United States v. Nayak: The Application of Honest Services Mail and Wire Fraud to the Health Care Industry (Part II)

By Joan H. Krause
[Cross-posted at HealthLawProf Blog]

In a prior post, I discussed the Seventh Circuit’s decision in United States v. Nayak, one of the first major “honest services” mail and wire fraud cases to arise since the Supreme Court decidedSkilling v. United States in 2010. In Skilling, the Court found clear Congressional intent to limit honest services prosecutions to “offenders who, in violation of a fiduciary duty, participated in bribery or kickback schemes.” (Skilling at 407, emphasis added) As I warned in a 2012 article, the Court’s focus on bribery and kickback activity within the context of a fiduciary duty might have wide-ranging consequences in the health care field given the nature of the physician-patient relationship.

The structure of honest services cases differs from that of more traditional forms of mail and wire fraud, which usually involve perpetrators who defraud victims of money or property. In contrast, these “intangible rights” cases eliminate the requirement that the victim suffer a financial loss to the perpetrator. Nonetheless, such fraud is actionable only when the perpetrator in fact owes a heightened duty to provide “honest services” to the victim. While Skilling grounded that duty in a fiduciary relationship, the majority offered little guidance as to which aspects of the relationship were most important. As Justice Scalia noted in his concurrence: “None of the ‘honest services’ cases . . . defined the nature and content of the fiduciary duty central to the ‘fraud’ offense. There was not even universal agreement concerning the source of the fiduciary obligation – whether it must be positive state or federal law . . . or merely general principles, such as the ‘obligations of loyalty and fidelity’ that inhere in the ‘employment relationship.’” (Skillingat 416-17)

The indeterminacy of the fiduciary requirement has particular relevance in the medical context. While the physician-patient relationship is commonly described as a fiduciary one, the characterization is far more complex than may first appear. The disparities in medical knowledge, as well as the inability of patients to access many services (such as prescription drugs) without physician involvement, give physicians a great deal of power over their patients – a characteristic fiduciary responsibility. Yet the relationship lacks other fiduciary hallmarks; the physician, for example, lacks the fiduciary’s traditional control over the beneficiary-patient’s money. Skilling offered little guidance as to which of these characteristics is most relevant to the honest services duty.  Continue reading

Call for Abstracts: 2015 Petrie-Flom Annual Conference – Law, Religion, and American Health Care

Abstracts due next Monday, December 1, 2014:

SCOTUSfrontThe Petrie-Flom Center invites abstracts for its 2015 Annual Conference: “Law, Religion, and American Health Care.” The conference will be held at Harvard Law School on May 8 and 9, 2014.

This conference, and anticipated edited volume, will aim to: (1) identify the various ways in which law intersects with religion and health care in the United States; (2) understand the role of law in creating or mediating conflict between religion and health care; and (3) explore potential legal solutions to allow religion and health care to simultaneously flourish in a culturally diverse nation.

For a full conference description, including the call for abstracts and registration information, please visit our website.

The conference seeks to address the following topics. Please note that this list is not meant to be exhaustive; we hope to receive papers related to the conference’s general theme, but not specifically listed here:  Continue reading

United States v. Nayak: The Application of Honest Services Mail and Wire Fraud to the Health Care Industry (Part I)

By Joan H. Krause
[Cross-posted at HealthLawProf Blog]

Since the early 1900’s, the federal mail and wire fraud statutes have been applied to schemes to defraud victims not just of money or property, but also of “intangible rights” such as the right to the “honest services” of an employee or public servant. 18 U.S.C. §§ 1341, 1343, 1346. This expansive theory of honest services fraud has been applied to public officials and private businessmen, although only rarely to physicians or others in the health care system. In 2010, the Supreme Court used the case of former Enron CEO Jeffrey Skilling to impose significant limits on the reach of the honest services fraud theory. Skilling v. United States, 561 U.S. 258 (2010).Skilling itself had nothing to do with health care, arising instead from a prosecution for conspiracy, securities fraud, wire fraud, false representations to auditors, and insider trading in connection with Enron’s massive financial meltdown. Yet in rejecting Skilling’s vagueness challenge to the honest services wire fraud theory underlying his conspiracy conviction, the Court read the statute to limit honest services prosecutions to cases involving bribery and kickbacks – activities with particular salience in the health care context. In a 2012 article, I predicted that while Skilling generally was viewed as narrowing the scope of honest services fraud, the decision might have the paradoxical effect of inviting additional prosecutions in the health care industry.

