Fraud and Abuse:2016 Mid-Year Review

Brian Bewley, Esq.bbewley@polsinelli.com

Kelly Schulz, Esq.kschulz@polsinelli.com

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Agenda

Enforcement Trends and Statistics

Interesting Settlements

Noteworthy Court Decisions

Other Noteworthy Developments

Predictions

2016 YTD Statistics

Government recovered $2.7 billion inimproper payments from federal healthcareprograms in first half of 2016

– $554.7 million from audits

– $2.22 billion from investigations

Recoveries up over $1 billion from first halfof 2015

Enforcement Trends

June 22, 2016 Take Down—Largest in History

– Nationwide sweep led by the Medicare FraudStrike Force in 36 federal districts resulting incriminal and civil charges against 301 individuals,including 61 doctors, nurses and other licensedmedical professionals

Focus on Individual Responsibility

Focus on Medical Necessity (Skilled NursingFacilities, hospice)

Settlement Trends

Kickback cases– Continuing to see cases involving kickbacks, particularly in

context of speaker engagements– Also charges brought against individuals, including physician, for

accepting bribes in exchange for referrals

Ambulance Companies– Multiple cases of ambulance companies settling allegations of

submitting ambulance transportation claims not meetingMedicare requirements for emergency transport

– Twelve OIG Civil Monetary Cases 2015-2016 resulting inrecoveries over $1.9 million

Laboratories– Enforcement activities involving test referrals

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Settlement Trends, Cont.

Patient Dumping Cases– University of Mississippi and Floyd Medical Center both

entered into settlements for failing to accept and/ortreat patients transferred from another hospital underthe Emergency Medical Treatment and Labor Act.

Employment of Excluded Individuals– CardioSpecialists Group, Ltd paid $274,721 to OIG to

resolve allegations that CSG employed an excludedindividual as a medical biller.

– Cascadia Behavioral Health, Inc. settlement allegationsfor $92,052

Interesting Settlements

Salix Pharmaceuticals– $54 million settlement in a civil fraud lawsuit against

Salix, specialty pharmaceutical company. Allegationsinvolved illegal kickbacks to doctors through “speakerprograms” to induce them to prescribed Salix products

21st Century Oncology– National chain of cancer clinics agreed to pay $35

million to end a False Claims Act suit alleging fraudulentbilling for unreliable radiation measurements.

Implantation of Cardiac Devices– 51 hospitals, 15 states, more than $23 million, to resolve

allegations related to implantation of cardiac devices inviolation of Medicare coverage requirements

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Interesting Settlements, Cont.

Respironics

– Respironics agreed to pay $34.8 million to resolveFCA allegations it paid kickbacks in the form of freecall center services to DME suppliers that bought itsmasks for patients with sleep apnea.

Olympus

– $623.2 million settlement resolving criminal and civilclaims related to kickback scheme, settling claimsunder FCA and Foreign Corrupt Practices Act

Interesting Settlements, Cont.

Kindred Care / RehabCare

– agreed to pay $125 million to settle a whistleblowersuit claiming Kindred caused the submission of falseclaims to Medicare for rehabilitation therapy

– Allegation that therapy was either unnecessary ornot provided

Noteworthy Court Decisions

Universal Health Services Inc. v. U.S. ex rel Escobar

June 16, 2016 unanimous Supreme Court decision

Defendant can face False Claims Act liability under animplied certification theory where:

(1) The claim asserts a request for payment and makes specificrepresentations about the goods and services provided; and

(2) failure to disclose noncompliance with material statutory,regulatory, or contractual requirements makes thoserepresentations misleading half-truths.

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Noteworthy Court Decisions

Warner Chilcott

– October 2015: Warner Chilcott Agrees to Plead Guilty toFelony Health Care Fraud Scheme and Pay $125 Millionto Resolve Criminal Liability and False Claims ActAllegations

– Proceedings against district managers and formerpresident for participating in kickback scheme of bribingdoctors through meals and speaking fees followed

– June 2016: Federal Jury acquitted the former President

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Noteworthy Court Decisions

U.S. v. AseraCare– Government alleged AseraCare knowingly billed for hospice

services for patients who were not eligible for hospice

– District Court for the N. District of Alabama threw out juryverdict for government, ordering new trial on basis of juryinstructions into falsity requirement under the False ClaimsAct, stating: “[A] mere difference of opinions amongphysicians, without more, is insufficient to show falsity.”

