2. UNIVERSITY OF PENNSYLVANIA Institutional Compliance Strategies at the University of Pennsylvania

3. UNIVERSITY OF PENNSYLVANIA WHAT IS INSTITUTIONAL COMPLIANCE? A formal process to reaffirm Penn’s commitment to uphold the internal and external laws which govern it

4. UNIVERSITY OF PENNSYLVANIA DEFINITIONS Compliance Program A”voluntary” undertaking by an entity or Health Care Provider to assure compliance with governing laws (including Medicare and Medicaid laws) Integrity Program Program mandated by government (usually by IG or USAO) as a condition of continuing participation in a government program after addressing patterns of conduct by an organization which violates federal law

5. UNIVERSITY OF PENNSYLVANIA BENEFITS OF AN EFFECTIVE COMPLIANCE PROGRAM RESOURCE To Protect Entity From Liability Limits Exposure Liability of Trustees, CEOs Mitigates Exposure/Liability of Principal Investigators and Other Key Business Administrators Mitigates Risk of Civil and Criminal Exposure for all Compliant Individuals

6. UNIVERSITY OF PENNSYLVANIA CONSEQUENCES OF NON-COMPLIANCE Fines and penalties Institution considered “exceptional” by funding agencies Additional oversight/monitoring by the government Loss of expanded authorities and participation in FDP Potential reduction in Federal funding Loss of letter of credit funding authorization Professional integrity compromised Suspension, debarment, exclusion of individuals

7. UNIVERSITY OF PENNSYLVANIA HOW DO PRINCIPAL INVESTIGATORS AND BUSINESS ADMINISTRATORS FIT INTO AN EFFECTIVE INSTITUTIONAL COMPLIANCE MATRIX? As corporate agent and manager, you set the tone at the top Evaluate operational impact that non compliance may have on the University, the school and you individually Public relations impact potential impact that public disclosure of non-compliance would have on reputational risk of institution and your professional reputation Effective managers have to be an active part of the solution Compliance is everyone’s responsibility

8. UNIVERSITY OF PENNSYLVANIA FAILURE TO MANAGE THESE BUSINESS RISKS HAS RESULTED IN REPUTATIONAL DAMAGE TO SOME OF THE WORLD’S MOST RESPECTED INSTITUTIONS Public Demand for Improved Control Thomas Jefferson University Medicare over-billing $12 mil University of Minnesota Misuse federal grants $2.5-32 mil New York University Medical Center Inflated research grant costs $15.5 mil Stanford University Inflated research overhead costs $1.2 mil University of Texas Underpayment of royalties whistle blower $12 mil Duke University Sexual harassment $0.5 mil University of Chicago Research fraud and abuse $650,000 Yale University Medical over-billing $5.6 mil Miscellaneous Scientific Misconduct Johns Hopkins Harvard (2) Yale University of Michigan Chief Urologist charged with Conflict of Interest $100,000 penalty 1 year probation

9. UNIVERSITY OF PENNSYLVANIA ISSUES & PERSPECTIVES INSTITUTIONISSUES GOVERNMENT ENFORCEMENT PERSPECTIVE UNIVERSITY PERSPECTIVE OUTCOME Wisconsin Madison Overstating # of Sponsors on Grant Application FraudMere Puffery - Listed on his grant application in hopes that they actually would become sponsors 10K Fine 3 months imprison- ment for PI

10. UNIVERSITY OF PENNSYLVANIA ISSUES & PERSPECTIVES INSTITUTIONISSUES GOVERNMENT ENFORCEMENT PERSPECTIVE UNIVERSITY PERSPECTIVE OUTCOME MINNESOTA Effort Reporting Irregularities Failure to obtain informed consent in Clinical Trial Scientific Misconduct Direct Costs- supplies not related to Grant were charged to Grant Violations of: Civil False Claims Act Federal Food Drug & Cosmetic Act Anti- Kickback Act Scientific Misconduct Public Health Service Act Title XVII Social Security Act Asserts that the United States was specifically aware of wrongful conduct for nearly two decades, which it failed to communicate to the University, and concerning which it deliberately chose not to take action, thereby itself causing the results which it pleaded in the Complaint. Answer to amended complaint 2/23/98 attorneys from regents of U of Minn. 32 Million Dollar Fine Loss of Expanded Authority

