Tag Archives: Patient Brokering

The Feds Get Creative Prosecuting Kickbacks

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In various health care law blogs and posts, lawyers across the country have been writing about the “Eliminating Kickbacks in Recovery Act” (EKRA) which was adopted as part of the SUPPORT Act of 2018 (the “Substance Use-Disorder Prevention that Promotes Opioid Recovery and Treatment for Patients and Communities Act”). Most if not all of the writings, opinions, and lectures lawyers have been giving are understandably all based upon conjecture, since the federal government has not (to anyone’s knowledge) brought a prosecution yet pursuant to that law.

As a general premise, and much like Florida’s Patient Brokering Act, EKRA prohibits kickbacks between providers of services or between third parties and service providers. The reason for the importance of this law is: (1) many states, aside from Florida, did not have a state-level “anti-patient brokering” law to address the fraud and corruption epidemic amongst various treatment providers and their marketing arms; (2) existing federal law addressed only federally-funded plans such as Medicare, Medicaid and TriCare.  EKRA was viewed as bridging that gap to capture similar criminal behavior amongst persons who obtain reimbursement from private insurance.

Most of the concern expressed is that the law, as drafted, is not (in their opinion) not as clearly articulated as the federal Anti-Kickback Statute (AKS) which has Safe Harbors and other regulatory interpretations which have guided health care lawyers since adoption.  Their concern is in their inability to counsel clients as to what behaviors are allowed under EKRA and which would violate that law.

While Congress may have had its own intent, it comes down to the Justice Department to enforce the law, and health care lawyers have been sounding the alarm that governmental overreach in prosecuting what is not otherwise a kickback but “looks” like a kickback is certain to happen, if for no other reason, but due to the constant negative publicity that addiction treatment providers regularly receive in the press.

In contrast, what does not occur in the press with much frequency is the daily arrest, indictment, conviction and plea deals struck with MEDICAL health care providers who violate the AKS (or its similar counterparts, the Stark Law and the False Claims Act).

However, a “tip of the cap” is to be given to the Dallas Morning News and reporter Kevin Krause, who revealed the federal government’s novel attempt to address kickbacks in health care – the federal Travel Act.

In his story published on 4/14/19 entitled “Here’s why doctors should worry about the feds’ novel approach to prosecuting health care kickback cases,” he write the following (with our editorialization in BOLD within):

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Texas doctors who cut business deals with hospitals thought they were in the clear, as long as they avoided Medicare patients and those covered by other federal health insurance programs.

That way, they couldn’t run the risk of violating the federal anti-kickback law. That’s the way it’s always been.

Not anymore.

Using a 60-year-old law, federal prosecutors have found a way to target health care kickback schemes that involve private insurance. The guilty verdicts against surgeons and others in the Forest Park Medical Center case are sending shock waves throughout the U.S. medical community and could upend many doctor-hospital relationships. The trial also revealed just how important doctors are to the financial survival of hospitals, and how far hospitals will go to attract them.

Some attorneys are crying foul, saying the government has moved the goalposts by using the Travel Act, which was passed to crack down on organized crime. Many attorneys are scrambling to advise their clients accordingly. A lot of money is at stake. Marketing agreements, in particular, are suddenly in the hot seat. But consulting agreements, medical directorships and office leasing arrangements are all in the mix, too.

“I think there is a lot of worry,” said Carolyn McNiven, a San Francisco health care lawyer who, like others, was closely watching the seven-week trial in Dallas. “I think a lot of people are walking into a buzz saw that they don’t know is coming.”

The Travel Act gives federal jurisdiction to a wide range of crimes, including bribery, if state lines are crossed using mail or electronic communications. But until recently, it’s never been used in health care fraud cases.

Federal prosecutors used it in Dallas successfully for the first time, in the Forest Park trial that wrapped up last week.

The jury found that Forest Park paid lucrative benefits to surgeons in the form of free advertising in exchange for them bringing their expensive surgeries to the hospital. Such quid pro quos are considered illegal kickbacks.

Dr. Michael Rimlawi, one of the convicted Forest Park surgeons, appeared stunned by the guilty verdict against him last week. He faces up to 15 years in prison.

