How to Make $4.1Billion in 12 Months: Healthcare Fraud and Abuse Enforcement Mark Bartlett Davis Wright Tremaine, LLP

Why Is This Man Smiling? 2

Health Care Fraud Enforcement: Top DOJ Priority  Government recovered almost $4.1 billion in health care fraud actions during FY11, up 58% percent from 2009  More than 700 criminal convictions "This is an unprecedented achievement -- and it represents the highest amount ever recovered in a single year," said Attorney General Eric Holder 3

Health Care Fraud Enforcement: Top DOJ Priority  December 19, 2011 DOJ Press Release – Over $3 billion in FCA civil settlements and judgments in Fiscal Year nd consecutive year over $3 billion $270 million HCF investigation funding increase FY12  $2.4 billion recovered from fraud involving federal health care programs – Over $6.6 billion recovered under FCA since January 2009

FCA: Settlements/Judgments $$ in millions Source: DOJ “Fraud Statistics – Overview” (Dec. 7, 2011) Settlements or Judgments in Cases Where Government Declines Intervention As Percentage of Total FCE Recoveries

Health Care Fraud Statutes  False Claims Act (Civil) – Imposes liability on any person who knowingly submits, or causes to be submitted, a false or fraudulent claim to the Federal Government  Anti-Kickback Statute (Criminal) – Prohibits knowingly and willfully offering, paying, soliciting, or receiving any remuneration to induce or reward referrals of items or services reimbursable by a Federal health care program 6

Health Care Fraud Statutes  Stark Law (Civil) – Prohibits a physician from making a referral to an entity in which the physician has an ownership interest or compensation arrangement  Health Care Fraud (Criminal) – Prohibits knowingly and willfully executing a scheme or artifice to defraud any health care benefit program 7

PPACA Anti-Fraud Provisions  Anti-Kickback Statute – Codifies lower scienter – Violation constitutes “false claim” under FCA  False Claims Act – Narrows definition of “public disclosure”  Overpayments – Providers must report and return any overpayment within 60 days  Increase provider exposure to administrative, civil and criminal liability

2011 Health Care Fraud Criminal Enforcement  September 7, 2011 – DOJ charges 91 individuals with Medicare fraud- related offenses, including fraudulent billings over $295 million, the largest single takedown in Strike Force history  September 16, 2011 – Lawrence Duran, the owner of a mental health care company, American Therapeutic Corporation, was sentenced to 50 years in prison for orchestrating a $205 million Medicare fraud scheme

Moving Beyond CIA’s Expansion of the Park Doctrine  Inspector General Levinson – excluding corporate officers influences corporate behavior without impacting patient access to care – 883 individuals and entities excluded 10/10 to 03/11  Purdue Frederick Oxycontin prosecution – $600 million criminal fines and civil sanctions – Corporate executive misdemeanor pleas 4 months later, 20 year exclusion (reduced to 12)  New Goal: Exclusion even where no guilty plea

A Brave New World: Fraud Detection in 2012  CMS use of predictive modeling and algorithms  Electronic billing  Stop pay first and ask questions later

CMS Benefit Integrity Contractors  Recovery Audit Contractors – Tasked with identifying and collecting improper Medicare payments, paid on contingency basis  Comprehensive Error Rate Testing – Analyze error rate data and develop plans to reduce improper payments 12

Responding to Subpoenas  Grand Jury Subpoenas – Used in criminal cases only – Determine if you are target or simply third party  Parallel Proceedings – Administrative Investigative Demands – Get as much information as possible as quickly as possible  HHS OIG Subpoenas

Execution of a Search Warrant  Always be polite and cooperative, but never consent to expanded search or voluntary interviews – Inform agents that they are not to speak to anyone  Gain as much information as possible – Ask the purpose of the visit – Names and titles of all agents – Copy of search warrant (mandatory) and affidavit (discretionary) – Monitor all items that are removed

We Are All Boy Scouts  “ BE PREPARED ”  Designate a single contact person to meet with all government visitors – In-house attorney, head of security, human resources Have at least one back-up point person  Ensures company speaks with one voice and permits company to control documents

Never Talk to Strangers  EDUCATE ALL EMPLOYEES – Employees have the right to talk or not talk to investigators – Employees have the right to talk with counsel before deciding whether to consent to a voluntary interview – Employees have the right to have counsel present during any interviews  Remember: it is the employee’s decision, not the company’s decision, whether to consent to be interviewed

The Best Defense  A robust, real Corporate Compliance Program can solve many problems  Mandatory ethics training  Commitment from the top  Effective response to problems

Contact  Mark Bartlett Partner Davis Wright Tremaine LLP direct mobile