While intangible rights cases date back to the early 1900’s, modern prosecutions were derailed in 1987 when the Supreme Court ruled that the mail and wire fraud statutes applied only to the deprivation of property rights. McNally v. United States, 483 U.S. 350 (1987). In response, Congress quickly enacted 18 U.S.C. § 1346 to clarify that the statutes did indeed prohibit “a scheme or artifice to deprive another of the intangible right of honest services.” The amendment did not include a definition of honest services, nor offer any other indication as to when the prohibition might apply. In his appeal, Skilling asserted that the provision was unconstitutionally vague because it failed to adequately define the prohibited behavior and granted nearly unfettered prosecutorial and judicial discretion. The Court, however, declined to overturn the statute, finding clear Congressional intent to return to the state of the law prior to McNally: a “solid core . . . involv[ing] offenders who, in violation of a fiduciary duty, participated in bribery or kickback schemes.” (Skilling at 407)

Given the prominence of kickback concerns in health care, I warned that the Court’s focus on kickbacks and bribery might well have the effect of reinvigorating the prosecution of health care intangible rights violations. And indeed on October 20, 2014, the Seventh Circuit decided one of the first major post-Skilling honest services fraud cases involving health care providers, United States v. Nayak. Continue reading

Upcoming Deadline: Submissions for The Journal of Law and Biosciences

JLB coverThe Petrie-Flom Center for Health Law Policy, Biotechnology, and Bioethics at Harvard Law School collaborates with Stanford and Duke Universities to publish The Journal of Law and Biosciences (Oxford University Press), an online, open-access, peer-reviewed journal.  JLB includes a New Developments section, comprised of brief summaries and commentary on recent legislation, regulation, and case law written by graduate students at the collaborating schools.  The Petrie-Flom Center is responsible for providing the New Developments for one issue per annual volume.  Last year’s contributions may be viewed here.

We are currently seeking Harvard graduate students to contribute New Developments for JLB’s Volume 2, Issue 2 (2015). Interested students from any Harvard school should submit a topic proposal (1 paragraph to 1 page) outlining the new development they wish to cover, along with their current CV, and a short writing sample (5-10 pages), by November 30, 2014. Update: Student contributions may be co-authored, particularly with students from different schools within Harvard. Proposals should be sent to Holly Fernandez Lynch, hlynch@law.harvard.edu.

Four proposals will be selected by December 15, 2014, with one alternate.  Outlines will be due January 19, 2015.  First drafts will be due February 16, 2015, with edits returned by March 2, 2015, and final submissions due to the publisher by April 30, 2015 for publication in July.

New Developments are limited to 4500 words, inclusive of footnotes and references, and formatted according to Blue Book style.  Students will be responsible for reviewing the drafts of other student contributors, and will also receive feedback from the Petrie-Flom Center.  Please keep in mind that New Developments are not full student Notes.  They should focus on describing the policy issue at hand, why it is relevant to scholars and practitioners, and providing analysis/questions for further consideration.

Questions?  Please contact Holly Fernandez Lynch, hlynch@law.harvard.edu

More Than Just the ACA at Stake in King v. Burwell

Guest post by Erin Fuse Brown
[Cross-posted from Center for Law, Health and Society Blog]

Commentators have been weighing in since the Supreme Court decided it would hear King v. Burwell, the case challenging the ability of millions of Americans to receive subsidies to purchase health insurance on federally operated Exchanges under the ACA.  Debate swirls over whether a decision striking down these subsidies will gut the ACA or not, but at the very least a ruling in favor of the petitioners would have grave consequences for ACA the and the millions that currently receive these subsidies.

There is, however, more at stake in the King case than the ACA.  If the Court takes this opportunity to cut down the ACA, it does so at the cost of the principle of separation of powers and the Supreme Court’s institutional legitimacy and credibility.