“I’m in disbelief,” Rimlawi told supporters gathered around him at the federal courthouse in Dallas. “I thought we had a good system, a fair system.”

McNiven and other health care lawyers say they believe the government will view the Forest Park case as a green light to launch more prosecutions in similar cases involving private insurance provided by such companies as Aetna and United Healthcare.

“The entire health care industry is looking at Dallas,” said Nick Oberheiden, a Dallas health care lawyer. “I think this is a complete shakeup.”

James A. Fisher, who has represented whistleblowers in health care fraud cases, said the new enforcement effort is a major step forward.

“I am glad the government aggressively prosecuted that case, because this is a serious problem. If the doctor’s decision is influenced by anything other than the patient’s best interest, then that is a corrupted process,” he said. “It will bring more integrity into decision-making by physicians.”

Two of the nine Forest Park defendants on trial were found by the jury to have violated the Travel Act: Wilton “Mac” Burt, a founder and top manager of the hospital, and Dr. Shawn Henry, a Fort Worth spine surgeon who referred patients to the hospital. The Forest Park prosecution also involved some federal insurance programs like Tricare, the military’s health program.

Four of the defendants were acquitted of charges related to the Travel Act, which some lawyers say should temper the government’s enthusiasm for the law.

Tom Melsheimer represented Dr. Nick Nicholson, a bariatric surgeon, the only Forest Park defendant to be acquitted last week of all charges against him.

“The verdict can be viewed as a pretty serious rebuff of the Travel Act theory as applied to the doctors,” he said. “No doctor who participated in the marketing program was convicted of a Travel Act count.”

Two other Forest Park founders and physicians, Dr. Richard Toussaint and Dr. Wade Barker, pleaded guilty to violating the Travel Act.

Most Forest Park defense attorneys declined to comment after the verdicts. Some said they plan to appeal. The convictions are not final until affirmed by an appellate court.

Doctors and their surgeries are critical for a hospital’s bottom line, and thus getting patients in the door and on the operating table has become big business — to such an extent that prosecutors say Forest Park had to bribe doctors for surgeries when it opened and for several years afterward.

Two Forest Park doctors, for example, operated there up to 14 times a day, from early morning until night, according to trial testimony. A recent survey found that doctors legally generate an average of $2.4 million per year for their affiliated hospitals.

The survey shows that doctors “continue to drive the financial health and viability of hospitals,” said Travis Singleton, executive vice president of Merritt Hawkins, a Dallas physician search firm that conducted the survey. The results were released as the Forest Park trial got underway.

Certain medical specialties generate the most revenue. Orthopedic and cardiovascular surgeons, for example, bring in an average of over $3 million for their hospitals each year, according to the survey.

Marketing arrangements between doctors and hospitals are commonplace across Texas, according to testimony during the Forest Park trial. Under such contracts, hospitals pay to advertise the practices of doctors who bring their surgeries to the hospital. But Forest Park picked up 100 percent of the tab even though the ads barely, if ever, mentioned the hospital.

That is a benefit, prosecutors argued — a lucrative one that helped the doctors grow their practices significantly.

The Forest Park surgeons argued there were no strings attached to that money. But prosecutors convinced a jury otherwise, showing that the doctors were being paid to steer their patients to Forest Park — and hiding behind legal contracts to do so.

At least three other Dallas hospitals have paid doctors for patients using marketing agreements, according to federal prosecutors.

Two of them, Vista Hospital and Victory Hospital, have since shut down like Forest Park. The third, Pine Creek Medical Center, paid a $7.5 million fine to the government in 2017 for a scheme similar to the one at Forest Park — paying doctors for patient referrals with free advertising on billboards, radio and TV, and the internet, according to the U.S. attorney.

The Pine Creek case came to light in a whistleblower lawsuit filed by two of the hospital’s former marketers. That scheme, however, involved Medicare and Tricare beneficiaries and did not employ the Travel Act and Texas’ commercial bribery law.

Pine Creek’s new chief executive, Dan Gideon, said his hospital has some new owners and is meeting the terms of its five-year corporate integrity agreement with the government. He said no additional concerns have been raised.