– March 2016 Court granted summary judgment to AseraCare,finding government offered no evidence beyond its ownexpert’s opinion

– Government has filed a notice of appeal

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Noteworthy Court Decisions

Vista Hospice—Summary Judgment– Relator, former social worker at Vista Hospice facilities,

alleged corporate scheme to admit Medicarebeneficiaries before they were eligible

– Relator relied on (1) expert testimony that physician’sincorrectly certified eligibility; and (2) corporate policiesdesigned to incentivize improper admissions

– District Court granted summary judgment to VistaHospice on June 20, 2016 on all but retaliation claims:

• Extrapolation of evidence not enough to proveliability

• Expert disagreement not enough to prove violation ofFCA

Noteworthy court Decisions

Caring Hearts Personal Home Service Inc. v. Burwell

– CMS attempted to apply regulations on medicalnecessity adopted in 2010 to support itsdisallowance of services rendered on or beforeJan. 31, 2009

– Caring Hearts challenged overpaymentdetermination through administrative review, toDistrict Court, and appealed to Tenth Circuit

– Tenth Circuit vacated and remanded, finding2010 regulations not applicable

The Yates Memo

September 2015 Memo by Deputy Attorney General SallyYates outlining six steps prosecutors are required to takewhen investigating a company to ascertain whether thereare responsible individuals who also should be charged.

Implementation:

– Coordination between Civil and Criminal DOJ attorneys,focusing on individuals from inception

– DOJ not releasing culpable individuals from civil orcriminal liability when resolving a matter with acorporation

OIG Criteria for Exclusion

April 2016: Released new criteria, replacing criteria from1997

Expectation that providers implement robust complianceprograms

Start with presumption of exclusion, and then assessedalong risk spectrum:

– (1) nature and circumstances of conduct

– (2) conduct during government investigation

– (3) significant ameliorative efforts; and

– (4) history of compliance

Other Noteworthy Developments

60 Day Final Rule

– Clarified when a claim is “Identified” for purposes ofstarting the 60-day clock

– Look-back period is 6 years

Increase in penalties under FCA

– Starts Aug. 1, 2016 for violations after Nov. 2, 2015

– Penalties nearly doubling: $10,781 per claim minimumand $21,563 per claim max

11 OIG Advisory Opinions in first half 2016

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Other Noteworthy Developments,Cont.

Elder Abuse Task Force

DOJ Compliance Expert to provide guidance oneffectiveness of corporate compliance programs

CIAs with different terms:

– No training hour requirements

– In addition to claims or transaction review, a complianceeffectiveness review by “Compliance Expert.”

Predictions for Rest of 2016

Watch for more action in AseraCare and casesinvolving medical necessity

Escobar-like cases involving implied certification Continued focus on individuals Types of Providers:

– Therapy companies– Skilled Nursing Facilities– DME– Hospitals– Ambulance / transport– Labs

Questions

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Brian D. Bewley, ShareholderHealth Care Regulatory816.360.4372 | bbewley@polsinelli.com

Kelly E. Schulz, AssociateHealth Care Regulatory816.572.4464 | kschulz@polsinelli.com

Kelly Schulz believes in a practical approach to addressing each client’sbusiness outcomes and objectives in a timely and efficient manner. Sheassists a broad range of health care organizations in criminal and civilinvestigations and regulatory compliance matters, and draws from thisexperience to assist clients with:

• Conducting investigations regarding potential violations of variouscivil, criminal, and administrative laws, including the False Claims Actand the Foreign Corrupt Practices Act

• Responding to government inquiries and subpoenas• Assessing whistleblower allegations• Performing due diligence in connection with corporate transactions

Prior to joining Polsinelli, Kelly practiced laws for over three yearsabroad, and she is easily attuned to the importance of understandingthe nuances of each unique client's needs.

Brian focuses his practice on healthcare fraud and abuse and complianceissues, and routinely represents entities under investigation based onalleged violations of various civil, criminal, and administrative laws,including the False Claims Act (FCA) and OIG’s Civil Monetary Penalties(CMP).

Prior to joining Polsinelli, Brian served as Senior Counsel at OIG-HHS andacted as the Team Leader for the Boston, Miami, Dallas, and SanFrancisco regions. Brian was also appointed by a former United StatesAttorney, now a federal court judge, to act as a Special Assistant U.S.Attorney to handle civil health care fraud matters.

Brian frequently presents on various health care regulatory fraud andabuse issues, acts as Program Chair for the Health Care ComplianceAssociation’s Midwest Region Conference, and serves as a member of theAmerican Health Lawyers Association Advisory Opinion Task Force forthe Fraud and Abuse Practice Group.

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