11. UNIVERSITY OF PENNSYLVANIA ISSUES & PERSPECTIVES INSTITUTIONISSUES GOVERNMENT ENFORCEMENT PERSPECTIVE UNIVERSITY PERSPECTIVE OUTCOME New York University Federal Research Indirect Cost Rates for 1982- 1993 Allegation of improper calculation of indirect cost rate leading to excessive reimbursement Acknowledge accounting & administrative mistakes made in calculating rate Public Relations $15.5 Million Settlement

12. UNIVERSITY OF PENNSYLVANIA FEDERAL FALSE CLAIMS ACT or “How a Seemingly Insignificant Amount of Money Can Become an Enormous Fine”

13. UNIVERSITY OF PENNSYLVANIA WHAT IS THE FALSE CLAIMS ACT? Law which targets government contractors that submit false claims for goods and services Has been used to combat fraud in a number of industries, most notably defense and Healthcare Carries both criminal and civil penalties Penalties include triple damages and fines of between $5,000 and $10,000 per false claim Source: Modern Healthcare

14. UNIVERSITY OF PENNSYLVANIA FEDERAL FALSE CLAIMS ACT (31 U.S.C. Section 3729) (Civil) LEGAL CONTEXT PROHIBITS Anyone who knowingly: Presents False/Fraudulent Claim for Payment From Government Presents False Record or Statement to Get False or Fraudulent Claim Paid by Government

15. UNIVERSITY OF PENNSYLVANIA FEDERAL FALSE CLAIMS ACT (Continued) PROHIBITS Anyone who knowingly: Conspires to defraud the government Uses False Record Statement to conceal, avoid, decrease obligation to pay money or property to government

16. UNIVERSITY OF PENNSYLVANIA FEDERAL FALSE CLAIMS ACT (Continued) Government must prove: Actual Knowledge of the False Information Act in Deliberate Ignorance of Truth or Falsity of Information; or Act in Reckless Disregard of Truth or Falsity of Information* *No Proof of Specific Intent to Defraud Required

17. UNIVERSITY OF PENNSYLVANIA FEDERAL FALSE CLAIMS ACT (Continued) Civil Penalty (Per False Claim) –Not less than $5,000; Not more than $10,000 Plus –Treble damages (Double damages if cooperate and no criminal proceeding) –Also liable for costs to government in bringing civil action

18. UNIVERSITY OF PENNSYLVANIA EXAMPLE: MD MD Bills 50 Level “5” Cases That Should Have Been Level “3” ($60 Difference) “Pattern or Practice” Established 50 X $10,000 = $500,000 ($60 X 50=$3,000) X (3) = $9,000 Total Payback Could be up to $509,000 on a $3,000 “Overbill” Plus cost to Government in bringing action/Attorney Fees(Qui Tam)

19. UNIVERSITY OF PENNSYLVANIA FEDERAL FALSE CLAIMS ACT (18 U.S.C. Section 287) (Criminal) Substantive Offense: FALSE, FICTITIOUS OR FRAUDULENT CLAIM Not greater than 5 years imprisonment Fine not greater than $250,000* *If submitted to Defense Department, maximum fine is $1,000,000 (18 U.S.C. Section 3623)

20. UNIVERSITY OF PENNSYLVANIA FEDERAL FALSE CLAIMS ACT (18 U.S.C. Section 286) (Criminal) CONSPIRACY TO DEFRAUD GOVERNMENT WITH RESPECT TO CLAIMS Not greater than 10 years imprisonment Fine of not greater than $250,000 Or both

21. UNIVERSITY OF PENNSYLVANIA QUI TAM PROVISIONS CIVIL FALSE CLAIMS ACT Action filed under seal If successful, “ Whistleblower”(relator) receives up to 30% of the Settlement/Judgment Against the Provider