At Forest Park, surgeries meant big bucks.

When the hospital opened in 2009, there was already a healthy competition for patients. Forest Park had another challenge: It wasn’t in any insurance networks and it didn’t accept Medicare patients.

Forest Park’s top administrator, Alan Beauchamp, didn’t mince words about the urgency of patient referrals.

“We need more bodies on the table,” he told Israel Ortiz, a clinic owner and co-defendant who admitted to selling patients to Forest Park.

The question then for hospitals, especially new ones, is how to legally attract patients without offering improper financial incentives.

Jacob T. Elberg, an associate professor at Seton Hall University School of Law in New Jersey, understands those business pressures.

When he was a federal prosecutor, he led a massive kickback prosecution in New Jersey that ultimately resulted in the convictions of over 50 defendants, including 38 doctors. The case, which wrapped up last year, involved a lab called Biodiagnostic Laboratory Services, which paid kickbacks to doctors for patient referrals.

Elberg’s case is believed to be the first time a federal jury convicted someone of violating the Travel Act in a health care fraud case.

The Travel Act was passed in 1961 to crack down on organized crime. The law makes it illegal to use the mail or other forms of interstate commerce to commit any “unlawful activity,” such as bribery. The federal law essentially piggybacks on state commercial bribery laws like the one in Texas, which apply to health care schemes involving private health insurance.

The government doesn’t even have to show patient harm in such cases.

Elberg, who was chief of the District of New Jersey’s health care and government fraud unit, said many states don’t have the resources or the expertise to take on large-scale prosecutions for health care bribes and kickbacks.

Texas has never enforced its commercial bribery law, according to testimony in the Forest Park trial.

“This is an area where there hasn’t been as much enforcement as there should be,” Elberg said.

Certain health care providers have taken advantage of that for years, he said. But Elberg said his case had a major deterrent effect.

“We were aware of misconduct that was ongoing that stopped as a result of this,” he said.

Oberheiden, the Dallas lawyer, said having a marketing contract that on its face complies with the law will no longer suffice for doctors.

“If the motives behind it are not legitimate, then the contract is not worth the paper it’s written on,” he said.

Lawyers, Oberheiden said, will need to be careful about authorizing such contracts and then closing their eyes to what they will be used for. And clients need to understand that “if undisclosed motives don’t match the language of the contract, then it’s useless.”

Jeff Ansley, a Dallas health care lawyer, called the Forest Park case and its use of the Travel Act a creative yet “very aggressive prosecution.”

He said the case will add confusion to the question of which doctor business practices are appropriate. The Justice Department should provide more legal guidance on the matter, Ansley said, particularly since doctors aren’t trained in the business of medicine.

“There is a lot of gray out there,” he said of doctor marketing arrangements. “It’s increasingly unclear where the lines are.”

In the Forest Park case, well-educated and respected practitioners had their business agreements vetted by lawyers and still got convicted, Ansley said. They included surgeons who pioneered techniques that cut down on infection and speed up recovery.

“You wouldn’t think they went to medical school to commit fraud, and here they are,” Ansley said.

McNiven, the San Francisco lawyer, echoed those concerns, saying those in the health care industry rely on “predictability” in enforcement.

“The application of the Travel Act really upended what people thought were the acceptable rules of the road,” she said. “I do feel like this is hiding the ball.”

Most lawyers are familiar with the federal Stark and anti-kickback laws, but they aren’t thinking about state commercial bribery laws like the one Texas has on the books, she said.

Jason Ross, an attorney for Burt, said the government’s prosecution should concern “individuals and companies in the health care industry.” He said it “marks an expansion of federal law enforcement” by “alleging fraud against private insurers by way of the Travel Act’s ability to federalize state laws.”

“The specter of more aggressive federal criminal enforcement of this type could certainly shift the balance of power in favor insurance companies, to the detriment of health care providers,” Ross said.

Ansley and McNiven said the ultimate impact of the Forest Park case might be to discourage many doctors from engaging in any sort of business relationships.

And that would be bad for doctors and patients, they said.

