For The Defense, February 2012 - DRI Today

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Government Enforcement and Corporate Compliance 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. FAQ, Office of the Inspector General, U.S. Dep’t of Health and Human Serv. website. On rare occasions, the OIG will settle using a CCA rather than a CIA. The OIG considers a CCA appropriate when a company already has a comprehensive compliance program in place, and the OIG simply wants to require the company to maintain it. Id. Certain compliance obligations in a CCA mirror those found in a CIA, including (1) reporting overpayments, reportable events, and ongoing investigation and legal proceedings to the OIG; and (2) providing annual reports to the OIG regarding the entity’s compliance activities during the term of the CCA. Id. However, CCAs generally last for only three years and do not require audits from independent review organizations. Open Letter to Health Care Providers from Daniel R. Levinson, Inspector General, Office of Inspector General, U.S. Dep’t of Health and Human Serv. (Apr. 24, 2006). In an Open Letter to Health Care Providers dated April 24, 2006, Inspector General Daniel R. Levinson acknowledged that many providers had “independently developed robust and effective compliance programs, which include internal auditing mechanisms.” Id. at 2. As a result, he wrote, “In appropriate cases, we have agreed to reduce the obligation on providers settling health care fraud matters by entering into Certification of Compliance Agreements (CCAs), rather than more extensive CIAs.” Id. The new approach recognized concerns about the financial impact of CIAs on providers that had initially been raised 56 ■ For The Defense ■ February 2012 in a 2001 Open Letter from previous OIG Inspector General Janet Rehnquist that did not mention CCAs explicitly but promised that the OIG “would be exploring ways to increase reliance on providers’ internal audit capabilities.” Rehnquist, supra. Levinson pledged to consider applying a CCA over a CIA based on several factors listed in the 2001 letter, including (1) whether a provider self- disclosed the alleged misconduct; (2) the monetary damage suffered by the federal healthcare programs; (3) whether the case involved successor liability; (4) whether the provider still participated in the federal health care programs or still conducted business that gave rise to the fraudulent conduct; (5) whether the provider could repeat the alleged conduct; (6) the age of the conduct; (7) whether the provider had an effective compliance program and would agree to limited compliance or integrity measures and would annually certify such compliance to the OIG; and (8) other circumstances, as appropriate. The OIG has deemed self- disclosure of violating conduct an “important factor” in the analysis “because detection and prompt disclosure of potential fraud are evidence of an effective compliance program.” Levinson, supra. The OIG cited self- auditing and open disclosure as the primary reason that it allowed a Philadelphia hospital system to operate under a CCA rather than a CIA in a 2008 settlement agreement. The U.S. attorney handling the case “complimented the hospital for disclosing the billing discrepancy found during its own audit” and confirmed that the OIG could evaluate continuing compliance “without the need for a Corporate Integrity Agreement overseen by the Inspector General.” Keith Phucas, Mercy Health System Owes Medicare $7.9M, The Times Herald, Aug. 9, 2010. However, this case appears to be an aberration, or at least an example of the OIG’s insistence on inflating the importance of self- reporting at the expense of the other factors that Levinson had outlined in 2001. An analysis of the settlement agreements posted on the OIG website indicates that the agency may not be making a concerted effort to craft settlement agreements on case-by-case bases: only about 10 percent of the settlements in recent years involved CCAs. The majority involved standard CIAs that generally involved some sort of monitoring requirement. See Corporate Integrity Agreement Documents, Office of Inspector General, U.S. Dep’t of Health and Human Serv. Impact on Providers The CIA requirements are burdensome to the average health care provider in ways that CCA requirements are not, so the OIG’s reflexive tendency to implement CIAs has serious ramifications for the industry. CIAs typically involve an outsider coming in to monitor day-to-day operations within a company. The decisions that this independent monitor makes may not be in the best interest of the corporation and may not align with the interests of management, employees, or shareholders. Finegan, supra, at 