Do You Have The COVID-19 Blues? Don’t Forget About Sunshine!

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MoFo Life Sciences

While the Centers for Medicare and Medicaid Services (CMS) acknowledges the impact COVID-19 has had on the healthcare industry, CMS does not have the authority to postpone the deadline for Sunshine Act reporting. Accordingly, March 31, 2021, remains the deadline for reporting for 2020. 

Despite not extending any deadline, CMS is sensitive to the fact that COVID-19 may have impacted an organization’s reporting processes. Specifically, CMS recommends using “COVID-19 Impact” in an applicable manufacturer’s assumptions statement and explaining the circumstances surrounding the data, including, if applicable, references to any related help desk ticket numbers. 

Separately, we note that the 2020 reporting year marks the eighth year that CMS has collected open payments data. Accordingly, CMS has amassed a vast data set of payments occurring within the healthcare industry. This large data set is a tool for other agencies to enforce healthcare regulations. In particular, we expect that the Department of Justice (DOJ) will use data analytics to analyze the open payments data and use the results of such analytics to identify potential Anti-Kickback Statute violations and pursue False Claims Act litigation.

As a consequence, improper reporting, or the failure to report open payments data, could lead to allegations of a false claim against a drug or medical device manufacturer and the recipient of such payment in addition to any penalties levied under the Sunshine Act regulations. Under the Sunshine Act, an applicable manufacturer that fails to report payments information is potentially subject to a civil monetary penalties for each payment or other transfer of value or ownership or investment interest that it did not report timely, accurately, or completely. If the failure to report timely, accurately, or completely is a knowing violation, those penalties increase tenfold.

While generally there has been little enforcement in this area to date, in October 2020, DOJ announced a settlement over $9 million dollars with Medtronic based on allegations that Medtronic violated the False Claims Act by paying kickbacks to a neurosurgeon and failing to accurately report the direct and indirect payments made to the neurosurgeon. This was the first major settlement related to the Sunshine Act’s reporting obligations. We expect litigation in this space to increase as DOJ runs more sophisticated analyses against the open payments data set. 

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DISCLAIMER: Because of the generality of this update, the information provided herein may not be applicable in all situations and should not be acted upon without specific legal advice based on particular situations.

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