Hit the Ground Running: How to be a Healthcare Lawyer

Today’s speakers Sean McKenna Shareholder, Greenberg Traurig, LLP (Dallas, Texas) Sarah Frazier Partner, Berg & Androphy (Houston, Texas) Jessica Parker-Battle Compliance Officer, Biogen (Weston, Massachusetts)

OUTLINE Role of Compliance and Legal Partners in a Company Analyzing Proposed Transactions for Fraud & Abuse Concerns Data Breaches & HIPAA Concerns Repayment and Disclosure The Enforcement Landscape – Civil and Criminal Statutory considerations Concluding thoughts

Hypothetical You are outside counsel for a jointly-owned medical practice and toxicology lab with no GC The physician customers for the lab have patients with a mix of Medicare, Medicare Advantage, Medicaid, and commercial insurance A manager for the lab, responsible for marketing, reports concern regarding: Salespeople violating HIPAA with customers Inducements to customers Medically unnecessary testing Physician investors in the lab profiting from self-referrals

Role of Compliance and Legal Partners at a Company

7 Elements of an Effective Compliance Program Oversight & Governance Risk Assessment & Issue Identification Written Standards Training & Communication Monitoring & Auditing Response & Corrective Actions Culture of Integrity

DOJ Issues New Corporate Compliance Guidelines Analysis and Remediation of Underlying Conduct Senior and Middle Management Compliance Autonomy and Resources Policies and Procedures Risk Assessment Training and Communication Confidential Reporting and Investigations

DOJ Issues New Corporate Compliance Guidelines Incentives and Disciplinary Measures Continuous Improvement, Periodic Testing, and Review 3rd Party Management Mergers and Acquisitions Reference: “Evaluation of Corporate Compliance Programs,” U.S. Department of Justice, Criminal Division, Fraud Section, available at https://www.justice.gov/criminal-fraud/page/file/937501/download. OIG Compliance Guidance: https://oig.hhs.gov/compliance/compliance- guidance/

Analyzing Proposed Transactions for Fraud and Abuse Concerns

Data Breaches and HIPAA Considerations Consent

Repayment and Disclosures First, Fix Any Problems to Reduce Exposure CMS Final Rule 60 Day deadline to repay known Medicare and Medicaid overpayments Failure to repay is a FCA and/or potential criminal violation! Disclosure to Payors Disclosure to DOJ HHS-OIG Self-Disclosure Protocol CMS Voluntary Self-Referral Disclosure Protocol

The Enforcement Landscape Big budget for enforcement - $672 million for Health Care Fraud and Abuse Program DOJ Recovery in 2016 Total $4.7 billion (up from $3.8 billion in 2015). $2.5 billion paid from healthcare industry. $2.9 billion from whistleblower cases. Whistleblowers received a record $519 million.

Enforcement Outlook in 2017 Federal and State Budget Shortfalls State and Federal Scrutiny of Arrangements Increasing Repeal and Replace ACA? Greater Enforcement Actions By U.S. Attorneys, DOJ, States, and OIG-HHS Investment and Use of Data Analytics Will Continue to Drive Enforcement Increased Focus on Individual Actors by DOJ and HHS-OIG

Company and Officer Conflicts Under the Yates Memo On September 9, 2015, Deputy DOJ AG, Sally Yates issued a memo encouraging prosecutors to focus on individual actors, not just legal entities. The memo also provided guidelines for all investigations of corporate wrongdoing.

Internal Investigations at a Company

Parallel Investigations Knowing who and what you are facing Determining if investigation is criminal, civil, administrative, and/or multi-state Practices to address government’s concerns Licensing and private liability

Whistleblowers Prevention Handling Misconduct Privilege Trade Secrets Litigation

Federal Enforcement Agencies United States Department of Justice (DOJ) Commitment to prosecute healthcare fraud Criminal/Civil/Antitrust Divisions Consumer Protection Branch Healthcare fraud coordinators within 94 United States Attorneys' Offices Federal Bureau of Investigation Drug Enforcement Agency Partnerships with private payors Distinct funding sources Federal actions have collateral consequences

Government Investigations Sources Whistleblowers Competitors Government reports Payor audits Media Patient and Family Complaints Common Risk Areas Lack of compliance with exceptions and safe harbors Fair Market Value (FMV) Commercial reasonableness Overutilization

Statutory Considerations

Common Healthcare Enforcement Statutes Title 18 U.S.C. Healthcare, wire, and mail fraud Commercial Bribery Anti-Kickback Statute (AKS) Stark Law False Claims Act (FCA) Whistleblowers under Qui tam provisions Civil Monetary Penalties Law Each State May Have Own Version And limit certain physician ownership

