For some time, we have been reporting on issues involving federal government scrutiny of physician-owned distributors (“PODs”). From our blog post here on the Department of Health and Human Services Office of Inspector General’s (“OIG”) issuance of the March 2013 OIG Special Fraud Alert (“Special Fraud Alert”), to our post here on the Reliance Medical … Continue Reading
We have been reporting for some time on issues involving the Office of the Inspector General (OIG) scrutiny of physician-owned distributors (PODs). In March 2013, we analyzed an OIG Special Fraud Alert on PODs and in October we reported on an interesting challenge to the Fraud Alert filed by a medical device manufacturer in the U.S. District Court for the Central District of California. That suit argued that the Fraud Alert unfairly and unconstitutionally burdened the plaintiff's First Amendment rights of free speech and due process. In this post, we report on the disposition of that case, and several other related POD developments.… Continue Reading
By Elizabeth B. Carder-Thompson on Posted in Health Care
This post was written by Elizabeth Carder-Thompson.
On October 8, 2013, Reliance Medical Systems, LLC, filed a complaint in the U.S. District Court for the Central District of California, seeking a declaration that an Office of Inspector General (OIG) Special Fraud Alert on physician-owned distributors (PODs) unfairly and unconstitutionally burdens First Amendment rights of free speech and due process.
Reliance describes itself as "a design company that collaborates with spine surgeons to design highly customized spinal implant devices and surgical tools." It states it had physician owners from its beginning in 2006, characterizing this as a business model that "maximizes and optimizes physician design input." However, in 2012, before issuance of the Fraud Alert, it "moved away from the physician-owned entity business model, after careful consideration and out of an abundance of caution." Interestingly, in a separate part of the complaint, Reliance allows that "the OIG is currently investigating Reliance, and its physicians with whom Reliance previously communicated." The Complaint goes on to explain that it now wishes to return to a physician-owned business model, but that the Fraud Alert's characterization of PODs as "inherently suspect" under the federal anti-kickback statute is chilling its ability to speak with prospective physician owners. It also expresses concern about future OIG investigations, and about reluctance by hospitals and ambulatory surgical centers to enter contracts with it, for fear that they themselves may be "at risk" under the Fraud Alert for doing business with physician-owned entities.
The complaint provides a colorful chronology of events leading up to the OIG's issuance of the POD Fraud Alert.… Continue Reading
Referencing what it deems a "proliferation" of physician-owned distributors (PODs), on March 26, 2013, the Department of Health and Human Services (HHS) Office of Inspector General (OIG) released a Special Fraud Alert identifying significant concerns with such entities under federal anti-kickback principles.1 For purposes of the Alert, the OIG defines a POD as "any physician-owned entity that derives revenue from selling, or arranging for the sale of, implantable medical devices," including "physician-owned entities that purport to design or manufacture, typically under contractual arrangements, their own medical devices or instrumentation." Specifically, the OIG describes in somewhat unusual detail the multiple "attributes and practices" of PODs that the OIG believes "produce substantial fraud and abuse risk and pose dangers to patient safety."
Notably, the Alert is focused on PODs that derive revenue from selling, or arranging for the sale of, implantable medical devices that are ordered by physician-owners for use in procedures that physician-owners "perform on their own patients at hospitals or ambulatory surgical centers (ASCs)." However, the OIG states that "the same principles would apply when evaluating arrangements involving other types of physician-owned entities."… Continue Reading
The New Hampshire State Senate held a hearing on April 19, 2012 regarding HB 1725, a new measure that would prohibit all health care practitioners from prescribing or referring any U.S. Food and Drug Administration class II or class III implantable medical device if the practitioner stands to "profit indirectly or directly from the sale of [the] medical device by any supplier in which the health care practitioner has a direct or indirect ownership interest."… Continue Reading
On March 29, 2012, the New Hampshire House of Representatives recommended for passage HB 1725. If passed, HB 1725 would prohibit all health care practitioners from prescribing or referring any U.S. Food and Drug Administration class II or class III implantable medical device if the practitioner stands to profit, directly or indirectly, from the sale of the device, or from performing any procedure involving the device.… Continue Reading
On June 9, 2011, Senator Orrin Hatch released a report by the Senate Finance Committee Minority Staff that outlines key concerns about Physician-Owned Distributors ("PODs"), specifically regarding the lack of regulatory oversight and clear guidance from the Department of Health and Human Services Office of Inspector General ("OIG"). The Committee Minority's report, Physician Owned Distributors (PODs): An Overview of Key Issues and Potential Areas for Congressional Oversight, set forth findings of committee staff who spoke to over fifty people and reviewed thousands of pages of documents. In addition to the report, the Chairman and Ranking Members of the Senate Financial Committee, Special Committee on Aging, and Judiciary Committee sent letters on the same day to the Administrator for Centers for Medicare & Medicaid Services ("CMS") and the Inspector General of Health and Human Services ("HHS") requesting further inquiry into the concerns set out in the Senator Hatch's report.… Continue Reading