contracts with physician inventors and technical advisers for compliance with the Anti-Kickback Law and the Stark Law
fraud and abuse counseling related to structuring business arrangements among pharmaceutical companies, managed care organizations, physicians, hospitals and other providers
evaluating corporate compliance programs and practices and compliance risks as part of due diligence reviews.

The firm also assists clients under investigation for health care fraud and abuse matters by the OIG, DOJ and state regulatory authorities in responding to government subpoenas, investigative demands and audits regarding health regulatory compliance. We also defend clients in federal and state court actions related to such matters, including qui tam whistleblower suits. Representative engagements have included—

representing a medical device manufacturer in a large scale government investigation regarding violations of the Anti-Kickback Law
successfully litigating a large whistleblower action in which the government contended that a number of health care providers routinely “upcoded” their Medicare claims in order to obtain additional reimbursement
conducting an internal investigation and responding on behalf of a national pharmacy chain to DOJ allegations that the chain violated the FCA
assisting several health care providers in making voluntary disclosures under the FCA to the OIG and applying to the OIG’s voluntary disclosure program (thereby reducing their exposure to civil penalties and program exclusion)
representing teaching hospitals and participating in an industry task force regarding the OIG’s Medicare PATH audit initiative (a nationwide FCA-driven enforcement initiative directed at teaching hospitals)
defending a large health care supply company against the issuance by the DOJ of a civil investigative demand under the FCA and negotiating with DOJ with respect to the government’s intervention in a qui tam suit filed against the company
defending a multi-specialty group practice and physician accused by the government of FCA violations and achieving victory in an extraordinarily rare instance in which defendants have prevailed against the government at summary judgment
representing a health system in a large scale governmental investigation of its Medicare outlier payments and negotiating a settlement with the DOJ to resolve an FCA lawsuit filed by three whistleblowers.

Health Information Privacy and Security

The firm’s health industry practice has maintained a robust privacy practice since the passage of the Health Insurance Portability and Accountability Act (HIPAA) in 1996. Health information is protected by a complex patchwork of state and federal laws and regulations that is continually evolving. Most notably, Congress passed the Health Information Technology for Economic and Clinical Health Act (HITECH) as part of the American Recovery and Reinvestment Act of 2009, dramatically impacting data privacy and security obligations and risks. Our lawyers have the depth of experience needed to handle health information privacy and security issues in these dynamic times. We assist hospitals, pharmacies, pharmaceutical companies, health clinics, health plans, third-party administrators, research entities, software vendors, service providers, trade associations and even a professional sports league, among others, in addressing concerns relating to data privacy and security. Representative engagements include—

developing HIPAA and HITECH compliance and training programs for clients ranging from a health provider trade association to a health software vendor to a health plan
drafting data breach remediation and response policies and procedures for clients ranging from a health information exchange to employer-sponsored group health plans to a health provider trade association
assisting health care providers that have experienced a data breach in complying with state and federal breach notification requirements and in addressing related concerns
counseling providers in connection with HHS Office for Civil Rights (OCR) investigations of alleged HIPAA violations
preparing comments for submission to HHS on the proposed (1999) and interim final (2000) privacy rules on behalf of clients, including a major retail pharmacy chain and a group of cancer hospitals developing HIPAA-compliant forms, including authorization forms, notices of privacy practices and complex business associate agreements
drafting, tailoring and negotiating contracts to address health information privacy and security concerns on behalf of clients ranging from health plans to pharmacy chains to hospitals to vendors
advising a major hospital and health system, as well as a retail pharmacy chain, on issues arising under the HIPAA regulations governing transaction standards
reviewing existing and proposed state health information privacy laws in varying contexts, including analyzing their potential impact on a medical products manufacturer’s clinical research and promotional activities
providing a range of clients with advice relating to the HIPAA and HITECH marketing provisions
developing and implementing a HIPAA compliance strategy and business plan for a clinical research company gathering data from patients and their physicians to build a database to be used for research purposes
assisting a physician practice management company acquiring physician practices in obtaining access to medical records in compliance with state and federal laws governing the release of medical records, including sensitive records containing information regarding substance abuse, psychiatric conditions and/or the treatment of AIDS or related conditions
addressing health information privacy concerns arising in the course of litigation and in bankruptcy proceedings.

