In February 2013, we reported (on our Healthcare Law Blog) that the Centers for Medicare and Medicaid Services (CMS) announced the final rule for the Physician Payments Sunshine Act. In the interest of providing more transparency for patients, the final rule requires pharmaceutical and medical device manufacturers and group purchasing organizations to report payments or transfers of value provided to physicians or teaching hospitals and to report physician ownership and investment interests. The deadline for submission of aggregate data was March 31, 2014, and the deadline for submission of detailed data is June 30, 2014. CMS has already established a website to display that data beginning in September 2014. In the meantime, also in the interest of transparency, on April 9, 2014 CMS touted the “historic” release of data showing utilization, payments, and submitted charges for services and procedures provided by physicians and other health care professionals to Medicare beneficiaries. As claimed by CMS, this data covers “880,000 distinct health care providers who collectively received $77 billion in Medicare payments in 2012, under the Medicare Part B Fee-For-Service program” and will enable “a wide range of analyses that compare 6,000 different types of services and procedures provided, as well as payments received by individual health care providers.” (See press release. The data is available here.) The consequences of such unprecedented releases of payment/investment interest and Medicare billing data are significant.
On May 7, 2014, the Office of Federal Contract Compliance Programs (“OFCCP”) issued a directive establishing a five-year moratorium on enforcement of certain affirmative obligations of TRICARE subcontractors—specifically, obligations related to affirmative action programs and recordkeeping under Executive Order (“E.O.”) 11246, as amended, Section 503 of the Rehabilitation Act of 1973 (“Section 503”), as amended, and the Vietnam Era Veterans’ Readjustment Assistance Act of 1974 (“VEVRAA”), as amended.
Amended SDN Designations Under New Sanctions Programs
On May 23, the U.S. Department of Treasury, Office of Foreign Assets Control (“OFAC”) published additional identifying information for persons whose property has been blocked for their activities related to the conflict in the Central African Republic. See 79 Fed. Reg. 29,842 (May 23, 2014). On May 12, President Obama issued an Executive Order that authorizes the blocking of all property in the United States of persons for activities including actions that threaten the peace or stability of the Central African Republic, actions or policies that undermine transitional institutions or democratic institutions, targeting women for acts of violence, the recruitment of child soldiers, and other human rights abuses. See Exec. Order 13,667 (May 12, 2014). The Executive Order provides authority for persons to be added to OFAC’s Specially Designated National (“SDN”) List. Once a person is added to that list, that person’s property under U.S. jurisdiction is blocked, and U.S. persons are prohibited from transacting with that person. The Central African Republic sanctions are the most recent example of sanctions programs targeting human rights violators, and a discussion of previous sanctions can be found in our Global Trade Blog.
If you are a contractor that interacts with both the Department of Defense and “electronic parts,” it is time to grab the caffeinated beverage of your choice, crack open 79 FR 26,092, and begin the bone-tingling read that is sure to keep many supply chain managers up at night. Implementing the requirements found in the National Defense Authorization Acts for FY2012 and FY2013, the DoD’s counterfeit parts rule was finalized and published in the Federal Register on May 6, 2012. Effective immediately, the new series of regulations apply to defense contractors using, relying on, or selling to the DoD an “electronic part,” as that term is now newly defined. Although it may spoil the ending and break the cardinal rule of reading any thriller, we provide here the “Cliffs Notes” version of the regulations’ lengthy preamble and the key takeaways of the new Rule and its proposed application.
On March 10, 2014, just days before trial, Halifax Hospital Medical Center and Halifax Staffing, Inc. (collectively “Halifax”) entered into an $85 million settlement with the U.S. Department of Justice resolving allegations that they violated the False Claims Act (“FCA”) by submitting Medicare claims that violated the Stark law. See Notice of Settlement and Settlement filed in U.S. ex rel. Baklid-Kunz v. Halifax Hospital Medical Center, Civ. Act. No. 6:09-CV-1002 (M.D. Fla.) The settlement effectively ended a qui tam action that had been filed by an insider in June 2009. The Government had intervened based on employment agreements with six medical oncologists that compensated the physicians based on the operating margin of Halifax’s medical oncology program. The compensation arrangement, referred to as an “Incentive Bonus,” covered a four-year period—from 2005-2008. There are a few lessons to be learned from this case.
DoD Issues Final Rule regarding Counterfeit Electronic Parts (79 Fed. Reg. 26092)
The Department of Defense issued a final rule on May 6, 2014 that sets forth contractor responsibilities related to the detection and avoidance of counterfeit electronic parts, including the obligation to report counterfeit or suspected counterfeit electronic parts. For a detailed discussion of this new rule, see article here.
The federal government sector has been abuzz lately with whispers and shouts about pending cybersecurity regulations, frameworks, and requirements. This attention is not particularly surprising, especially given the recent high-profile data breaches, the litigation threats surrounding those breaches, the recent identification of the encryption-disabling, consumer data threatening “Heartbleed SSL” OpenSSL vulnerability, and recent reports that the September 2013 cyber-incursion into the U.S. Navy’s Intranet network could have been prevented with the proper security contracting mechanism. Notably, however, while these stories – and the resultant damages that these stories’ topics leave in their wake – remain in the headlines, Congress has yet to act (and according to Senator Evan Bayh (D-IN), will likely not be acting anytime soon). By contrast, the Executive branch, and especially the FTC, is in a full-on sprint and tackling cybersecurity wherever it can be found.
As promised in his 2014 State of the Union Address, President Obama has turned to executive action to advance his agenda, which includes increasing the minimum wage and creating improved tools to ensure equal pay for women and minorities. And unfortunately for federal contractors, the President’s recent executive actions have imposed increased, and potentially costly, obligations on federal contractors.
This month’s Federal Register Updates include four important changes that will impact the day-to-day activities of Government Contractors and Agencies alike. The first, a final DFARS rule on Performance-Based Payments, provides detailed guidance and instructions on the use of the Performance-Based Payment analysis tool, which is required to be used by all Contracting Officers contemplating use of performance-based payments on new fixed-price type contract awards. The second is a proposed rule that would extend personal conflicts of interest to a newly expanded group of “covered employees” who perform functions closely associated with inherently governmental functions (not simply acquisition functions, as is currently the case under the present rule) and contracts for personal services. The third change does not impose requirements on contractors, but does establish DoD procedures relating to the reported foreign ownership, control, or influence (FOCI) information that DoD is tasked with evaluating, mitigating, or negating. And the fourth important change, the President’s Memorandum and Executive Order on Compensation Data Issued on National Equal Pay Day, continues the President’s push for greater pay equality between women and minorities.
On March 4, 2014, the United States Supreme Court, in a 6-3 decision, expanded the protections offered to whistleblowers under anti-fraud laws, in Lawson v. FMR LLC. In its decision, the Court ruled that a specific protection against retaliation enacted as part of the Sarbanes-Oxley Act after Enron’s collapse, i.e., 18 U.S.C. § 1514A, not only provides whistleblower protection to employees of public companies, but also protects a public company’s private contractors and subcontractors.