EDITORS NOTE: We have been reading stories like this for years, and the common answer has always been, “how are we to conduct business if the standard commercial business rules don’t apply?” The answer is very simple – do not engage in any form of quid pro quo, any form of incentive or benefit, or anything that would steer clients as a result of a pecuniary gain, rather than what is in the best interests of the patient. While many providers across all health care paradigms complain that the intent of the laws passed are being abused by law enforcement and causing unreasonable and unpredictable disruption in the health care economy, the issue continues to emphasize the serious conflict between free market enterprise and the public policy regarding healthcare. This issue is clearly going to be a constant theme in the 2020 Presidential election and for many years to come.

The re-posting of this story is for informational purposes only. We are neither endorsing or commenting on any statement made by any lawyer or person in the article. Language inbold letters is for illustration and emphasis purposes only.

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What We Are Reading This Week

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Hello all!  We haven’t written in a while because there seems to be “news” updates that come out almost daily.  Please “Like” and follow our Facebook page if you would like to see the latest news stories that we post. https://www.facebook.com/soberlawnews/

Here is what we have been reading that is of great interest:

  1. “Mom, When They Look at Me, They See Dollar Signs” by Julie Lurie.  After a 9-month investigation, Ms. Lurie wrote this article that not only addresses the epidemic of patient brokering that itself is sweeping the nation, but also does an excellent job discussing current trends and historical perspectives to better understand “how we got here.”  A “must read” in our opinion.
  2. “United loses in court on behavioral health coverage rules” by Modern Healthcare reporter Harris Myer, and “Mental Health Treatment Denied to Customers by Giant Insurer’s Policies, Judge Rules” by NY Times reporter Reed Abelson. As reported in the NYT, the federal judge in the consolidated cases of Wit v. United Behavioral Health and Alexander v. United Behavioral Health, ruled that a unit of UnitedHealth Group, the giant health insurer, had created internal policies aimed at effectively discriminating against patients with mental health and substance abuse disorders to save money. The cases are both class-action lawsuits filed in 2014 against UnitedHealth and involved United members, including children, being denied coverage by self-insured and fully insured employer health plans for residential and outpatient treatment from 2011 to 2017. The plaintiffs claimed United adopted an unreasonable interpretation of plan rules which required coverage for treatment that was consistent with generally accepted standards of care.  However, the article rightfully points out what most of us already know – different insurers use widely different criteria for covering behavioral care, even though medical experts have sought to standardize those guidelines. Many states require providers and carriers to use criteria developed by the American Society of Addiction Medicine, or ASAM, for addiction-treatment coverage. Those are the criteria the plaintiffs want United to adopt. In his decision, Judge Spero found that United had a structural conflict of interest in applying its own restrictive coverage rules because it felt pressure to keep benefit expenses down so it could offer competitive rates to employers. “UBH’s refusal to adopt the ASAM criteria was not based on any clinical justification,” Spero wrote. “Indeed, all of its clinicians recommended that the ASAM criteria be adopted. The only reason UBH declined to adopt the ASAM criteria was that its finance department wouldn’t sign off on the change.” D. Brian Hufford of Zuckerman Spaeder, the co-lead attorney for the plan members, called the ruling “a monumental win for mental health patients, who face widespread discrimination in attempting to get the coverage they were promised and that the law requires.”
  3. “Buprenorphine Coverage in the Medicare Part D Program for 2007 to 2018” is the title of a recent research paper published in the Journal of the American Medical Association (JAMA), authored by Daniel M. Hartung, PharmD, MPH; Kirbee Johnston, MPH; Jonah Geddes, MPH; Gillian Leichtling; Kelsey C. Priest, MPH; and P. Todd Korthuis, MD, MPH. Their research concluded that, eliminating Medicare Part D coverage restrictions on the medication buprenorphine would immediately improve patients’ access to opioid use disorder treatment. About 300,000, or 12 percent, of Americans diagnosed with opioid use disorder in 2013 were Medicare beneficiaries. Buprenorphine, which may cause less dependence and fewer withdrawal symptoms than other opioids, is often used to treat the disorder. The research, funded by the Agency for Healthcare Research and Quality (AHRQ) which is part of HHS, analyzed drug formularies and found that Part D coverage for buprenorphine was relatively high. In 2018, generic buprenorphine tablets were covered by all plans. And about three-fourths of plans covered brand-name and generic versions of buprenorphine-naloxone, which is another opioid medication. Access to both brand-name and generic formulations was often delayed, however, by prior authorization requirements.
