The Road Ahead

Frank E. Sheeder, Esq.Partner, DLA Piper

frank.sheeder@dlapiper.com(214) 743-4560

Kevin Lyles, Esq.Partner, Jones Day

kdlyles@jonesday.com(614) 281-3821

Diane MeyerChief Compliance and Privacy Officer

Stanford University Medical CenterDMeyer@stanfordmed.org

(650) 724-2572

Agenda4 Key Topics for Discussion Today

1. False Claims Act and Whistleblowers2. Physician-Hospital Relationships3. HIPAA4. Antitrust Developments

Current Environment: Competing Goals

Cost

Population Health/PreventionQuality

Topic 1: False Claims Act and Whistleblowers

Topic 1: False Claims Act and WhistleblowersIncentives for Whistleblowers

• Federal FCA whistleblower percentage of recovery—15%-30%

• DRA of 2005• Additional recoveries• California up to 50% of recovery

• Result• Record-breaking 647 FCA qui tam

complaints filed last year• Total amount of qui tam

settlements and judgments• 2011-1987: over $24 billion• 2011: over $3 billion

Topic 1: False Claims Act and WhistleblowersPPACA Changes

PPACA Changes— Easier for Qui Tam Relators• Eliminates prior rule of mandatory dismissal when a relator’s claim is

based on publicly disclosed information (unless relator was the “original source”) and now requires dismissal only if the dismissal is not opposed by the Department of Justice

• Narrows definition of “publicly disclosed” information to situations where substantially the same allegations or transactions were publicly disclosed in a federal report, hearing, audit, or investigation or in the news media, which allows actions based on information in state or local government publications

Topic 1: False Claims Act and WhistleblowersWhistleblower Trends

• Emergence of the new whistleblower

• Compliance Officers

• Internal Auditors

• Physicians

• Attorneys

• Consultants

• Scientists

• Government employee

• “Professional Whistleblowers”

• New breed of whistleblowers’ counsel

Topic 1: False Claims Act and Whistleblowers Developments

• United States ex rel. Dittmann v. Adventist Health System/Sunbelt Inc.(M.D. Fla. July 30, 2012)

• Whistleblowers were a compliance officer and a physician• Survived motion to dismiss

• United States ex rel. Ruhe v. Masimo Corp. (C.D. Cal. July 9, 2012)• Whistleblowers were former sales representatives • Court found that device companies potentially violate FCA by selling

knowingly defective equipment

Topic 1: False Claims Act and WhistleblowersNoteworthy Settlements

• GlaxoSmithKline (July 2012)• Consolidated multiple separate whistleblower actions (including one brought by

former quality assurance manager)• Largest healthcare fraud settlement in US history ($3 billion)

• Janssen Pharmaceuticals, Johnson & Johnson subsidiary (July 2012)• Multiple whistleblower suits brought in multiple states• J&J agreed to pay $2.2 billion in a global settlement

• Morton Plant Mease Health Care Inc. (November 2012)• Paid over $10 million to resolve a qui tam lawsuit filed by a former director at Morton

Plant Hospital• The whistleblowers’ lawsuit alleged that Morton Plant and its affiliated hospitals

submitted false claims for services to Medicare patients at hospice facilities

• Continuing Kyphoplasty Settlements• More than 40 hospitals settled for amounts totaling over $39 million• Whistleblowers include former reimbursement manager and former regional sales

manager

Topic 1: False Claims Act and WhistleblowersBest Practices—Part 1 of 2

• Invest more in compliance resources• Training and education• Internal controls• Monitoring • Expectations from leadership• Expectations regarding how you treat complaints or questions• Culture of no retaliation

• “Original Information”• Self reporting• Create an accurate and clear record—in appearance and actuality

• E-mail• Phone calls—logs and recordings• Internal drafts of external communications• Internal presentations and memoranda• Social networking sites, messaging, or chat functions