Chevron

The question in King will be resolved under the Chevron framework, which provides that if a statutory provision is ambiguous, then the court must defer to the agency’s interpretation, so long as it is permissible.  Reasonable, learned minds have been disagreeing on the meaning of the statutory provision. As Adrian Vermeule has pointed out, of the 9 federal judges that have reviewed this question, 6 have agreed with the government’s interpretation or concluded the statute is ambiguous, and 3 have concluded that the statute unambiguously precludes subsidies. This type of judicial disagreement is evidence itself of statutory ambiguity.  Continue reading

Tomorrow: “Patients With Passports” Book Launch

Cohen_Medical_TourismBook Launch: Patients with Passports: Medical Tourism, Law, and Ethics

Wednesday, November 19, 2014

Harvard Law School Library
Langdell Hall, Caspersen Room
1557 Massachsetts Ave., Cambridge, MA [Map]

This event is free and open to the public. A light lunch will be served.

I. Glenn Cohen‘s new book Patients with Passports: Medical Tourism, Law, and Ethics  (Oxford University Press, 2014) is the first comprehensive legal and ethical analysis of medical tourism. Examining both the legal and ethical issues raised by medical tourism and how the two interact, it provides the best currently available data and explanations of the industry and tackles the most prevalent legal and ethical issues facing medical tourism today.

Co-sponsored by the Harvard Law School Library.

Upcoming Deadline: Submissions for The Journal of Law and Biosciences

JLB coverThe Petrie-Flom Center for Health Law Policy, Biotechnology, and Bioethics at Harvard Law School collaborates with Stanford and Duke Universities to publish The Journal of Law and Biosciences (Oxford University Press), an online, open-access, peer-reviewed journal.  JLB includes a New Developments section, comprised of brief summaries and commentary on recent legislation, regulation, and case law written by graduate students at the collaborating schools.  The Petrie-Flom Center is responsible for providing the New Developments for one issue per annual volume.  Last year’s contributions may be viewed here.

We are currently seeking Harvard graduate students to contribute New Developments for JLB’s Volume 2, Issue 2 (2015). Interested students from any Harvard school should submit a topic proposal (1 paragraph to 1 page) outlining the new development they wish to cover, along with their current CV, and a short writing sample (5-10 pages), by November 30, 2014. Update: Student contributions may be co-authored, particularly with students from different schools within Harvard. Proposals should be sent to Holly Fernandez Lynch, hlynch@law.harvard.edu.

Four proposals will be selected by December 15, 2014, with one alternate.  Outlines will be due January 19, 2015.  First drafts will be due February 16, 2015, with edits returned by March 2, 2015, and final submissions due to the publisher by April 30, 2015 for publication in July.

New Developments are limited to 4500 words, inclusive of footnotes and references, and formatted according to Blue Book style.  Students will be responsible for reviewing the drafts of other student contributors, and will also receive feedback from the Petrie-Flom Center.  Please keep in mind that New Developments are not full student Notes.  They should focus on describing the policy issue at hand, why it is relevant to scholars and practitioners, and providing analysis/questions for further consideration.

Questions?  Please contact Holly Fernandez Lynch, hlynch@law.harvard.edu

Check out the latest news from the Petrie-Flom Center!

11-14 newsletter screenshot

Check out the November 14th edition of the Petrie-Flom Center’s biweekly e-newsletter for the latest on events, affiliate news and scholarship, and job and fellowship opportunities in health law policy and bioethics.

New BoH Feature: Monthly Round-Up of What to Read on Pharma Law and Policy

Each month, the Program On Regulation, Therapeutics, And Law (PORTAL) in the Division of Pharmacoepidemiology and Pharmacoeconomics at Brigham and Women’s Hospital/Harvard Medical School reviews the peer-reviewed medical literature to identify interesting empirical studies, in-depth analyses, and thoughtful editorials on pharmaceutical law and policy.  We are thrilled to announce that PORTAL (specifically Aaron Kesselheim and Ameet Sarpatwari) will being posting these curated round-ups at Bill of Health each month, with a full posting including abstracts/summaries at their website.

Below are the abstracts/summaries for papers identified from October.  The selections feature topics ranging from the cost-utility of specialty drugs, to the association between financial conflicts of interest and favorable assessments of newer influenza treatments, to the clinical evidence supporting biomarker testing reported in FDA drug labels.  We thank Lara Maggs and Nazleen Khan for their contributions to this review.

