DEVELOPING A PROMOTIONAL COMPLIANCE PROGRAMDarshan Kulkarni

Pharm.D, MS, Esq.

Kulkarni Law Firm

Kulkarni Law Firm * conformlaw.com* @FDALawyers 1

Who Am I - Education

Kulkarni Law Firm * conformlaw.com* @FDALawyers2

Darshan

Pharm.D

JDQA/RA

How many people work in: Healthcare?

Life Sciences?

Others

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Audience

How many people work in:ComplianceLegalClinical TrialsMarketing

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If Compliance/ Legal

Are you in the middle of developing a compliance program?

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Who Am I - Experience

Kulkarni Law Firm * conformlaw.com* @FDALawyers6

Darshan

Pharmacist

Attorney

Teacher

Author

Legal & Regulatory Penalties

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Why it matters?

•False Claims Act•Anti-Kickback Law•Park Doctrine

What matters?

Penalties

Compliance Planning

Future

Why It Matters

Ethical

Legal & Regulatory

Public Relations

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Impact on stock price

Pts. don’t see the LS industry as trustworthy? Still trust providers

Fraud

To be discussed

• FCA• AKL• HIPAA• Park• Synthes• Harkonen• Penalties• Planning• Future

FALSE CLAIMS ACT

FCA - Fines

>$30 Billion

>$8.8 Billion

>$6.6 Billion

• Total recovered under FCA

• Recovered since January 2009

• Recovered since 2009 for healthcare fraud

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What Matters - FCA What is it?

Who brings the action?

Who else can bring the action?

No specific intent to defraud must be proved

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Actions brought by the DOJ

Whistleblower or qui tam provisions allow individuals to bring actions in the name of the government, and can share in any recovery

What Matters -FCA

“any person who—(A) knowingly presents, or causes to be presented, a false or fraudulent claim for payment or approval;

(B) knowingly makes, uses, or causes to be made or used, a false record or statement material to a false or fraudulent claim; … “

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31 USC § 3729

Presents, or causes to be presented

Knowingly makes, uses or causes to be made or used

What Matters - FCA (E) is authorized to make or deliver a document

certifying receipt of property used, or to be used, by the Government and, intending to defraud the Government, makes or delivers the receipt without completely knowing that the information on the receipt is true; …

(G) knowingly makes, uses, or causes to be made or used, a false record or statement material to an obligation to pay or transmit money or property to the Government, or knowingly conceals or knowingly and improperly avoids or decreases an obligation to pay or transmit money or property to the Government,

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31 USC § 3729

…Without completely knowing that the information on the receipt is true…

Penalties- FCA

… is liable to the United States Government for a civil penalty of not less than $5,500 and not more than $11,000, …, plus 3 times the amount of damages which the Government sustains because of the act of that person.”

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$5,500/ $11,000 + 3x damages

How can it be implicated?

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Upcoding

Unbundling

Lack of Necessity

Services not rendered

Worthless services

Duplicate Services

Lack of Documentation

• FCA• AKL• HIPAA• Park• Synthes• Harkonen• Penalties• Planning• Future

ANTI- KICKBACK LAW

What Matters – Anti-Kickback Law

How is it initiated?

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No private right of action

Anti Kickback Law Whoever knowingly and willfully solicits or receives

any remuneration (including any kickback, bribe, or rebate) directly or indirectly, overtly or covertly, in cash or in kind—(A) in return for referring an individual to a person for the furnishing or arranging for the furnishing of any item or service for which payment may be made in whole or in part under a Federal health care program, or

(B) in return for purchasing, leasing, ordering, or arranging for or recommending purchasing, leasing, or ordering any good, facility, service, or item for which payment may be made in whole or in part under a Federal health care

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42 USC § 1320A–7B

Any remuneration (including any kickback, bribe, or rebate)

..in return for purchasing … ordering or recommending… any good, … service.. In whole or in part …

Intent – Anti-Kickback Law

“a person need not have actual knowledge of this section or specific intent to commit a violation of this section.”

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…need not have actual knowledge… or specific intent…

Anti-Kickback Law - Penalties“… shall be guilty of a felony and upon conviction thereof, shall be fined not more than $25,000 or imprisoned for not more than five years, or both.”

