For The Defense, February 2012 - DRI Today

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Government Enforcement and Corporate Compliance In Search of a More Flexible Approach Uneven Practices in False Claims Act Settlements By Aaron M. Danzig How the OIG insists on onerous settlement terms and fails to consider its own guidance. In many cases, an accusation of misconduct under the False Claims Act (FCA) is a debilitating blow to a health care provider whether or not the provider actually violated the law. At best, an accusation will harm a provider’s reputation and generate significant legal fees. At worst, the government will exclude a provider from participating in federally funded health care programs, and depending on how much the provider relies on those programs, the provider potentially can lose its entire livelihood. For these reasons, many companies targeted by the U.S. Department of Justice (DOJ) and the U.S. Department of Health and Human Services Office of Inspector General (OIG) feel pressured to consent to settlement agreements rather than risk trials. Such settlement almost always includes a corporate integrity agreement (CIA) requiring a company to undertake onerous, expensive monitoring. A CIA generally requires a company to hire an independent monitor to ensure compliance over a period of time and to foot the bill. In rare instances, the OIG will agree to a certification of compliance agreement (CCA) in lieu of a CIA, which is generally less comprehensive, intrusive, and expensive. This article explores the OIG’s tendency to impose CIAs routinely on companies in FCA settlements and argues that the OIG should more flexibly consider other options including CCAs and settlements that don’t include specific compliance agreements at all. Most False Claims Act Cases Settle The FCA prohibits corporations from submitting false claims for reimbursement of services to the Medicare or the Medicaid programs. 31 U.S.C. §3729 (2010). The FCA includes a citizen lawsuit provision that allows whistleblowers to bring false claims allegations to the government’s attention; the government may choose to intervene or let the whistleblower continue with his or her lawsuit individually. 31 U.S.C. §3730 (2010). The government also may choose to dismiss a lawsuit altogether. 31 U.S.C. §3730(c)(2)(A). However, the government has little incentive to do that, so it rarely happens. Sharon Finegan, The False Claims Act and Corporate Criminal Liability: Qui Tam Actions, Corporate Integrity Agree- ■ Aaron M. Danzig is a partner in Arnall Golden Gregory LLP’s Litigation Group. From the firm’s Atlanta office, he chairs the Government Investigations and Special Matters Practice Team. His practice focuses on white collar criminal defense, internal corporate investigations, corporate compliance and governance matters, and business and intellectual property litigation. He is a member of DRI and its Government Enforcement and Corporate Compliance Committee. 54 ■ For The Defense ■ February 2012
ments and the Overlap of Criminal and Civil Law, 111 Penn. St. L. Rev. 625, 645 (2007). The OIG will often work with the civil division of a U.S. attorney’s office in response to a whistleblower lawsuit alleging Medicare or Medicaid fraud, launching an investigation and initiating civil settlement negotiations without referring the case to the DOJ for criminal prosecution. See Finegan, supra, at 646, 656–57; A Perspective on Fraud, Waste, and Abuse Within the Medicare and Medicaid Programs: Hearing Before the Subcomm. on Health Care, District of Columbia, Census and the National Archives, H. Comm. on Oversight and Government Reform, 112th Cong. 6 (2011) (testimony of Gerald T. Roy, Deputy Inspector General for Investigations, Office of Inspector General, U.S. Dep’t of Health and Human Serv.). The OIG and the U.S. attorney’s office can then negotiate settlement terms, including payment of often significant amounts of money and a CIA that requires a company to have an independent monitor for long-term followup, freeing up court and agency dockets while sending a message to both the public and the corporation under scrutiny that the government will not tolerate further noncompliance. See Vincent L. DiCianni, New Principles Can Help Advance Independent Corporate Monitoring 3, Am. Health Lawyers Ass’n Health Lawyers Weekly, July 18, 2008. From the OIG’s point of view, these settlements are economic and efficient vehicles for generating goodwill among the public, which has become rather disenchanted with corporate behavior in recent years. Some commentators believe that the government’s increased use of independent monitors in recent