Health care providers continue to experience significant levels of scrutiny from CMS, OIG, audit and recovery contractors, as well as state and federal law enforcement agencies. As a result of heightened enforcement activity, health care providers may be at risk. To update you on the current regulatory and enforcement environment, this presentation focusing on fraud and abuse will cover: •Important regulatory, compliance and enforcement activity during 2015 •Noteworthy settlements and lessons learned over the past year •Continuing developments with the Stark Law, the Anti-Kickback Statute, the False Claims Act •Proactive compliance activities to protect your organization in 2016 and beyond Presenters: •Jeffrey Fitzgerald, Shareholder, Polsinelli •Asher D. Funk, Associate, Polsinelli

1. Fraud and Abuse:
2015 Year In Review
January 7, 2016
Jeffrey Fitzgerald, Esq.
jfitzgerald@polsinelli.com
Asher Funk, Esq.
afunk@polsinelli.com
52120593

2. Settlement Trends
Kickback cases still yielding big settlements, but
no common thread
– Novartis AG $390M (kickbacks to specialty pharmacies for pushing
Novartis drugs)
– Millennium Health $256M (free specimen testing cups)
– Warner Chilcott $125M (cash payments and expensive dinners for
referring physicians)
– Health Diagnostics Laboratories $48.5M (S&H for lab specimens,
waiver of co-pays)
– Daiichi Sanko $39M (honoraria and meals for referring physicians)
– Westchester Medical Center $18.8M (advancing money to physician
practice and forgiving debt)
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3. Settlement Trends
Hospice enforcement: smaller dollars, but
more settlements
– Covenant Hospice $10.1M (billing issues)
– Compassionate Care Hospice Group $6M (failure to treat
based on POC)
– Good Shepherd Hospice $4M (lack of terminal illness)
– Guardian Hospice of Georgia LLC $3M (lack of terminal
illness)
– Hospice of Citrus County $3.2M (length of stay issues)
– Serenity Hospice and Palliative Care $2.2M (AKS and Stark
violations)
3

4. Settlement Trends
Physician employment and compensation cases
– Citizens Medical Center paid $21.7M
• Non-FMV payments to cardiologists
• Bonus payments to ED MDs based on cardiology referrals
– Resolution of Tuomey litigation for $72.4M
– Adventist Health System paid $115M
• Bonus payments to physicians based on volume of referrals for tests or
procedures ordered
– North Broward Hospital District paid $69.5M
• Non-FMV comp for nine employed physicians in violation of Stark
• Complaint alleged that losses on hospital-owned practice was evidence
of non-FMV compensation
4

5. Interesting Settlements
Resolution of DOJ’s ICD investigation ($250M
settlement with 457 hospitals)
Sandoz Inc., $12.6M (CMP for misrepresenting drugs
pricing data)
Piedmont Pathology Associates Inc., $500,000
(providing free EMR licenses allegedly for referrals)
Regent Management Services $3.2M (alleged
swapping arrangement for ambulance transport)
Shelby Regional Med. Center's former CFO pled guilty
and sentenced to 23 months for falsely certifying
compliance with meaningful use
5

6. Noteworthy Court Decisions
Active year for litigation of the FCA’s public disclosure bar
– Chattanooga-Hamilton Cnty. Hosp. v. U.S. ex rel. Whipple -
anonymous tip and gov’t investigation not a public disclosure
– U.S. ex rel. King v. Solvay S.A. – off-label promotion allegations
based on elements of a New Yorker magazine article are barred
– U.S. ex rel. Antoon v. Cleveland Clinic Found – retired air force
colonel was not an “original source” of allegations regarding his
own botched surgery
– U.S. ex rel. Hartpence v. Kinetic Concepts - Ninth Circuit
overruled prior decision that an “original source” had to have
played a role in the public disclosure
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7. Noteworthy Court Decisions
Providers generally prevail in FCA cases based upon
noncompliance with condition of participation
– U.S. ex rel. Ortolano v. Amin Radiology – State regulation addressing
certification of nuclear medicine tech not a condition of payment
– U.S. ex rel. Gampie v. Gilead Scis. - Switch to unapproved
manufacturing sources for APIs (that did not have NDA) not a
condition of payment
– But, U.S. ex rel. Ecobar v. Universal Health Svcs. - First Circuit
reversed and held that Medicaid licensing and supervision
standards for psychiatric services were a condition of payment
• Supreme Court will review “implied certification theory” and need for
“conditions of payment” to be expressly set forth in statute or regulation
7

8. Noteworthy Court Decisions
Reasonable interpretation of ambiguous or confusing
regulations not an FCA violation
– U.S. ex rel. Saldivar v. Fresenius – Provider did not
“knowingly” submit false claims for drug overfill based on
reasonable interpretation of ambiguous regulation
– U.S. ex rel. Donegan v. Anestesia Assocs. Of Kan. City –
Medicare regulation addressing presence of anesthesiologist
during portions of surgery was ambiguous and provider’s
reasonable interpretation of regulation did not lead to
“knowingly” submitting false claims
8