  4. “Alexion agrees to pay $13 million for illegally using charities to pay kickbacks to Medicare patients” by Ed Silverman and published in STAT is the ongoing story of entities trying to create charitable non-profits to cover their patients/consumers out of pocket expenses. Alexion disclosed that it agreed last December to pay $13 million to resolve civil claims concerning payments made to Patient Services and the National Organization of Rare Disorders, which provide financial assistance to Medicare patients taking its medicines. This concern is nothing new to the HHS OIG and we wrote about this back in December 2016 in the post “Donation to Charity in Exchange for Patient Referrals Violates Federal Law.”
  5. “Insurer skips doctors and sends massive checks to patients, prompting million-dollar lawsuit” by Wayne Drash for CNN (finally) brings attention to the horrendous practice of insurance providers (namely Anthem and its BCBS federal policies) directly paying patients rather than treatment providers for services rendered. “Those allegations are part of a lawsuit winding its way through federal court that accuses Anthem and its Blue Cross entities of paying patients directly in an effort to put pressure on health care providers to join their network and to accept lower payments. The insurance giant is accused of sending more than $1.3 million in payments to patients — money, the suit claims, that is owed to the facilities that treated people with addiction and mental health problems.” Critics say it’s a revenge tactic against doctors, hospitals, treatment facilities and other medical providers that don’t agree to insurance companies’ demands to be “in-network,” by making them chase down money. At the same time, trying to become an in-network provider is often a monumental task and regularly rejected by insurance companies. The insurance industry disputes any such characterization.  But the known reality is that, instead of paying the facilities, Anthem sends checks directly to patients, some while they were still in rehab. It’s a strategy that put the providers in the tricky and tenuous position of trying to collect money — in some cases, very large sums — from the very people they were trying to help. Health care providers, medical professionals and attorneys familiar with this insurance practice told CNN that, while many patients send the money on to the providers, others realize they’re onto a bonanza, pocketing the money and ducking and dodging every time a doctor or medical office reaches out.
  6. NAATP Releases Version 2.5 of its Code of Ethics, Prohibiting Provider Operated Directories. According to Marvin Ventrell, Executive Director of NAATP: “All NAATP members, as a condition of their NAATP membership, must act in compliance with the NAATP Code of Ethics. Noncompliance can result in removal from membership. Our goal with the new Ethics Code, as with previous versions, is not to exclude providers but rather to create a professional membership environment in which all providers agree to common, values-based, professional, and ethical conduct. By doing so, we demonstrate to the public, payers, and policymakers that NAATP is committed to helping families find reliable, responsible, and fully transparent care.” Amongst the changes to the Ethics Code is provision IV, B, 6, which provides as follows: “NAATP Members may not own, operate, or otherwise control directory type websites.” NAATP believes that it is a fundamental conflict of interest for a treatment provider to operate a directory purporting to unbiasedly direct consumers to care providers. “Unlike a Yellow Pages or Yelp-type service, which is truly independent from the providers to which consumers are directed, a provider-operated directory is indisputably and integrally connected to the provider itself.” Additional changes to the code include: (i) Clarifying the branding requirements for advertising, including television ads that do not identify the specific provider that is paying for or promoting the ad; (ii) Prohibiting advertising that refers to a competitor name while promoting one’s own program; and (iii) Prohibiting the display of services that are not actually offered by the provider.  This Code of Ethics follows in large part the changes to addiction treatment marketing space adopted by the Florida Legislature.

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Feds Reconsidering Stark and Anti-Kickback Safe Harbors

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The concepts of the federal Stark Law and its companion Anti-Kickback Statute (AKS) are often used interchangeably by health care industry providers, though both laws are different in applicability.

A chart detailing the differences has been prepared by HHS and can be found here: https://oig.hhs.gov/compliance/provider-compliance-training/files/starkandakscharthandout508.pdf
Health & Human Services (HHS) and its Office of Inspector General (OIG) HHS has been taking comments from industry as to ways to “update” the rules implementing the Stark Law and the AKS to meet modern evolutions in physician/employee compensation and other financial arrangements which industry believes are outdated and stifle innovation.

