S ELF- D ISCLOSURE A DVANTAGES & P ITFALLS

1. SELF-DISCLOSUREADVANTAGES & PITFALLS Carrie Valiant, Esq. Epstein Becker & Green, P.C. Washington, DC L. Lamar Blount, CPA Healthcare Management Advisors Atlanta, GA

2. First Steps: Triage the issue - is it a problem? Determine whether independence/privilege is needed in investigation Considerations Potential Qui Tam Positions involved Availability of internal staff Skill level of internal staff Credibility of “report” and results Intention to share results with the government INTERNAL INVESTIGATIONS

3. Possible Actions Stop billing or other activity involved Terminate or suspend individual Terminate or suspend contractorChange policy or procedure INTERNAL INVESTIGATIONS (cont.) • Second Step • Evaluate the potential nature and extent of problem • Evaluate whether intentional fraud or serious risks to personnel or patients may be involved • If so, consider immediate interventional actions

4. INTERNAL INVESTIGATIONS (cont.) • Second Step (cont.) • If not sure, create “holding” mechanism while the issue is researched, or source of problem identified • Examples • Stop or hold coding or billing • Impose secondary, independent review of decision-making

5. INTERNAL INVESTIGATIONS (cont.) • Third Step: Develop the Story • Address key questions • Nature of allegations? • How and why did it happen? • Who is involved? • How long has it occurred? • Why won’t it happen again?

6. LEGAL BACKGROUND Self-Disclosure A / K / A -- “So, do we have to return the money?”

7. Penalties for non-disclosure Certainty (but depends on extent of release) Standard in the industry? The “sleep at night” factor More favorable treatment The reality of the whistleblower Control documents quantification no subpoena no raid SELF-DISCLOSURE Why voluntary disclosure?

8. SELF-DISCLOSURE (cont.) • What is voluntary disclosure? • Distinguish from regular repayment of claims paid in error • Depends on nature of issue and monetary value • Can be to any government body, including DOJ, OIG, State Medicaid Agency • Does disclosure to carrier or fiscal Intermediary “count”?

9. SOCIAL SECURITY ACT • Section 1128B of the Social Security Act provides that “[w]hoever having knowledge of the occurrence of any event affecting his initial or continued right to…[a] benefit or payment [from a federal health care program] … conceals or fails to disclose such event with an intent fraudulently to secure such benefit or payment either in a greater amount that is due or when no such benefit or payment is authorized” is subject to up to five years imprisonment and a fine of $250,000 for individuals and $500,000 for corporations. (emphasis supplied)

10. FCAVOLUNTARY DISCLOSURE: 31 U.S.C.§3729(a) • Can reduce rather usual FCA treble damages plus mandatory penalties of $5,000-$10,000 per false claim to “only” double damages • Disclosure must be • made by the person or entity that violated FCA • made to the DOJ • made within 30 days after first obtaining information about FCA violation

11. CRIMINAL CULPABILITY: FEDERAL SENTENCING GUIDELINES • “If the organization (A) prior to an imminent threat of disclosure or government investigation; and (B) within a reasonably prompt time after becoming aware of the offense, reported the offense to appropriate governmental authorities, fully cooperated in the investigation, and clearly demonstrated recognition and affirmative acceptance of responsibility for its criminal conduct, subtract 5 points [from the Culpability Score.]” USSG 8C2.5(g) (emphasis added)

12. CRIMINAL CULPABILITY: FEDERAL SENTENCING GUIDELINES • “Appropriate governmental authorities,” means the federal or state law enforcement, regulatory, or program officials having jurisdiction over such matter, including OIG, HCFA, DOJ, State Medicaid Agency and the State AG. See USSG 8C2.5(g)(n.11). • “The term ‘appropriate governmental authorities’ does not encompass governmental agents, such as Medicare Contractors.” GAO/HEHS 99-59, Medicare Early Evidence of Compliance Program Effectiveness is Inconclusive, April 1999.

13. MODELCOMPLIANCE PLAN FOR CLINICAL LABORATORIES: 2/97 • OIG recommendation: Laboratory give notice to the OIG of misconduct that either (a) violates criminal law, or (b) constitutes a material violation of the civil law, rules and regulations governing federally funded health care programs within sixty days (60) days after receipt of the credible evidence of misconduct.

