Retained by Holland & Knight
The Vega team supported Professor David Bradford from University of Georgia and Professor Lou Rossiter from William & Mary in a False Claims Act case in which an institutional long-term care pharmacy was alleged to have engaged in a violation of the Federal Anti-Kickback Statute by "swapping." As part of its allegations, the Qui Tam Relator alleged that the long-term care pharmacy provided Medicare Part A services to nursing homes at below cost in exchange for securing those nursing homes’ Medicare Part D and Medicaid business.
Dr. Rossiter was engaged to analyze and opine on how long-term care pharmacies compete for both Medicare Part A and Part D contracts with skilled-nursing facilities ("SNFs") in a competitive market with extensive regulations and the economic outcomes expected in such an environment. In his expert report, Dr. Rossiter explained that due to the nature of the per diem reimbursement for Medicare Part A services under the Prospective Payment System ("PPS"), SNFs are incentivized by regulations to control costs and act as prudent purchasers of pharmacy services. Dr. Rossiter also explained that, in such a highly competitive market, pharmacies that are faced with uncertainty when signing ex ante contracts with per diem payments, occasionally end up with low or even negative profit margins for Medicare Part A services for certain SNFs and that such profit margins are a natural and expected result as a matter of economics.
Vega also supported Dr. Bradford in rebutting Relator’s damages expert who purported to identify instances of the alleged "swapping" violations by calculating the long-term care pharmacy’s profitability—as measured by its contribution margin—for 175 unique nursing homes. As part of supporting Dr. Bradford, Vega analyzed the pharmacy's extensive database containing drug dispenses, costs, reimbursements, invoices, billings, and other records from the 175 SNFs. Vega also analyzed the pharmacy's profit and loss tables and identified clear mistakes and gaps in Relator's experts handling of the data. With Vega's assistance, Dr. Bradford prepared a report explaining how the purported identification of swapping was unreliable and flawed, both as a conceptual matter of economic principles as well as due to numerous unsupported and unreliable assumptions applied to the data in implementing Relator’s expert’s proposed methodology. Dr. Bradford also provided an analysis that demonstrated that the long-term care pharmacy actively managed its Medicare Part A contracts with the relevant SNFs towards profitability through the use of contractual price resets as well as adjustments to formularies and contract renegotiations.
Vega supported both Dr. Rossiter and Dr. Bradford in preparation of their reports and provision of their deposition testimony. Vega Economics continues to provide support in this case for Daubert and Summary Judgment motions as well as other client requests.
Excerpt of Bradford Report (listing Relator expert's technical errors)