According to recent reporting by ModernHealthcare.com:

“Hospitals have urged HHS’ Office of Inspector General to recognize that payments between providers in the same alternative pay models do not violate federal anti-kickback laws, warning they may not participate in the programs otherwise. Alternative pay models can violate anti-kickback laws because they can include incentives and shared savings payment agreements to reduce the cost of care, which could influence a provider to use a certain vendor, refer patients to specific facilities or order more services that are paid for by federal healthcare programs. But providers told the OIG that the laws are too broad and they’re getting in the way of the move to value-based care. Some providers called on the agency to create a so-called safe harbor for payments made between hospitals, physician groups and skilled-nursing facilities in value-based arrangements to allow them to split shared savings payments.”

Relevant to the addiction treatment industry was commentary about forms of “payments” to patients.

“Providers also want to protect payments to patients to address their social determinants of health. These payments may violate anti-kickback statute because a beneficiary could feel obligated to continue receiving care from that provider.  But patients are more likely to lose weight if they have a financial incentive, according to American College of Cardiology President Dr. Michael Valentine. If physicians can pay for food, clothing or even transportation to and from healthcare visits, that could improve patient health. Valentine called for an expanded safe harbor that would allow physicians to pay patients to improve their social determinants of health.  Karen Ali, general counsel at the New Jersey Hospital Association, agreed that OIG should not penalize hospitals for these payments, as they could reduce unnecessary readmissions. ‘Hospital responsibility for patient care no longer begins and ends at the hospital door,’ Ali said. The comments are in response to a Request for Information issued by HHS’ OIG this past summer. The agency asked providers how it could encourage value-based pay arrangements. It received more than 350 responses. The CMS is also looking to soften anti-kickback regulations. It issued its own RFI to determine how it can minimize the regulatory barriers around the so-called Stark law.”

At the local (Florida) level, and now at the federal level with the adoption of the new “Eliminating Kickbacks in Recovery Act” (EKRA), the importance of updates to the AKS is relevant for two main reasons:

  1. Florida’s Patient Brokering Act (PBA), s. 817.505, Fla. Stat., holds out as “defenses” anything that is deemed a “safe harbor” within the federal AKS (meaning, if HHS/OIG says a certain action does not violate the AKS, then Florida law says it also does not violate the PBA); and
  2. EKRA, which passed at part of the SUPPORT Act of 2018, does specifically include certain “safe harbors” but also explicitly contemplates that DOJ and HHS will adopt rules to further clarify those exceptions.

As proposed rules relaxing the AKS are rolled out, we will certainly keep everyone updated.  However, we continue to strongly believe (if not know) that any such benefit given to a patient with the intent to induce patronage will continue to be disfavored as being against public policy.

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Florida’s First Sober Home Patient Brokering Case Goes to Trial

Since 2016, the Office of the State Attorney for the Fifteenth Judicial Circuit of Florida (Palm Beach County, The Honorable David Aronberg, State Attorney) began significant investigations and prosecution of alleged violation of Florida’s Patient Brokering Act, which law prohibits: (A) paying for a referral; and/or (B) inducing patients to select a treatment provider by offering anything of value.

While there have been many arrests and prosecutions, the cases have ended up in plea deals.  Until now.

We believe the first defendant not to accept a plea and to go to trial beginning this morning is the case of Robert Simeone, the owner of Epiphany’s Treatment Center.

https://www.palmbeachpost.com/news/crime–law/former-deputy-state-house-candidate-faces-patient-brokering-charges/GqNYXZ6sbA7xo5PhVEfMfP/

The allegations appear to be payment to sober home providers for referrals of residents under the premise of payment of fees for Case Management services.

While the payment for a referral is against the plain letter of the law, payment for true, real, actual “Case Management” services is not, and which payments are not a disguise for referrals.

The question is, was a provider truly paying for Case Management services, or were payments simply labeled as “Case Management Fees” to effectively launder what were actually kickbacks for referrals?

