The Road Ahead Kevin Lyles, Esq. Partner, Jones Day kdlyles@jonesday.com (614) 281-3821 Diane Meyer Chief Compliance and Privacy Officer Stanford University Medical Center DMeyer@stanfordmed.org (650) 724-2572 Frank E. Sheeder, Esq. Partner, DLA Piper frank.sheeder@dlapiper.com (214) 743-4560
Agenda 4 Key Topics for Discussion Today 1. False Claims Act and Whistleblowers 2. Physician-Hospital Relationships 3. HIPAA 4. Antitrust Developments
Current Environment: Competing Goals Cost Quality Population Health/Prevention
Topic 1: False Claims Act and Whistleblowers
Topic 1: False Claims Act and Whistleblowers Incentives for Whistleblowers Federal FCA whistleblower percentage of recovery 15%-30% DRA of 2005 Additional recoveries California up to 50% of recovery Result Record-breaking 647 FCA qui tam complaints filed last year Total amount of qui tam settlements and judgments 2011-1987: over $24 billion 2011: over $3 billion
Topic 1: False Claims Act and Whistleblowers PPACA Changes PPACA Changes Easier for Qui Tam Relators Eliminates prior rule of mandatory dismissal when a relator s claim is based on publicly disclosed information (unless relator was the original source ) and now requires dismissal only if the dismissal is not opposed by the Department of Justice Narrows definition of publicly disclosed information to situations where substantially the same allegations or transactions were publicly disclosed in a federal report, hearing, audit, or investigation or in the news media, which allows actions based on information in state or local government publications
Topic 1: False Claims Act and Whistleblowers Whistleblower Trends Emergence of the new whistleblower Compliance Officers Internal Auditors Physicians Attorneys Consultants Scientists Government employee Professional Whistleblowers New breed of whistleblowers counsel
Topic 1: False Claims Act and Whistleblowers Developments United States ex rel. Dittmann v. Adventist Health System/Sunbelt Inc. (M.D. Fla. July 30, 2012) Whistleblowers were a compliance officer and a physician Survived motion to dismiss United States ex rel. Ruhe v. Masimo Corp. (C.D. Cal. July 9, 2012) Whistleblowers were former sales representatives Court found that device companies potentially violate FCA by selling knowingly defective equipment
Topic 1: False Claims Act and Whistleblowers Noteworthy Settlements GlaxoSmithKline (July 2012) Consolidated multiple separate whistleblower actions (including one brought by former quality assurance manager) Largest healthcare fraud settlement in US history ($3 billion) Janssen Pharmaceuticals, Johnson & Johnson subsidiary (July 2012) Multiple whistleblower suits brought in multiple states J&J agreed to pay $2.2 billion in a global settlement Morton Plant Mease Health Care Inc. (November 2012) Paid over $10 million to resolve a qui tam lawsuit filed by a former director at Morton Plant Hospital The whistleblowers lawsuit alleged that Morton Plant and its affiliated hospitals submitted false claims for services to Medicare patients at hospice facilities Continuing Kyphoplasty Settlements More than 40 hospitals settled for amounts totaling over $39 million Whistleblowers include former reimbursement manager and former regional sales manager
Topic 1: False Claims Act and Whistleblowers Best Practices Part 1 of 2 Invest more in compliance resources Training and education Internal controls Monitoring Expectations from leadership Expectations regarding how you treat complaints or questions Culture of no retaliation Original Information Self reporting Create an accurate and clear record in appearance and actuality E-mail Phone calls logs and recordings Internal drafts of external communications Internal presentations and memoranda Social networking sites, messaging, or chat functions
Topic 1: False Claims Act and Whistleblowers Best Practices Part 2 of 2 Investigating Complaints What do you investigate? Privilege questions Inside counsel, regular outside counsel, or new counsel? Independent committee to oversee? Form of investigative reports Plan and conduct the investigation in view of the possible outcomes including remedial actions, disclosure, regulatory action and cooperation, private litigation, and privilege waiver Interviewing Witnesses Upjohn warnings and confidentiality admonitions Well-prepared and skillful witness questioning, incorporating the investigator s analysis of evidence Consider providing counsel to witnesses who want it Procedures when witness refuses an interview
Topic 2: Physician-Hospital Relationships Historical perspective Accountable Care Organizations CMS involvement and incentives Various models Co-management service agreements ACO-like arrangements Hospital employment of physicians Physician-hospital organizations Large multi-specialty group practice that affiliates/partners with hospitals Integrated physician practice networks
