Cannabis: Investing in One of the Fastest “Growing” Segments of the Life Sciences Industry

Duane Morris partners Seth Goldberg and David Feldman, members of Duane Morris’ Cannabis Law Practice Group, were panelists for an ACG webinar, “Cannabis: Investing in One of the Fastest “Growing” Segments of the Life Sciences Industry” on May 9, 2017. You may view the webinar below.

Research Misconduct False Claims Act Lawsuit Upheld

A North Carolina federal judge Tuesday refused to dismiss a False Claims Act lawsuit claiming a University and some of its faculty knowingly falsified medical research data in order to get federal grants, saying that the whistleblower had adequately stated his case.

In a three-page order, U.S. District Judge Catherine C. Eagles denied dismissal motions by the University and individual defendants. The judge did not elaborate on her decision beyond saying that plaintiff had brought claims upon which relief could be granted.

At the time the alleged events occurred, the plaintiff was a laboratory research analyst in the Pulmonary, Asthma and Critical Care Division of the Health Systems. One of the defendants was a clinical research coordinator in that same division and is charged with directly manipulating the research in question, while another defendant, a research professor of medicine, was a direct supervisor.

This case is just one of the recent research misconduct cases initiated by whistleblowers, with false claims act implications. Researchers have exposure for alleged research misconduct from multiple sources. The consequences of a research misconduct allegation can be devastating to the individual researcher, as well as the sponsoring institution. Findings of research misconduct can result in exclusion from grants, termination of employment, and possible civil and criminal penalties.

David Feldman

West Virginia Joins Legal Cannabis List

Last week WV Governor Jim Justice (great name) signed into law a bill passed by the state legislature to permit the production and sale of medical marijuana in the state. This makes West Virginia the 29th US state to legalize medical marijuana. It is also one of the few states acting through legislation rather than requiring approval of the voters in a referendum.

It does seem that the legalization train is very much out of the station and it appears only a matter of time before most, if not all states permit at least medical marijuana. There is more and more evidence of the potentially wide range of help for illnesses and maladies well beyond simply helping chemotherapy patients reduce nausea. For example, earlier this year a case was studied seeming to indicate that cannabis extract can be used to treat serious wounds.

Our President and his spokesman both have indicated their support of legalizing medical marijuana. In the meantime, we continue to carefully monitor the interplay between the state and federal regimes.

The Best of MPM

The Journal of Medical Practice Management (Journal) recently published a collection of favorite articles from the Journal. My article, Purchasing Technology: A Few Things to Consider, co-written with the Rebecca Dean, CEO of a physician practice client, was selected for inclusion in the Journal’s powerhouse articles collection. Copies of the article are available from the Journal. A critical take away from the article is to make sure that the technology you are purchasing will do what you need it to do. Get representations and warranties in writing. Do not accept verbal promises.


A new OIG CMP rule effective January 6, 2017 clarifies the liability guidelines for EMTALA violations. The rule affirmed that willful conduct by a provider is not required for the OIG to impose penalties for EMTALA violations and revised the definition of  “responsible physician” to clarify that on-call physicians at hospitals with specialized capabilities are considered responsible physicians subject to EMTALA. 

The new rule removes “intent to leave” as a mitigating factor, adds “corrective action” as a mitigating factor and adds “risk of patient harm” as an aggravating factor. Because alleged EMTALA violations increasingly include allegations against the hospital and the responsible physician, a potential conflict of interest exists between the hospital and the responsible physician, due to the temptation to divert blame by pointing fingers.  The hospital and the responsible physician should have separate legal counsel.  For physicians, EMTALA violation findings can become medical license disciplinary actions.




New Purchased/Referral Care (PRC)  regulations give the Indian Health Service (I) , Tribal  Organizations (T) and Urban Indian Organizations (U) the ability to cap payment rates at a “Medicare-like rate” to physicians and other non-hospital provides and suppliers.  PRC covered services include outpatient care, physicians, laboratory, dialysis, radiology, pharmacy and transportation services.  The effective date of the regulations was May 20, 2016, with an implementation date of no later than March 21, 2017. In the absence of a contract or agreement with I/T/U for a different rate, the PRC “Medicare-like rate” applies when a Provider accepts a referral or request for services, accepts a purchase order for services, or files a claim for payment for an I/T/U patient.   Under the coordination of benefits provisions, PRC is a residual resource and pays after all other resources have considered the claim. Federal law prohibits the provider from billing the I/T/U  patient for authorized care.






Cherokee Nation Sues Drug Wholesalers and Retailers for Opioid Abuse

On April 20. 2017, the Cherokee Nation filed suit in the District Court of the Cherokee Nation alleging that certain wholesale drug distributors and pharmacies have caused the citizens of the Cherokee Nation to become addicted to opioid drugs and that the defendants could and should have taken steps to prevent the opioid epidemic. The complaint states that the defendants created an environment in which drug diversion can flourish causing damages to the Cherokee Nation; including the cost of medical care, counseling and rehabilitation services, child welfare, law enforcement and public safety, and lost productivity of Cherokee Nation citizens and businesses. The Cherokee Nation is asking the Cherokee Court to award injunctive relief, compensatory damages, statutory damages, punitive damages and attorneys’ fees. The Complaint states that the District Court of the Cherokee Nation has jurisdiction because the defendant distributors conduct business with the Cherokee Nation and the defendant pharmacies fill prescriptions for Cherokee Nation citizens and hire Cherokee Nation citizens.

This case raises a number of interesting issues regarding the duties of pharmacies to ensure that they dispense only those prescriptions that are based on legitimate medical need. This is a case to watch.