As Simone’s defense attorney states in his Motion to Dismiss:

“The determinant issue as it relates to the charges here, in whether the case management agreements entered into between the Defendant and witnesses whom the PB SAO relies upon to support probable cause were truly for the provision of case management support services, or just a disguise for payments to induce the sober home operator/witness to refer residents to Epiphany’s.”

To answer that question, one must look at the evidence, and each prosecution stands on a case-by-case basis.

But the key issue being litigated today goes beyond that question.

In a decision which is likely to set the stage for all future prosecutions across the state is the question of “criminal intent” – does violation of the Patient Brokering Act only require payment for a referral and/or some action to induce a patient, or does that law require some form proof that there was a specific intention to violate the statute?

What if someone in good faith did not believe they were violating the statute through their actions, but it turns out that their actions violated the law?

For example, what if you believe the speed limit to be 75mph, you drive 75mph, and you intended to drive 75mph, but the actual speed limit is 65mph – did you break the law?

In large part, that is the legal issue at the heart of the Simeone prosecution this week, and part of Defendant’s Motion to Dismiss being heard likely today.

As stated in the Motion:

It must be acknowledged that indeed there did existing within the growing drug treatment industry certain treatment providers and sober home operators whose intent was not to provide quality healthcare, but instead to make money through insurance fraud, drug sales and prostitution. However, these so called “bad actors” constituted a small portion of the individuals operating businesses in the industry; and were dealt with by federal authorities.  The arrests and prosecutions of others for patient-brokering based on the system of case management, including the one here, have struck at legitimate and well-intentioned actors whose only motivations were to operate in a legal manner to provide quality care.

No matter how the court rules, we expect appeals on this legal issue, so the law will not be settled for quite some time. However, in the meantime, the entire industry is holding its collective breath.

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BREAKING NEWS – Google Reinstates Ads for Addiction Treatment Centers, With Pre-certification by LegitScript

Google will start accepting ads for addiction treatment centers again, Reuters reports. The company suspended the ads in September after The Verge reported that Google ads were being used to direct people to shady addiction treatment centers and away from legitimate facilities. Starting in July, treatment centers can run ads on Google but only after they’ve been vetted by LegitScript, a firm that also verifies online pharmacies.

Google told Reuters Monday it would resume accepting ads from U.S. addiction treatment centers in July, nearly a year after it suspended the lucrative category of advertisers for numerous deceptive and misleading ads.

According to the just-released revised advertising policy press release from Google:

In May 2018, Google will update the Healthcare and medicines policy to restrict advertising for recovery-oriented services for drug and alcohol addiction. This policy will apply globally, across all accounts that advertise addiction services.

Here are some examples of addiction services that will be restricted under this new policy:

  • Clinical treatment providers for drug and alcohol addiction, including inpatient, residential, and outpatient programs
  • Recovery support services for drug and alcohol addiction, including sober living environments and mutual help organizations
  • Lead generators and referral agencies for drug and alcohol addiction services
  • Crisis hotlines for drug and alcohol addiction

Outside the United States, ads for addiction services are currently not allowed.

In the United States, advertisers will need to be certified by LegitScript as addiction services providers before they can advertise through AdWords.

Not all drug and alcohol addiction services are eligible for LegitScript Certification.

Those not eligible for certification, such as sober homes and referral agencies, are not allowed to advertise for drug and alcohol addiction services on Google.

LegitScript charges a fee for processing and monitoring applicants, but fee waivers may be available in certain circumstances.

According to John Horton, CEO of LegitScript:

All of us at LegitScript are really excited about this new program. In many ways, it’s a natural extension of the work we’ve done for years to make the rogue internet pharmacy problem — a driver of prescription drug abuse and other problems — smaller. One of the most pernicious problems our country faces today is opioid addiction and other substance abuse. In the midst of this crisis, some opportunistic addiction treatment providers have been cashing in on patients’ recovery efforts and insurance billing opportunities. The worst of these have not only failed to provide treatment, but have encouraged ongoing drug abuse in patients trying to break the habit.