14. OIG’S COMPLIANCE PROGRAM GUIDANCE FOR THIRD-PARTY BILLING COMPANIES: 11/98 • The billing company should report the existence of misconduct that may violate criminal, civil or administrative law promptly to the appropriate Government authority within a reasonable period, but not more than sixty (60) days after determining that there is credible evidence of a violation. • Represents current formulation of standard.

15. PROVIDER SELF-DISCLOSURE PROTOCOL Office of Inspector General Department of Health and Human Services October 1998 www.hhs.gov/progorg/oig

16. Individuals/entities implicated & their roles Relevant time periods Type of provider Basis of belief that violation occurred Federal health care programs affected Certification BASIC INFORMATION • Name, address, PIN, TIN and billing numbers • Corporate relationships • Designated representative • Matter under current inquiry by government agency/contractor? • Description of the matter

17. SUBSTANTIVE INFORMATION • Findings of internal investigation pursuant to Internal Investigation Guidelines • Findings of self-assessment pursuant to Self-Assessment Guidelines • Certifications

18. INTERNAL INVESTIGATION GUIDELINES • Nature and Extent of Improper/Illegal practice (Telling the Story) • Potential causes of practice • Detailed description of incident or practice • Identify divisions, departments, branches or related entities involved and/or affected • Impact on/risks to health, safety, or quality for assessment of immediacy • Delineate time period

19. INTERNAL INVESTIGATION GUIDELINES (cont.) • Nature and Extent (cont.) • Identify individuals who knew of, encouraged, participated in, the practice or incident • Identify individuals involved in detecting matter • Identify individuals who should have known, but failed to detect the matter based on job responsibilities • Estimation of monetary impact on federal programs

20. INTERNAL INVESTIGATION GUIDELINES(cont.) • Discovery & Response to the Matter • Describe how matter was identified • Describe entity’s effort to investigate and document the incident or practice

21. INTERNAL INVESTIGATION GUIDELINES (cont.) • Discovery & Response (cont.) • Detailed chronology of the investigative steps taken re: internal inquiry including: • List of individuals interviewed, their positions, subject matter, dates and summaries; include names of individuals who refused interviews • Description of files, documents and records reviewed • Summary of auditing activity • Summary of documentation supporting estimation of losses

22. INTERNAL INVESTIGATION GUIDELINES (cont.) • Discovery & Response (cont.) • Actions taken to stop inappropriate conduct and prevent recurrence • Describe related health care businesses affected • Describe disciplinary actions against corporate officials, employees and agents • Appropriate applicable notices to other government agencies

23. INTERNAL INVESTIGATION GUIDELINES (cont.) • Certification • “to the best of the individual’s knowledge, the internal investigation report contains truthful information and is based on a good faith effort to assist OIG in its inquiry and verification of the disclosed matter.” • Signed by disclosing provider or authorized representative of entity

24. INTERNAL INVESTIGATION GUIDELINES (cont.) • According to OIG, this self-assessment should be a review of either: • all claims affected by the disclosed matter for the relevant period; or • a statistically valid sample of the claims that can be projected to the population of claims affected by the matter for the relevant period.

25. SELF-ASSESSMENT GUIDELINES • Considerations • “All claims” simplifies process but may involve inordinate volume • “Sample” reduces volume to review but involves more sophistication and skill to avoid rejected results • Design the plan to not be biased

26. SELF-ASSESSMENT GUIDELINES (cont.) • The determination should be based on: • implicated population size • the variance of characteristics to be reviewed the cost of the self-assessment • the available resources • the estimated duration of the review • other appropriate factors

27. SELF-ASSESSMENT GUIDELINES (cont.) • Submit a work plan describing the self-assessment process • articulate the objective of the review and the procedure • identify the population & methodology used to development population • sources of data upon which the review will be based • applicable legal standards • sources of payment data • personnel qualifications

28. SELF-ASSESSMENT GUIDELINES (cont.) • For samples, the work plan should include a Sampling Plan that: • describes the objective • defines the population • defines the sampling frame • identifies the sampling unit • specifies the sample design • may be simple random sampling, stratified or multistage

29. SELF-ASSESSMENT GUIDELINES (cont.) • Sampling Plan (cont.) • sample size may be determined through use of a probe sample • probe sample must contain at least 30 sample units and cannot be used as part of the full sample • full sample typically is based on a 90 to 95% confidence level with +/- 5 to 20% precision. Minimum OIG standard is 90% confidence level and 25% precision