Statutory Considerations: Anti-Kickback Statute (AKS) Prohibits knowingly and willfully soliciting or receiving, offering or paying: Any remuneration directly or indirectly, overtly or covertly, in cash or kind; To induce or reward the referral, purchase, order, lease, or recommendation of; or Any item or service that may be paid for under the federal healthcare program. Severe Penalties $25,000 per violation Up to 5 years imprisonment Exclusion Statutory and Regulatory Safe Harbors Certain types of payments OIG identified business and financial practices

Statutory Considerations: Stark Law “If a physician (or an immediate family member of such physician) has a financial relationship with an entity…then the physician may not make a referral to the entity for the furnishing of designated health services for which payment otherwise may be made under Medicare.” Exceptions Ownership/Investment interests (42 C.F.R. § 411.356) For compensation arrangements (42 C.F.R. § 411.357) For certain “services” (42 C.F.R. § 411.355) Penalties Automatic overpayment or disallowance Knowing violation can result in CMP liability of up to $15k per violation plus treble damages and/or $100k per circumvention scheme Exclusion from healthcare programs

Statutory Considerations: False Claims Act, Escobar, and State Equivalents Civil (31 U.S.C. § 3729) Either USAG or a relator (whistleblower) may bring FCA cases Qui tam provisions filed under seal DOJ has 60 days to intervene Awards relator 15-30% recovery + attorneys fees 6 year SOL and 3 year tolling provision 29 states and D.C. have adopted a statute equivalent to FCA Remedies: Mandatory treble damages and civil monetary penalties between $10,781 and $21, 563 per false claim Criminal

Stark Law vs. Anti-Kickback Statute (AKS) Civil v. Criminal v. Administrative Strict Liability v. Criminal Intent Exceptions v. Safe Harbors What must be satisfied? Which Applies? Hospital renting x-ray at physician’s office Group practice

Types of False Claims Act Cases – Health Care Fraudulent Billing Anti-Kickback Statute Violations & Stark schemes – physician salaries, discounted office space, etc. Pricing fraud - “Best Price” AWP fraud, best value, 340(b) diversion “Off-Label” marketing Switching schemes Hospice – ineligibility Nursing home worthless services Nursing home inflation of RUG scores/medically unnecessary Unnecessary lab testing – especially urine testing for opioids Manufacturing standards Other medical necessity claims Ambulance DME rentals Home health

Changing Political Makeup and the Potential Effect on False Claims and Anti-Kickback A new administration could ease Yates policy and other agencies could follow lessening individual liability Change in Supreme Court Could weaken interpretation of Escobar and what is “material” to a false claim 100 vacancies for federal judges

Changing Political Makeup and the Potential Effect on False Claims and Anti-Kickback (Continued) Congress recently passed repeal of ACA, but outcome on FCA remains uncertain Public Disclosure Bar Removed express reference to jurisdictional nature of public disclosure bar Gave government the ability to object to dismissal due to the public disclosure bar Narrowed categories of what constitutes as “public” disclosure Repeal could expand the protections of this defense Provided relator with a lower standard to qualify as an “original source”

Changing Political Makeup and the Potential Effect on False Claims and Anti-Kickback (Continued) Congress recently passed repeal of ACA, but outcome on FCA remains uncertain 60-Day Rule: A person who has received an overpayment must report and return such overpayment within 60 days after overpayment was identified Repeal could cause confusion over timing and what qualifies as “overpayment” Provided violation of Anti-Kickback constitutes a false claim Repeal could weaken government’s implied certification argument

HHS Inspector General Policy on Exclusion Rule Statute of Limitations: Exclusions will only apply to misconduct from the past 6 years (proposed 10-years) Early Reinstatement Process Audit Obstruction Mitigating Factor for Exclusions Aggravating Factor Threshold Now $50,000 in certain circumstances

Statutory Considerations: Dodd Frank Dodd-Frank Wall Street Reform and Consumer Protection Act, was signed into law July 21, 2010 Dodd-Frank established a bounty for reports, 15 U.S.C. § 78u-6(b)(1), whereby whistleblowers can receive 10-30% of the monetary sanctions over $1,000,000 collected based on the original information provided by the whistleblower. Section 15 U.S.C. § 78u-6(a)(6) of the Dodd-Frank Act defines "whistleblower" as "any individual who provides, or 2 or more individuals acting jointly who provide, information relating to a violation of the securities laws to the Commission [SEC], in a manner established, by rule or regulation, by the Commission [SEC]."

Statutory Considerations: Foreign Corrupt Practices Act Key elements of an anti-bribery violation: Offer, promise, or payment of anything of value; To a Foreign Official; With corrupt intent; and To assist in obtaining or retaining business or directing business to any person or obtaining any improper business advantage.

Concluding Thoughts

CONTACT INFORMATION Sean McKenna mckennas@gtlaw.com 214.665.3617 Sarah Frazier sfrazier@bafirm.com 713.529.5622 Jessica Parker-Battle jessica.parkerbattle@biogen.com 781.464.5290