Healthcare Matters

   A Complimentary Newsletter From:

Barmak and Associates, LLC  

Managing Liability for Long Term Care and Health Care Providers

Volume 17, Issue 3                 ADVERTISEMENT                           March 2016

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In This Issue
Recent Federal Enforcement Victories
Conducting Proper Workplace Investigations
David Barmak, Esq.
Gerald V. Burke, M.D., Esq. 
Jo Ann Halberstadter, Esq.
Jo Ann Halberstadter, Esq.

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Recent Federal Enforcement Victories 
By: Gerald V. Burke, M.D., Esq.
Here we go again.  Two more large, corporate healthcare entities have received stiff government fines for violating the Stark Law and the False Claims Act.
In the first matter, the Olympus Corporation of America, the United States' largest distributor of surgical scopes commonly used in medical procedures, recently agreed to pay $623.2 million to resolve criminal and civil claims that its agents paid bribes and kickbacks to boost sales. The company's agents paid bribes and kickbacks to doctors and hospitals from 2006 through 2011.
Gifts by the company's sales force included cash, paid for overseas trips, expensive meals and events, and provided spa treatments to doctors, hospital officials and other medical professionals in return for purchasing Olympus' equipment.  It also offered "research grants" to hospitals in return for purchases.
During the time in question, the Olympus Company operated without a single compliance officer to guard against this illegal activity.  Coincidentally, the whistleblower who reported the company was the company's first compliance officer, who filed a whistleblower suit in 2010 in New Jersey federal court.  He will receive more than $51 million from the criminal and civil settlements.
The $623 million from Olympus will be the largest amount paid in US history for violations of the Anti-Kickback Statute. Olympus only realized gross profits of $230 million from these improper sales.  The Anti-kickback Statute prohibits payments to induce purchases through federal healthcare programs such as Medicare and Medicaid.
In a separate incident, the Justice Department announced on January 15, 2016 that Tri-City Medical Center, a hospital located in Oceanside, California, has agreed to pay $3,278,464 to resolve allegations that it violated the Stark Law and the False Claims Act by maintaining financial arrangements with community-based physicians and physician groups that violated the Medicare program's prohibition on financial relationships between hospitals and referring physicians.
The Stark Law generally forbids a hospital from billing Medicare for certain services referred by physicians who have a financial relationship with the hospital unless that relationship falls within an enumerated exception.  The exceptions generally require, among other things, that the financial arrangements do not exceed fair market value, do not take into account the volume or value of any referrals and are commercially reasonable.  In addition, arrangements with physicians who are not hospital employees must be set out in writing and satisfy a number of other requirements.
The settlement resolves allegations that Tri-City Medical Center maintained 97 financial arrangements with physicians and physician groups that did not comply with the Stark Law.  The hospital identified five arrangements with its former chief of staff from 2008 until 2011 that, in the aggregate, appeared not to be commercially reasonable or for fair market value.  The hospital also identified 92 financial arrangements with community-based physicians and practice groups that did not satisfy an exception to the Stark Law from 2009 until 2010 because, among other things, the written agreements were expired, missing signatures or could not be located.

This settlement illustrates the government's emphasis on combating healthcare fraud and marks another achievement for the Healthcare Fraud Prevention and Enforcement Action Team (HEAT) initiative, which was announced in May 2009 by the Attorney General and the Secretary of Health and Human Services.  The partnership between the two departments has focused efforts to reduce and prevent Medicare and Medicaid financial fraud through enhanced cooperation.  One of the most powerful tools in this effort is the False Claims Act.  Since January 2009, the Justice Department has recovered a total of more than $27.1 billion through False Claims Act cases, with more than $17.1 billion of that amount recovered in cases involving fraud against federal healthcare programs.

If you have any questions regarding your relationships with healthcare providers that may draw the scrutiny of the HEAT task force, a full review by a healthcare attorney is indicated.

For any inquires  regarding this article, please contact Gerald V. Burke, M.D., Esq. at or by telephone at (609) 454-5351.