  1. Chambers JD, Thorat T, Pyo J, Chenoweth M, Neumann PJ. Despite high costs, specialty drugs may offer value for money comparable to that of traditional drugs. Health Aff (Millwood). 2014 Oct 1;33(10):1751-60.
  2. Chang CQ, Tingle SR, Filipski KK, Khoury MJ, Lam TK, Schully SD, Ioannidis JP. An overview of recommendations and translational milestones for genomic tests in cancer. Genet Med. 2014 Oct 23. [Epub ahead of print]
  3. Dunn AG, Arachi D, Hudgins J, Tsafnat G, Coiera E, Bourgeois FT. Financial conflicts of interest and conclusions about neuraminidase inhibitors for influenza: an analysis of systematic reviews. Ann Intern Med. 2014 Oct 7;161(7):513-8.
  4. Kesselheim AS, Tan YT, Darrow JJ, Avorn J. Existing FDA pathways have potential to ensure early access to, and appropriate use of, specialty drugs. Health Aff (Millwood). 2014 Oct 1;33(10):1770-8.
  5. Miladinovic B, Kumar A, Mhaskar R, Djulbegovic B. Benchmarks for detecting ‘breakthroughs’ in clinical trials: empirical assessment of the probability of large treatment effects using kernel density estimation. BMJ Open. 2014 Oct 21;4(10):e005249.
  6. Naci H, Alexander GC. Regulators should better leverage effectiveness standards to enhance drug value. Pharmacotherapy. 2014 Oct;34(10):1005-11.
  7. Sarpatwari A, Kesselheim AS, Malin BA, Gagne JJ, Schneeweiss S. Ensuring patient privacy in data sharing for postapproval research. N Engl J Med. 2014 Oct 23;371(17):1644-9.
  8. Starner CI, Alexander GC, Bowen K, Qiu Y, Wickersham PJ, Gleason PP. Specialty drug coupons lower out-of-pocket costs and may improve adherence at the risk of increasing premiums. Health Aff (Millwood). 2014 Oct 1;33(10):1761-9.
  9. Wang B, Canestaro WJ, Choudhry NK.Clinical Evidence Supporting Pharmacogenomic Biomarker Testing Provided in US Food and Drug Administration Drug Labels.JAMA Intern Med. 2014 Oct 13. [Epub ahead of print]
  10. Woodcock J. Paving the critical path of drug development: the CDER perspective. Nat Rev Drug Discov. 2014 Oct 31;13(11):783-4.
  11. Yeh JS, Austad KE, Franklin JM, Chimonas S, Campbell EG, Avorn J, Kesselheim AS. Association of medical students’ reports of interactions with the pharmaceutical and medical device industries and medical school policies and characteristics: a cross-sectional study. PLoS Med. 2014 Oct 14;11(10):e1001743.

Introducing New Blogger Ameet Sarpatwari

AmeetAmeet Sarpatwari, J.D., Ph.D., is a research fellow at Harvard Medical School and member of the Program On Regulation, Therapeutics, And Law (PORTAL) [Twitter: @PORTAL_Research] in the Division of Pharmacoepidemiology and Pharmacoeconomics at Brigham and Women’s Hospital. His research draws upon his interdisciplinary training as an epidemiologist and lawyer and focuses on the effects of laws and regulations on therapeutic development, approval, use, and related public health outcomes.

Ameet graduated from the University of Virginia, where he was a Jefferson Scholar. He studied epidemiology at the University of Cambridge, receiving an M.Phil. in 2006 and a Ph.D. in 2010. His doctoral work centered on uncovering disease progression, treatment effectiveness, and co-morbid burden among adults patients with primary immune thrombocytopenia—a rare autoimmune disease—through the establishment of a national disease registry. He subsequently studied law at the University of Maryland, with a focus on health law, as a John L. Thomas Leadership Scholar, graduating in 2013.