Tax Matters

The firm has a diversified federal, state and local tax practice for the benefit of health industry clients, with a particular emphasis on representing tax-exempt organizations. The firm provides comprehensive tax planning, administrative and tax controversy services that include—

comprehensive representation in IRS Coordinated Examination Program (CEP) audits, preemptive examinations of tax-exempt health care groups in anticipation of IRS audits and representation of health industry clients before the IRS in managing the audit process, seeking favorable determination letters and technical advice, and contesting determinations
counseling on various tax-exempt organization issues, including inurement and private benefit, unrelated business income tax, employment tax and employee benefits (including tax-deferred annuities and deferred compensation), public charity and private foundation issues, “intermediate sanctions” and board of directors and conflicts of interest issues
comprehensive tax advice on all aspects of health system mergers, including transactional tax planning and IRS rulings
advice to tax-exempt health care entities on federal income tax issues related to various forms of reorganizations and affiliations (including joint ventures, joint operating agreements and leases) with other tax-exempt and taxable health care providers, and the creation of new health care provider entities tax planning with respect to the creation and operation of offshore insurance companies on behalf of health industry clients.

Corporate Transactions

The firm provides substantial general corporate and transactional services to its health industry clients. Our health industry regulatory lawyers work closely with our corporate lawyers, antitrust professionals and tax practitioners, and we are adept at assembling and coordinating teams that work on an array of transactions, corporate finance and securities matters and corporate governance issues. There is no learning curve involved and no “shopping” for skill or talent is ever required. Recent engagements include—

formation of hospital networks and other joint ventures for the purpose of operating and marketing HMOs, PPOs and other managed care entities
sales and acquisitions of hospitals and other institutional providers, including the representation of financial institutions in connection with such transactions
structuring joint ventures between and among health systems and physicians, not-for-profit institutional providers and for-profit partners and large health systems or academic medical centers and community hospitals or other providers
initial public offerings, private placements and other securities offerings on behalf of various health industry clients
formation and operation of PHOs, MSOs, IPAs and related managed care products and arrangements
negotiating, preparing and evaluating managed care contracts and related documents, including insurance contracts, administration agreements, hospital service agreements, HMO contracts, preferred provider agreements and other managed care agreements.

Antitrust

Antitrust issues are often a serious concern among health care clients in the context of mergers and acquisitions, product marketing and distribution, the exercise and protection of intellectual property and (for hospitals and physicians) professional staff relationships. Our antitrust attorneys, in coordination with our health industry and corporate transactional lawyers, have provided counseling and strategic planning advice in connection with mergers and joint ventures (including Hart-Scott-Rodino reporting), have represented health industry clients in DOJ and FTC investigations and lawsuits, and have handled myriad private antitrust lawsuits brought against health industry clients.

General Counsel Concerns

The firm routinely advises hospitals and multihospital systems on operations, management and governance issues. Our representation includes providing advice to governing boards concerning licensing and regulatory issues, bylaws and compliance matters. We also provide advice on all facets of peer review and credentialing with regard to medical staff and managed care credentialing plans. This work includes—

drafting and reviewing medical staff bylaws, rules and regulations and related policies and procedures
assisting hospital medical staffs, medical groups and provider associations in the creation, application and defense of credentialing and peer review standards, and in decisions with respect to particular individuals
representing the interests of the hospital medical staffs and medical staff committees at peer review hearings that apply those standards
advising other medical staff and hospital committees, including with regard to bioethics, institutional review boards and quality management
advising hospitals on matters related to consent to treatment and other medical/legal issues
advising hospitals concerning measures required to “close” clinical departments
advising hospitals and medical staffs concerning the proper role of allied health professionals such as psychologists and certified registered nurse anesthetists
advising hospitals on matters related to the Emergency Medical Treatment and Active Labor Act (EMTALA) and defending hospitals in regulatory investigations that concern that law
advising hospitals on all aspects of accreditation and certification.