Conducting Proper Workplace Investigations

By: Jo Ann Halberstatder, Esq. 

Administrators and Compliance Officers are often faced with determining what actually occurred when one or more employees engage in possible workplace misconduct. It is essential for you to be able to properly conduct workplace investigations without adding liability exposure to the organization while doing so. Your investigation must be thorough and unbiased.
Many different problems can lead to an investigation:  substance abuse, discrimination complaints, harassment complaints, threats by one employee against another employee, etc. The goal of any investigation is to understand the underlying reasons for the problem so that you can take corrective action. However, you must also be knowledgeable about state and federal employment laws, be thorough and objective and protect the privacy rights of employees. No one said being the Administrator or Compliance Officer was going to be easy!
To begin, must you do an investigation when you receive an employee's complaint? YES!  There are numerous federal laws that actually mandate investigations upon receiving a complaint. For example, job discrimination laws, health and safety laws, background and credit check laws as well as drug-free workplace laws.
It is beyond the scope of this article to give all of the details that you must be aware of when conducting an investigation; however, please be mindful of the following issues that potentially increase liability for the organization:
  • Personnel Files - maintain appropriate confidentiality as you and others who have a job related need to know access the files.
  • Searches at Work - respect reasonable expectations of privacy that employees have at work.
  • Drug testing - ensure that all of the appropriate releases and procedures are in place prior to drug testing current employees.
  • Defamation - remember, defamation is the communication of false information about a third person to a third party, either intentionally or with reckless disregard for its falsity.
  • Retaliation - employees who file claims in good faith are protected under numerous laws from retaliation for having filed such claims.
There are certain steps that are common to any investigation. These include recognizing when an investigation is required; determining what the goals of the investigation are; identifying the appropriate investigators; identifying potential witnesses and documents for review; developing a written list of questions to use during the interviews; determine proper security for the records that will be reviewed and generated during the investigation; and consult your compliance attorney to ensure that the procedures being followed minimize liability exposure for the organization and maximize the use of attorney - client privilege as needed.

If you have questions regarding this article, please contact Jo Ann Halberstatder, Esq. by telephone at (609) 454-5351 or email 

Barmak and Associates, LLC      


Our law firm provides integrated regulatory, transactional, employment and litigation/advocacy services to skilled nursing facilities and other healthcare providers.


Representative Clients: 

Entities:  Skilled nursing facilities; Home health agencies; Hospice agencies; Hospitals.


Providers: Physicians; Therapists; Orthotists and Prosthetists


Suppliers:  Durable medical equipment; Long-term care pharmacies; Retail pharmacies.


Businesses: Billing; Management service organizations; Independent provider associations


Regulatory Issues: Corporate Compliance Programs (Fraud, waste & abuse; Privacy & Data Security; Employment); Healthcare facility; Licensed Professionals; Medicare & Medicaid (certification, survey and reimbursement); Auditing (legal; clinical; administrative; and reimbursement).


Transaction Issues: General Counsel Services; Contracts.
Employment Issues: Wage and hour; Equal employment opportunity; Discrimination; Whistle-blowing; Employment agreements; Severance packages; Employee release agreements, Non-compete agreements; Non-solicitation agreements; Confidentiality agreements, Employee leave issues, Electronic monitoring and employee privacy, Employee separation (suspensions, terminations and reductions in force); Documentation.


Litigation/Advocacy: Contracts; Employment; Fiduciary issues; Commercial leases; Payment (Managed Care Organizations; Medicare; Medicaid); Guardianship; Professional and facility licensing; Healthcare regulatory; Fraud and privacy issues.
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This newsletter has been prepared by Barmak and Associates, LLC for informational purposes only and is not intended to provide legal advice. You should consult an attorney for advice regarding your individual situation. We invite you to contact us. Contacting us does not create an attorney-client relationship. Please do not send any confidential information to us until such time as an attorney-client relationship has been established.


For more information, please contact:

David S. Barmak, Esq.

Telephone (609) 454-5351
Fax (609) 454-5361 

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