Ameet’s work has appeared in such top peer-reviewed medical journals as the New England Journal of Medicine, Clinical Pharmacology and Therapeutics, and Blood.  He is the recipient of Robert Wood Johnson Public Health Law Research grant to examine the public health implications of variation in state drug product selection laws. Among other projects, he is also currently assessing the impact of risk evaluation and mitigation strategies on competition and off-label prescribing, and legal and ethical issues surrounding the use of financial incentives to promote physician use of generic drugs.

Welcome, Ameet!

Introducing New Blogger Aaron S. Kesselheim

ASKAaron S. Kesselheim, M.D., J.D., M.P.H. [Twitter: @akesselheim], is an Associate Professor of Medicine at Harvard Medical School and a faculty member in the Division of Pharmacoepidemiology and Pharmacoeconomics in the Department of Medicine at Brigham and Women’s Hospital (BWH). Within the Division, Aaron leads the Program On Regulation, Therapeutics, And Law (PORTAL) [Twitter: @PORTAL_Research], an interdisciplinary research core focusing on intersections among prescription drugs and medical devices, patient health outcomes, and regulatory practices and the law.

Aaron graduated from Harvard College and received his postgraduate training at the University of Pennsylvania School of Medicine and Law School, and most recently at the Harvard School of Public Health. He is Board Certified in Internal Medicine, and serves as a primary care physician at the Phyllis Jen Center for Primary Care at BWH. He is also a Patent Attorney and member of the New York State Bar.

Aaron has received wide recognition for his work, which frequently appears in top peer-reviewed medical journals like the New England Journal of Medicine, JAMA, and Annals of Internal Medicine. In 2012, he was named to the Perspectives Advisory Board of the New England Journal of Medicine. Aaron has testified before Congress on pharmaceutical policymedical device regulation, and modernizing clinical trials, and served as a consultant for the NIHFDAInstitute of MedicineUSPTO, and numerous state government offices.  In 2010, he received AcademyHealth’s Alice S. Hersh New Investigator Award from AcademyHealth, given annually to an outstanding health services researcher under age 40 in the US.

Aaron also serves as a faculty affiliate for the Petrie-Flom Center for Health Law Policy, Biotechnology, and Bioethics at Harvard Law School, and is a Research Associate in the Department of Health Policy and Management at the Harvard School of Public Health.  In the 2014-2015 academic year, he will be a Visiting Associate Professor of Law at Yale Law School, where he will teach Food and Drug Administration Law.

Welcome, Aaron!

Protect Those Who Protect Our Food

Check out a new op-ed by our friends, Jacob E. Gersen and Benjamin I. Sachs at Harvard Law School!

CAMBRIDGE, Mass. — EVERY year, 5.5 million people are sickened by norovirus, a highly contagious gastrointestinal bug. According to the Centers for Disease Control and Prevention, norovirus is the leading cause of food-borne illness in the United States and is spread primarily by “infected food workers.” Last year cooks, waiters and other workers were involved in about 70 percent of the outbreaks.

This is just one example of the critical role that food workers play in our nation’s economic and public health systems. And yet, while we often tailor employment rules for work that has a special impact on the public, the law has yet to recognize food workers as a distinct class — an approach that harms consumers, the economy and the workers themselves.

Sick restaurant workers provide a particularly vivid example of the kind of legal reform that’s needed. Until recently, very few restaurant workers had the legal right to paid sick time, which meant that many of them went to work very ill (last week voters in Massachusetts and three cities passed paid-sick-leave laws). Federal law can fix this problem by requiring employers to provide their workers with paid time off. [...]

To read the full op-ed, please click here.

Tomorrow: Law and Ethics of Non-Invasive Prenatal Testing

DNA_3helixesThe Law and Ethics of Non-Invasive Prenatal Testing

November 6, 2014 12:00 PM

Harvard Law School
Wasserstein Hall, Room 3018
Cambridge, MA 02138 [Map]

See the list of panelists here.

The Petrie-Flom Center will host a discussion of the issues surrounding noninvasive prenatal testing (NIPT), a screening method for detecting certain specific chromosomal abnormalities, as well as sex, in utero.  NIPT may help mothers avoid other tests that could put their pregnancies at risk, but the ability to detect substantial information about a developing fetus with such ease raises a wide range of important ethical and legal issues.  Our discussion will cover background on the technology, what makes NIPT unique, issues with global dissemination, eugenics concerns and legislative responses.