Topic 2: Physician-Hospital Relationships Integrate Now What? Define objectives Discuss and set expectations Roadmap for roadblocks Involve key stakeholders (including Compliance) at onset Develop relationships Due diligence People Behavior Practices Ongoing process Compliance needs to be at the table Various regulatory issues Fraud & Abuse Stark Law Civil Monetary Penalties Exempt Organization Laws Antitrust Corporate Practice of Medicine Physician Payment Sunshine Act Use of Consultants for determining fair market value
Topic 3: HIPAA Recent Highlights Final omnibus HIPAA regulations published January 25, 2013, with a September 23, 2013 compliance date OCR Director Speech from June 7, 2012: Permanent and robust audit program Continued emphasis on enforcement
Topic 3: HIPAA Privacy Audit Protocols Part 1 of 3 Release of HIPAA Audit Protocols on June 26, 2012 Audit vs. Enforcement Audit Procedures: 68 Privacy, 77 security, and 10 Breach notification User-Friendly, so use them in preparation for potential audit and/or internal audit Helpful for gap analysis; ensuring completeness of policies & procedures
Topic 3: HIPAA Privacy Audit Protocols Part 2 of 3 Clichés apply Be prepared Timing is everything Short time frame for response 15 days for documentation 30 to 90 days until on-site activity begins (data collection, interviews, etc.) Draft report comes 20-30 days later 10 days to respond Final report issued
Topic 3: HIPAA Privacy Audit Protocols Part 3 of 3 Be prepared to show implementation and enforcement of policies Developing proof of effective implementation Proving a negative? (Not exactly) Show an organized and useable process (e.g., access to policies, reporting potential violations, asking questions) Demonstrate compliance through audits, tests, investigations, documentation (logs) Document training Develop audit response team
Topic 3: HIPAA Case Example: Mass. Eye and Ear Infirmary Settlement Reported Facts: Stolen Laptop (3,621 records) Resolution Agreement September 13, 2012 Penalty - $1.5 million in 3 installments Areas of OCR Concern Insufficient risk analysis (especially portable devices) Insufficient security measures to ensure confidentiality of ephi Inadequate adoption and implementation of certain policies and procedures Correction Action Plan 3-year term Hire HHS-approved Monitor; Develop Monitor plan Review, revise and develop policies & procedures for HHS s review & approval (certain minimum content dictated to MEEI) Distribute policies & procedures to workforce and get signed certification from workforce Training and reporting requirements Implementation report and annual reports
Topic 4: Antitrust Developments Federal and State Enforcers Federal Trade Commission Leading healthcare enforcer today Mergers involving hospitals and other healthcare businesses Pharmaceutical patent settlements Department of Justice, Antitrust Division Health plan mergers State Attorneys General Independently review or join federal investigations Broader interests than feds (maintain jobs, preserve failing businesses, price concerns) State may be an ally to merging parties
Topic 4: Antitrust Developments Government Merger Review Process HSR Act requires filing with federal agencies For transactions valued above $68 million 30-day clock delays closing while agency reviews Closing further delayed by agency second request for more information from parties Deals that did not require filing may be reviewed Agencies have investigated and challenged smaller and consummated transactions Federal court must enjoin transaction FTC continues in administrative proceeding, DOJ in court Both appeal to U.S. Court of Appeals
Topic 4: Antitrust Developments Recent Challengers to All Kinds of Mergers Hospitals Physicians Health Plans PBMs Pharmacies Dialysis Centers Take Home Government is litigating and often winning merger challenges
Topic 4: Antitrust Developments Merger Challenges Internal Company Documents The key to Government lawsuits Be cautious in describing your position and rivals competition in strategic planning and premerger documents Antitrust agency will use your documents against you
Topic 4: Antitrust Developments Second Term of Obama Administration Aggressive rhetoric, investigations, and enforcement actions Challenges to small and consummated deals Efforts to expand authority Willingness to litigate New leadership at both agencies Little change in enforcement programs
Thank you. Questions? Kevin Lyles, Esq. Partner, Jones Day kdlyles@jonesday.com (614) 281-3821 Frank E. Sheeder, Esq. Partner, DLA Piper frank.sheeder@dlapiper.com (214) 743-4560 Diane Meyer Chief Compliance and Privacy Officer Stanford University Medical Center DMeyer@stanfordmed.org (650) 724-2572 Additional Media: www.thecomplianceblog.com www.healthcarelawmatters.com Twitter:@hclawyer