Timothy Moore Anticipates Increase in Sunshine Act Enforcement

Shook, Hardy & Bacon Pharmaceutical and Medical Device Associate Timothy Moore has authored an article on the Centers for Medicare and Medicaid Services' (CMS') lack of Sunshine Act enforcement for the February 2016 edition of Life Science Compliance Update. Under the Sunshine Act, CMS has broad authority to impose civil monetary penalties (CMPs) if applicable group purchasing organizations (AGPOs) and applicable manufacturers (AMs) fail to report CMS "ownership or investment interests a U.S.-licensed physician or that physician’s immediate family held in them during the previous year." In addition, the Sunshine Act requires AMs or report "payments or other transfers of value it made indirectly or directly to a 'covered recipient,' which is a U.S.-licensed physician or teaching hospital."

Titled "Parting the Clouds - Some Thoughts on Why CMS Has Not Imposed Civil Monetary Penalties for Sunshine Act Violations," the article suggests that early enforcement actions would have "stymied CMS’s efforts to create a regulatory scheme where AMs, AGPOs, and covered recipients resolve disputes between themselves." Moore warns, however, that CMS is likely to step up CMPs, which can range between $1,000 and $10,000 for each payment, transfer or investment that is reported late or inaccurately, or between $10,000 and $100,000 for each transaction that is knowingly reported late or that goes unreported: 


We can expect CMS to begin enforcement actions soon. Sunshine Act reporting is no longer new: AMs, AGPOs, and covered recipients have two years of experience. Many successful dispute resolutions show that stakeholders are comfortable with the dispute resolution process, and resolutions will become easier with upcoming system enhancements.

Furthermore, in its 2015 report to Congress on Sunshine Act reporting, CMS explained that it had already begun “an effort to increase submission compliance of specific entities that did not submit data.” Thus, AMs and AGPOs (which include physician-owned distributorships, another top target for government enforcement efforts) that have not reported Sunshine Act data can expect to be in CMS’s enforcement crosshairs.