30. SELF-ASSESSMENT GUIDELINES (cont.) • Sampling Plan (cont.) • “probe” sample and sample must be selected through random numbers • OIG strongly recommends “RAT-STATS” (statistical software available on web) • discuss how missing sample items are to be handled • identifies characteristics measured for testing each sample item

31. SELF-ASSESSMENT GUIDELINES (cont.) • Sampling Plan (cont.) • Estimate damages to the federal health care program • simple extrapolation of error rate found in sample • using RAT-STATS to project upper and lower limits of overpayments • multiple confidence and precision levels • Indicate how results will be reported

32. SELF-ASSESSMENT GUIDELINES (cont.) • Certification • “to the best of the individual’s knowledge, the report contains truthful information and is based on a good faith effort to assist OIG in its inquiry and verification of the disclosed matter.” • Signed by disclosing provider or authorized representative of entity

33. COMMONISSUES FACEDDURINGSELF-DISCLOSURE PROCESS • Issue of “naming names” under OIG’s Provider Self-Disclosure Protocol • effect on overall effectiveness of compliance program from finger pointing • can global or systems fault be alleged?

34. COMMONISSUES FACEDDURINGSELF-DISCLOSURE PROCESS (cont.) • What government agency should be approached?

35. COMMONISSUES FACEDDURINGSELF-DISCLOSURE PROCESS (cont.) • Potential for referral to OIG from intermediary if approach intermediary • Factors include: • dollar amount at issue - carrier/intermediary thresholds • government identified enforcement priority? • OIG Work Plan • Individual government settlements • DOJ National Enforcement Project • Targeted provider for other settlements/investigations

36. COMMONISSUES FACEDDURINGSELF-DISCLOSURE PROCESS (cont.) • Expectation regarding Extent of Release • Carrier/intermediary--overpayment liability • State Medicaid program--state liability • OIG--exclusion/civil monetary penalties • DOJ--FCA penalties • DOJ Criminal Division--criminal release

37. COMMONISSUES FACEDDURINGSELF-DISCLOSURE PROCESS (cont.) • Expectation regarding Amount of Payment • overpayment liability at single damages • for OIG/DOJ release--usual settlement posture is double damages

38. COMMONISSUES FACEDDURINGSELF-DISCLOSURE PROCESS (cont.) • Expectation regarding Timing • Rule of Thumb: The more parties brought to the table, the longer the time necessary to Accomplish settlement • Important to consider if: • Anticipated sale of company or major refinancing • Timing of reports for publicly traded companies

39. COMMONISSUES FACEDDURINGSELF-DISCLOSURE PROCESS (cont.) • Structuring the investigation • Delineation of tasks • Retaining outside counsel & consultants and maintaining the attorney/client privilege • Presentations to management & creating reasonable expectations regarding • timing • liability • business disruption

40. COMMONISSUES FACEDDURINGSELF-DISCLOSURE PROCESS (cont.) When to Approach the Government • Options • upon discovery of issue • upon preliminary review and confirmation of issue • upon full investigation and quantification

41. COMMONISSUES FACEDDURINGSELF-DISCLOSURE PROCESS (cont.) When to Approach the Government(cont.) • Considerations • first swipe at magnitude often over-broad, suggesting greater liability than warranted • earlier disclosure can avoid duplication of effort • later disclosure can lead to quicker resolution • whistleblower lawsuits and other threats to “voluntary” nature of disclosure • government timetables

42. COMMONISSUES FACEDDURINGSELF-DISCLOSURE PROCESS (cont.) What to Present to the Government • Presentation is important • How much detail to present? • Less is more (but not always!) • Consider whether materials presented raise new issues • Explaining missing information or materials • Personal meetings vs. written submission

43. COMMONISSUES FACEDDURINGSELF-DISCLOSURE PROCESS (cont.) An inaccurate, incomplete or otherwise misleading disclosure may be worse than no disclosure at all

44. COMMONISSUES FACEDDURINGSELF-DISCLOSURE PROCESS (cont.) • A Maryland Health system settled for $2.7 million to settle charges of alleged overbilling of Maryland Medicaid. • $829,000 in damages was assessed because the organization, through counsel, disclosed to state officials that the overbilling lasted only 6 months when it had been going on for several years.

45. Epstein Becker & Green 202-861-1857 www.EBGlaw.com Healthcare Management Advisors 770-751-1199 www.HMA.com Questions& Answers 122854 v.2