The “resolution model” document, which Modern Healthcare obtained copies of Thursday (PDF), says each questionable ICD case will be evaluated individually. Hospitals are being told to self-audit the cases and estimate damages, with the severity of penalties based on whether the hospital had medical reasons to violate CMS rules; if patient harm resulted; if the hospital had prior knowledge or a statistical pattern of non-guideline implants; and if a hospital compliance program was in place.
“This is a novel approach for a few reasons,” said DLA Piper attorney Frank Sheeder III, who has hospital clients with defibrillator investigations. “First, the DOJ is articulating standards on clinical and reimbursement issues. And second, they have been working collaboratively with hospitals and their counsels and have expressed an intention to continue to do so in an effort to bring these cases to reasonable resolutions.”
The Justice Department e-mail says it will not penalize every device that falls outside the 2005 CMS National Coverage Determination rules for preventive ICD use. The letter also says the damages model does not modify the CMS coverage rules, which have been criticized by physicians for relying on outdated clinical trials that excluded patients who would benefit from preventive implantable defibrillators.
Sheeder said he disagreed with the Justice Department's decision to pursue the investigation under an anti-fraud statute such as the False Claims Act, which allows for collection of up to triple the amount of actual damages, depending on the severity of the infraction.
Other attorneys have said the Justice Department doesn't appear to have a solid legal foundation for any potential prosecution at all.
In a 2011 report (PDF), two lawyers—Drinker Biddle & Reath partner Jesse Witten and Fredrikson & Byron partner David Glaser—wrote that the 2005 CMS rules did not include language explicitly barring the devices outside the coverage rules. “In other words, the NCD describes circumstances in which an ICD implantation is covered, but does not exclude coverage in other circumstances,” they wrote.
Justice Department officials declined to comment Thursday.