9. Noteworthy Court Decisions
First decision addressing ACA’s 60-day rule
– U.S. ex rel. Kane v. Continuum Health Partners (S.D.N.Y.)
• Medicaid HMO has IT glitch that causes large NY hospitals
to bill Medicaid FFS (resulting in Medicaid overpayments)
• All overpayment were refunded before DOJ intervened
(but after DOJ investigation)
• Relator ran report identifying 900 claims, of which only
50% were actual overpayments; relator terminated 4
days after emailing report, and files complaint 61 days
after email
• DOJ investigates for 3.25 years, then intervenes
• Court denies motion to dismiss
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10. Noteworthy Court Decisions
Resistance is not futile
– U.S. v. Bertie Ambulance – DOJ’s failure to provide 30-
days' notice before filing FCA lawsuit breached tolling
agreement with provider, resulting in DOJ’s loss of
claims
– U.S. ex rel. Green v. Inst. Of Cardiovascular Excellence –
Suspension of Medicare payments one week after
settlement talks with DOJ broke down, raised
suspicion of whether payment suspension was
retaliatory
10

11. Noteworthy Court Decisions
Miscellaneous, but noteworthy, cases
– U.S. v. Patel - 7th Circuit upholds physician’s AKS
conviction, expands definition of “referral” to include
home health care recertification
– U.S. ex rel. Boise v. Cephalon Inc. – Breach of corporate
integrity agreement actionable under the FCA
– Amarin Pharma Inc., v. FDA – Truthful non-misleading
off-label promotion of drug held not to violate FDCA’s
prohibition on misbranding
11

12. HIPAA Privacy and Security
Triple – S Management Corp. - $3.5M settlement
– Widespread non-compliance including disclosing PHI to third-parties without
permission and using or disclosing more than the min necessary for mailings
Lahey Hospital and Medical Center - $815,000 settlement
– Stolen laptop exposed PHI for 599 individuals
The University of Washington Medicine - $750,000 settlement
– PHI of 90,000 individuals exposed after employee downloaded an email
attachment that contained malicious
Cancer Care Group PC - $750,000 settlement
– Stolen laptop from car exposed PHI for 55,000 current/former patients
St. Elizabeth Medical Center - $218,000 settlement
– Use of unsecure internet based document sharing system, unsecured
PHI on employee’s laptop and USB drive
12

13. HIPAA Privacy and Security
Large volume of individuals’ PHI exposed during
breaches based on hackers
– Anthem, Inc. (IN) – cyberattack on unencrypted PHI, 37.5M
records impacted
– Premera Blue Cross (WA) – cyberattack exposed medical, financial,
and claims data for 11M customers
– Excellus Health Plan Inc., (NY) – cyberattack allowed unauthorized
access to 10M beneficiaries information
– UCLA (CA) – cyberattack on unencrypted data allowed access to
information for 4.5M patients
– Medical Informatics Engineering (IN) – cyberattack on EHR
provider compromised PHI for 3.9M individuals
13

14. The Yates Memo
September 2015 memorandum from Deputy Attorney
General Sally Quillian Yates
– Outlined six steps to strengthen pursuit of individual
corporate wrongdoing
– Some areas of focus new, while others were affirmation of
prior policy
– Revision to USAM, particularly in regard to “cooperation
credit”
True impact is unclear at best
– New articulation of old policy?
– Practical impact of pursuing individuals and ability to reach
civil settlements with entities substantially implicated if DOJ
strictly interprets this policy

15. OIG Also Focusing on Individuals
OIG creates new litigation team to pursue CMP and exclusion
cases:
– Jump in CMP cases from 36 in FY13 to 60 in FY14
– Stated goal of holding individuals accountable
– Meant to complement DOJ’s enforcement activities (filling
enforcement gaps)
– Potential to spin-off from FCA cases and pursuit of executives or
physicians
OIG issues Special Fraud Alert: “Physician Compensation
Arrangements May Result in Significant Liability”
– Focus on FMV and bona fide services and MD exposure
– Came before Tuomey, Adventist and North Broward settlements

16. Other Noteworthy Developments
15 OIG Advisory Opinions
– But 7 modifications of prior AOs
CMS official reports that there have been 554 self-
disclosures through the Stark/SRDP (March 2015)
– 33% increase from 2013 to 2014
– Total of 115 disclosure settled or withdrawn
OIG Self-Disclosure Protocol
– OIG official indicates that average length to resolution is 9
months (Oct. 2015)
DOJ hires “compliance expert” to provide guidance on
effectiveness of corporate compliance programs
16

17. The DOJ’s “Year in Review”
Total recoveries down by almost $2.2B
In FY15 85% of new matters based on qui tam actions, and recoveries from qui tam
actions exceeded DOJ initiated enforcement by ~$2.2B
Huge jump in recoveries from non-intervened cases, largest $ in FCA history
17

18. Predictions for 2015 – How Did We
Score?
DOJ enforcement nearly exclusively driven by
whistleblowers
HIPAA and computer security compliance increases in
importance (trending to be bigger than FCA
compliance)
Final 60-day refund rule issued and it creates much
ambiguity, compliance risk and headaches
No mandatory compliance plan rule for hospitals
More activity in enrollment and payment suspension
18
Grade

19. Predictions for 2016
Supreme Court limits the use of “implied certification” in FCA
cases to express “conditions of payment”
Yates Memo does not create a substantial difference in
resolution of FCA cases by providers
But increased enforcement and rhetoric of DOJ or OIG
pursuing individuals criminally, under FCA or with exclusion
(including some “exemplar” cases)
FCA enforcement continues to be dominated by whistleblower
cases with little or no clear DOJ priority agenda
Increase in FCA cases based on physician compensation
Increased state level enforcement (MFCU and Attorney
General) and growing volume of FCA cases based on Medicaid
19

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22. Fraud and Abuse:
2015 Year In Review
January 7, 2016
Jeffrey Fitzgerald, Esq.
jfitzgerald@polsinelli.com
Asher Funk, Esq.
afunk@polsinelli.com