At the same time, addressing opioid addiction rates requires effective drug treatment strategies: patients and their families need to know which treatment providers are credible and legitimate, and which ones should be avoided. We hope that our program will help provide patients and our partners (like Google) information about which programs provide genuine treatment and which are, in essence, scams.

An important note about cadence: during the first three months, we’re going to intentionally take it slow. Irrespective of how many applications we receive, we’ll probably only certify about 20 to 30, simply so that we can make sure and get the process right. After that, we’ll ramp up the speed. (This goes into the “lessons learned” bucket from our existing healthcare merchant certification program.) This also works well with Google’s timeline, since they have indicated they will actually begin allowing these advertisers in July.

To learn more about LegitScript Certification and submit an application, visit LegitScript’s website.

US advertisers that are certified by LegitScript must also be certified by Google before they can begin advertising.

Advertisers with LegitScript Certification can request certification with Google starting in July, when the form is published.

Interest in treatment for abuse of opioids and other prescription drugs has soared in recent years amid what authorities have described as a nationwide epidemic.

Scammers found that Google ads were an easy way to defraud treatment-seekers in an industry in which regulations vary greatly by jurisdiction, authorities and patient advocacy organizations have said.

Google suspended alcohol and drug treatment advertising on search pages and millions of third-party apps and websites in the U.S. in September, the week after tech publication The Verge posted a lengthy story about scams. Google expanded the prohibition globally in January.

The move cut off at least $78 million annually worth of advertising in the U.S. alone, research firm Kantar Media estimated.

Most advertisers can buy ads through Google with few hurdles to clear. But Google has adopted additional vetting for locksmiths, garage-door repairers, drug makers and online pharmacies following public pressure. Google has said it also will begin seeking more documentation from political advertisers this year.

The addiction treatment rules apply to in-person facilities, crisis hotlines and support groups.

LegitScript will evaluate treatment providers on 15 criteria, including criminal background checks and license and insurance verification. They must also provide “written policies and procedures demonstrating a commitment to best practices, effective recovery and continuous improvement,” according to LegitScript, which will charge $995 upfront and then $1,995 annually for vetting.

The National Association of Addiction Treatment Providers and the National Center on Addiction and Substance Abuse support the standards, John Horton, chief executive of LegitScript, said in an interview last week.

A vetting process for sober-living houses and non-U.S. treatment centers has yet to be set, he said.

Horton acknowledged the “extra step” may frustrate rehab centers.

“It’s unfortunate, but this is one way the market gets cleaner and people get the help they deserve,” he said.

Marcia Lee Taylor, chief policy officer of the Partnership for Drug-Free Kids, to whom Google has donated advertising space, said earlier efforts to certify treatment services have failed because there was no “business incentive to answer all these invasive questions.”

Tying access to the world’s biggest online advertising system to certification makes applying worthwhile, Taylor said.

The new rules do not affect free business listings on Google Maps, which also have been susceptible to fraud. Google said it is continuously developing ways to combat Maps spammers.

More about this new model will be part of my presentation “Public Policy and the Law of Marketing Treatment Programs” at the 2nd Annual Treatment Center Executive & Marketing Retreat hosted by the Institute for the Advancement of Behavioral Healthcare in Hilton Head, SC, April 30 – May 1, 2018.

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Massachusetts AG Launches Probe of Addiction Treatment

The Massachusetts attorney general’s office is investigating patient brokering of Massachusetts residents that recruited them to treatment centers in other states, according to people contacted by the office and others familiar with the matter.

Jillian Fennimore, a spokeswoman for Attorney General Maura Healey, confirmed the office is conducting a criminal investigation of addiction treatment centers. She would not provide details of the probe, including whether particular entities or individuals were being targeted.

The investigation follows reporting by STAT and the Boston Globe based on alleged insurance fraud.

“It is critical that people struggling with addiction can safely access treatment services,” Healey said. “Unfortunately, those seeking to make a profit off of this epidemic are targeting vulnerable patients with illegal treatment and recovery scams.”

The attorney general’s office also indicated it is taking a broader look at sober home operators in Massachusetts. Sober homes offer group living for people in recovery from drug addiction. Healey’s office said it was looking into allegations of poor living conditions in some sober homes, false advertising, and the failure of some operators to maintain a sober environment.

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