How to Make $4.1Billion in 12 Months: Healthcare Fraud and Abuse Enforcement

1. How to Make $4.1Billion in12 Months: Healthcare Fraud and Abuse Enforcement Mark Bartlett Davis Wright Tremaine, LLP

2. Why Is This Man Smiling?

3. 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

4. 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 2011 • 2nd 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

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

6. 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

7. 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

8. 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

9. 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

10. 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

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

12. 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

13. Responding to Subpoenas • Grand Jury Subpoenas • Used in criminal casesonly • 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

14. 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

15. 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

16. 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

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

18. Contact • Mark BartlettPartnerDavis Wright Tremaine LLPmarkbartlett@dwt.com206.757.8298 direct206.794.0705 mobile