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Felony ± ≤ $25000 ± ≤ 5 yr prison

What Matters – Anti-Kickback Law

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Seeding Trials

Payments above FMV

Sponsor research funding tied to other biz billable to govt. programs

Investigator Initiated Trials

What Matters – Anti-Kickback Law

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FCA

Anti- Kickback

What Matters – Anti-Kickback Law

Exceptions

“Safe harbors:”

○ 25 safe harbors

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42 C.F.R. § 1001.952

An arrangement which does not fit squarely within a safe harbor, DOES NOT per se render it illegal.

• FCA• AKL• HIPAA• Park• Synthes• Harkonen• Penalties• Planning• Future

PARK DOCTRINE

Park Doctrine - What is it? Who does this apply to?

Also called “Responsible Corporate Officer (RCO) Doctrine” 

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Broadly read: Managers C Suite

Park Doctrine - Penalties

RCO can be held liable for a first time misdemeanor (and subsequent felony) under the FD&C Act without proof of intent or negligence, even if no actual knowledge of or participation in specific offense

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Without proof of intent or negligence

… even if no actual knowledge of or participation in..

Park Doctrine – Factors (Partial List) Individual’s position in the company Relationship to the violation Did the official have authority to correct

or prevent violation?

(Please contact me for more factors)

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Park Doctrine - Impact

Administrative Fines & Penalties

Criminal Fines

Civil Fines

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Synthes

• FCA• AKL• HIPAA• Park• Synthes• Harkonen• Penalties• Planning• Future

CASE STUDY

Synthes - FactsUnauthorized clinical trials of Norian-brand cements from

May 2002 to late 2004○ Bone cement used in surgeries to treat vertebral compression

fractures of the spine (“VCFs”), commonly suffered by elderly individuals

○ These surgeries were performed despite label warning against this use and serious concerns about the safety of the devices when used in the spine 

○ Manufacturer created a “test market” without requesting IDE approval

3 patients died from a rapid drop in

blood pressure during surgeries

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Synthes - Impact

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• $22,500,000 (Norian)• $669,800 (Synthes)

Max. CMP

• SynthesForfeiture

• 4 Executives charged under Park Doctrine

• 5-9 Months in JailJail Time

Punishments Seen – Govt. Criminal Sanctions

Prison Sentence

Companies:Fines

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Punishments seen

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Institutional Punishments

Terminations

Demotions

Paycuts

Government Penalties

Individual Fines

Company Fines

Prison

• FCA• AKL• HIPAA• Park• Synthes• Harkonen• Penalties• Planning• Future

PENALTIES

Administrative Penalties

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Public Relations Impact

Temporary Exclusions

Permanent Exclusions

Consent Decrees/

CIAFines

Penalties- Admin Penalties“ in the case of such a statement, representation, concealment, failure, or conversion by any person in connection with the furnishing (by that person) of items or services for which payment is or may be made under the program, be guilty of a felony and upon conviction thereof fined not more than $25,000 or imprisoned for not more than five years or both, or…”

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42 USC § 1320A–7B

COMPLIANCE PLANNING

• FCA• AKL• HIPAA• Park• Synthes• Harkonen• Penalties• Planning• Future

Prevention Create a compliance plan

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Prevention – Compliance Plan

Applicable to:

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LS CompaniesHospitals

LTC Providers

Doctor’s Office

Prevention – Compliance Plan

Setting Up a Program

ASQ

OIG

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Compliance - ASQ

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Plan

Do

Check

Act

Compliance

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Compliance Officer/

CommitteeWritten Standards

Training Program

Report Overpayments

Provide OIG with annual compliance

reports

Restrict employment of ineligible

persons

Written Procedures

(Please contact me for a checklist of factors)

Recap

Why do it?

What are you preventing?

How?

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• Trust• Improve patient lives• Life altering Liability

• Fraud• Life altering Liability

• Plan• Do• Check• Act

Questions?

Darshan Kulkarni

Kulkarni Law Firm, PC

Ph: 215-703-7842

www.conformlaw.com

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@FDALawyers

References

http://www.taf.org/whyfca.htm False Claims Act: 31 U.S.C. § 3729-3733 Anti-Kickback Law: 42 U.S.C. § 1320a-7b(b) False, Fictitious or Fraudulent Claims: 18 USC 287 http://

www.mintz.com/newsletter/2012/Advisories/1618-0112-NAT-HCED/1618-0112-NAT-HCED_index.pdf

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