years is directly correlated to the desire to alleviate public concerns about corporate behavior. See, e.g., DiCianni, supra, at 3. Meanwhile, a company may acquiesce to the government’s settlement demand— with limited pushback—because it has little bargaining power once accused of an FCA violation. Amendments to the FCA over the years have made it much easier for claimants to prevail and thus much riskier from a provider’s standpoint. In 1986, when Congress added the whistleblower provision to the FCA, it lowered the FCA’s intent requirement so that the government or a whistleblower no longer needs to prove that a corporation had specific intent to falsify claims; liability exists if the corporation had “reckless or deliberate ignorance of the truth or falsity” of the claim or claims at issue. 31 U.S.C. §3729 (b)(1); Finegan, supra, at 644.Further, Congress lowered the evidentiary burden for proving a violation from a “clear and convincing” standard to the less stringent “preponderance of the evidence” standard. Finegan, supra, at 644. Additional amendments in 2009 expanded potential liability even further by eliminating language suggesting that a false claim must be submitted directly to a federal employee and by expanding the offense of “reverse” false claims to cover not only submitting false claims but also knowingly retaining overpayments. Cong. Research Serv., Qui Tam: The False Claims Act and Related Federal Statutes 9 (2009). A provider faced with allegations that it violated the FCA often will choose to settle as a form of damage control. Even if a provider believes that the case against it is weak, the risks associated with a trial are so great that it may feel coerced into settling. A trial loss can yield severe sanctions, including a civil penalty of up to $11,500 per claim plus treble damages.31 U.S.C. §3729(a)(1).In addition, the OIG has authority to exclude providers found liable under the FCA from participating in federal healthcare programs. 42 U.S.C. §1320a-7. Losing reimbursements from those programs may jeopardize a provider’s very existence. Finegan, supra, at 651. Furthermore, a trial win may not truly be a win. Though that scenario doesn’t involve exclusion from Medicare and Medicaid, the provider will have had to pay for its defense and also may have suffered enough reputational harm to outweigh the settlement cost. Finegan, supra, at 646.In the end, a company’s reputation could suffer so much that the harmful consequences could threaten the company’s livelihood as much as exclusion would have. So ultimately, this skewed balance of power and the high risk for a health care provider means that more cases settle, relieving the government of its obligation to meet its burden of proof. Specific Settlement Terms— Choosing a CIA Over a CCA CIAs are practically automatic in the FCA A company may acquiesce to the government’s settlement demand— with limited pushback— because it has little bargaining power once accused of an FCA violation. settlements that the OIG orchestrates. Open Letter to Health Care Providers from Janet Rehnquist, Inspector General, Office of Inspector General, U.S. Dep’t of Health and Human Serv. (Nov. 20, 2001); see also Finegan, supra, at 658 (“CIAs are the rule, rather than the exception, in health care settlement agreements.”).In each CIA the OIG will stipulate certain compliance measures that it wants a provider to take and promises that if a provider meets those terms it will not seek to exclude the provider from participating in Medicare or Medicaid. Corporate Integrity Agreement FAQ, Office of the Inspector General, U.S. Dep’t of Health and Human Serv. website. These agreements typically last five years and tend to incorporate more stringent standards than the law requires. Roy, supra, at 6; Finegan, supra, at 655.Each agreement is tailored “to address the deficiencies of the particular organization.” Roy, supra, at 6. However, certain core directives generally show up in most, if not all, CIAs: (1) hire a compliance officer, appoint a compliance committee, or both; (2) develop written standards and policies; (3) implement a comprehensive employee training program; (4) retain an independent review organization to conduct periodic reviews; (5) establish a confidential disclosure program; (6) restrict employment of ineligible persons; (7) report overpayments, reportable events ongoing investigations, and legal proceedings; and (8) provide an implementation report and annual reports to the OIG on the status of all compliance activities. Corporate Integrity Agreement For The Defense ■ February 2012 ■ 55
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