662.Yet the company might feel that its position doesn’t allow it to negotiate the scope of the monitor’s decision- making authority or responsibilities within the company because the monitor can report it as noncompliant. Corporations surveyed by the Government Accountability Office (GAO) for a 2009 report raised this concern. The survey focused on FCA prosecution in the criminal context but discussed some of the general characteristics of CIAs in general. See U.S. Gov’t Accountability Office, Corporate Crime: Preliminary Observations on DOJ’s Use and Oversight of Deferred Prosecution and Non- Prosecution Agreements 29 (June 25, 2009). A CIA also affects a company’s costcontrol capabilities. Under a CIA a corporation must pay for however much monitoring the OIG will require. The OIG can dictate the breadth, scope, and frequency of audits, as well the monitoring period duration. Moreover, since a monitor generally has the leeway to prescribe its individual role as it designs and implements a compliance program within a company, a program can become exceptionally involved. A monitor may deem it necessary to attend extra meetings or bring more monitoring staff on board, for example, which means extra hours of work and, therefore, a larger paycheck for the monitor. One company that the GAO surveyed said that its monitor “had a large number of staff assisting him on the engagement, and he and his staff attended more meetings than the company felt was nec-
essary, some of which were unrelated to the monitor responsibilities delineated in the agreement.” As a result, the costs of the monitorship were higher than the company believed that they should have been; but when the company tried to negotiate the number of staff and the amount of work at issue, “the monitor was generally unwilling to make changes.” U.S. Gov’t Accountability Office, Corporate Crime, supra, at 28 (June 2009). Monitors are paid hourly fees, which can range anywhere from $125 to $895. See U.S. Gov’t Accountability Office, Corporate Crime: Prosecutors Adhered to Guidance in Selecting Monitors for Deferred Prosecution Agreements, but DOJ Could Better Communicate its Role in Resolving Conflicts (Nov. 19, 2009). Health care consultants say that it is difficult to estimate how much a monitorship would cost because some CIAs require more extensive reviews or more frequent reports than others, which, in turn, affects the number of hours required to complete them. The GAO surveyed a number of companies involved in CIA settlements in the criminal context and found that the costs for those tended to range from $8,000 to $2.1 million per month. Id. at 15. Total reported costs for monitorships ranged from $200,000 to $38.7 million. Id. at 15, n.25. Onewell- publicized 18-month monitoring contract between Indiana- based medical supply company Zimmer Holdings and former U.S. Attorney General John Ashcroft in 2008 was reportedly valued at between $28 and $52 million. Philip Shenon, Ashcroft Deal Brings Scrutiny in Justice Department, N.Y. Times, Jan. 10, 2008, at A1. CIAs in civil settlements probably involve a similar cost structure. Conclusion The OIG has promised publicly to consider a number of criteria when negotiating settlement agreements in FCA cases. However, it seems to overemphasize self- reporting and ignore other factors such as whether a scrutinized company has already developed a compliance program and implemented it. Especially in the wake of the Patient Protection and Affordable Care Act, which requires Medicare and Medicaid providers to develop internal compliance plans, the OIG should become more amenable to working with existing compliance frameworks under CCAs as opposed to requiring a bottom- up approach that automatically resorts to CIAs and independent monitors, or perhaps to settling without requiring compliance agreements at all. A more flexible approach by the OIG would prove more faithful to the criteria that it has announced and would ultimately be more appropriate, just, and effective in the health care marketplace. The Most Timesaving, Cost-Effective Source For The Best Experts Expert referrals in virtually all fields, including unique specialties Most referrals made within 24 hours Independent Consulting and Testifying Experts for any stage of your case Flexibility for budgets of all sizes Expert-led webinars and case-relevant articles on www.TASAnet.com Challenge History Report TM 2.0 reveals challenges to expert testimony, enhancing your case strategy. Exclusively from TASA. Technical Advisory Service for Attorneys 800-523-2319 experts@tasanet.com www.TASAnet.com For The Defense ■ February 2012 ■ 57
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