This event is supported by the Oswald DeN. Cammann Fund.

Upcoming Event: “Patients with Passports” Book Launch

Cohen_Medical_TourismBook Launch: Patients with Passports: Medical Tourism, Law, and Ethics

Wednesday, November 19, 2014

Harvard Law School Library
Langdell Hall, Caspersen Room
1557 Massachsetts Ave., Cambridge, MA [Map]

This event is free and open to the public. A light lunch will be served.

I. Glenn Cohen‘s new book Patients with Passports: Medical Tourism, Law, and Ethics  (Oxford University Press, 2014) is the first comprehensive legal and ethical analysis of medical tourism. Examining both the legal and ethical issues raised by medical tourism and how the two interact, it provides the best currently available data and explanations of the industry and tackles the most prevalent legal and ethical issues facing medical tourism today.

Co-sponsored by the Harvard Law School Library.

Tomorrow: Global Reproduction

pregnant_bellyGlobal Reproduction: Health, Law, and Human Rights in Surrogacy and Egg Donation
November 5, 2014, 5:00 PM – 7:00 PM
Wasserstein Hall, Room 1010, Harvard Law School

Please join us for a screening of the documentary Can We See the Baby Bump, Please?, followed by a panel discussion of the legal and human rights issues surrounding surrogacy and egg donation in a global context.

The film screening will begin at 5PM; the panel discussion will begin at 6PM.  Feel free to join for one or both segments. The panelists are:

We encourage attendees to read Risk Disclosure and the Recruitment of Oocyte Donors: Are Advertisers Telling the Full Story? prior to the event.

Co-sponsored by Our Bodies, Ourselves and the South Asia Institute at Harvard University, with support by the Oswald DeN. Cammann Fund.

Call for Abstracts: 2015 Petrie-Flom Annual Conference – Law, Religion, and American Health Care

SCOTUSfrontThe Petrie-Flom Center invites abstracts for its 2015 Annual Conference: “Law, Religion, and American Health Care.” The conference will be held at Harvard Law School on May 8 and 9, 2014.

This conference, and anticipated edited volume, will aim to: (1) identify the various ways in which law intersects with religion and health care in the United States; (2) understand the role of law in creating or mediating conflict between religion and health care; and (3) explore potential legal solutions to allow religion and health care to simultaneously flourish in a culturally diverse nation.

For a full conference description, including the call for abstracts and registration information, please visit our website.

Abstracts are due by December 1, 2014. The conference seeks to address the following topics. Please note that this list is not meant to be exhaustive; we hope to receive papers related to the conference’s general theme, but not specifically listed here:  Continue reading

The Medical Liability Climate: The Calm Between Storms Is the Time For Reforms

By: Michelle Mello, JD, PhD
Stanford Law School and Stanford University School of Medicine

On November 4, Californians will vote on Proposition 46, a ballot initiative to adjust the $250,000 state’s noneconomic damages cap in medical malpractice cases for inflation, raising it to $1.1 million virtually overnight.  It’s a long overdue move – California has one of the most stringent damages caps in the country, and the cap really affects access to the legal system.  Now is the perfect time to do it, because after years of turbulence, the medical liability environment has calmed.

In an analysis published October 30 in the Journal of the American Medical Association (JAMA), David Studdert, Allen Kachalia and I report that data from the National Practitioner Data Bank show that the frequency and average cost of paid malpractice claims have been declining.  The rate of paid claims against physicians decreased from 18.6 to 9.9 paid claims per 1,000 physicians between 2002 and 2013, with an estimated annual average decrease of 6.3% for MDs and a 5.3% decrease for DOs. Among claims that resulted in some payment, the median amount paid increased from $133,799 in 1994 to $218,400 in 2007, an average annual increase of 5%. Since 2007 the median payment has declined, reaching $195,000 in 2013, an average annual decrease of 1.1%.

Trends in insurance premiums vary more according to which market you’re looking at, according to data from the Medical Liability Monitor’s Annual Rate Survey, but also look pretty favorable overall. None of the locations we examined showed large increases over the last 10 years, and most showed flat or declining premiums.  Continue reading