Topic 1: False Claims Act and WhistleblowersBest Practices—Part 2 of 2

• Investigating Complaints• What do you investigate?• Privilege questions• Inside counsel, regular outside counsel, or new counsel?• Independent committee to oversee?• Form of investigative reports• Plan and conduct the investigation in view of the possible outcomes—

including remedial actions, disclosure, regulatory action and cooperation, private litigation, and privilege waiver

• Interviewing Witnesses• Upjohn warnings and confidentiality admonitions• Well-prepared and skillful witness questioning, incorporating the

investigator’s analysis of evidence• Consider providing counsel to witnesses who want it• Procedures when witness refuses an interview

Topic 2: Physician-Hospital Relationships

• Historical perspective• Accountable Care Organizations• CMS involvement and incentives• Various models

• Co-management service agreements• ACO-like arrangements• Hospital employment of physicians• Physician-hospital organizations• Large multi-specialty group practice that affiliates/partners with hospitals• Integrated physician practice networks

Topic 2: Physician-Hospital RelationshipsIntegrate…Now What?

• Define objectives• Discuss and set expectations• Roadmap for roadblocks• Involve key stakeholders

(including Compliance) at onset• Develop relationships• Due diligence

• People• Behavior• Practices

• Ongoing process

• Compliance needs to be at the table• Various regulatory issues

• Fraud & Abuse• Stark Law• Civil Monetary Penalties• Exempt Organization Laws• Antitrust• Corporate Practice of Medicine• Physician Payment Sunshine Act

• Use of Consultants for determining fair market value

Topic 3: HIPAARecent Highlights

• Final “omnibus” HIPAA regulations published January 25, 2013, with a September 23, 2013 compliance date

• OCR Director Speech from June 7, 2012: Permanent and robust audit program

• Continued emphasis on enforcement

Topic 3: HIPAA PrivacyAudit Protocols—Part 1 of 3

• Release of HIPAA Audit Protocols on June 26, 2012

• Audit vs. Enforcement…• Audit Procedures: 68 Privacy, 77 security, and

10 Breach notification• User-Friendly, so use them in preparation for potential

audit and/or internal audit• Helpful for gap analysis; ensuring completeness of

policies & procedures

Topic 3: HIPAAPrivacy Audit Protocols—Part 2 of 3

• Clichés apply• Be prepared• Timing is everything• Short time frame for response

• 15 days for documentation• 30 to 90 days until on-site activity begins

(data collection, interviews, etc.)• Draft report comes 20-30 days later – 10 days

to respond • Final report issued

Topic 3: HIPAAPrivacy Audit Protocols—Part 3 of 3

• Be prepared to show implementation and enforcement of policies• Developing proof of effective implementation

• Proving a negative? (Not exactly)• Show an organized and useable process (e.g., access to policies,

reporting potential violations, asking questions)• Demonstrate compliance through audits, tests, investigations,

documentation (logs)• Document training

• Develop audit response team

Topic 3: HIPAACase Example: Mass. Eye and Ear Infirmary Settlement

• Reported Facts: Stolen Laptop (3,621 records) • Resolution Agreement – September 13, 2012• Penalty - $1.5 million in 3 installments• Areas of OCR Concern

• Insufficient risk analysis (especially portable devices)• Insufficient security measures to ensure confidentiality of ePHI• Inadequate adoption and implementation of certain policies and procedures

• Correction Action Plan• 3-year term• Hire HHS-approved Monitor; Develop Monitor plan• Review, revise and develop policies & procedures for HHS’s review & approval

(certain minimum content dictated to MEEI)• Distribute policies & procedures to workforce and get signed certification from

workforce• Training and reporting requirements• Implementation report and annual reports

Topic 4: Antitrust DevelopmentsFederal and State Enforcers

• Leading healthcare enforcer today• Mergers involving hospitals and other healthcare

businesses• Pharmaceutical patent settlements

Federal Trade Commission

• Health plan mergersDepartment of Justice, Antitrust Division

• Independently review or join federal investigations• Broader interests than feds (maintain jobs,

preserve failing businesses, price concerns)• State may be an ally to merging parties

State Attorneys General

Topic 4: Antitrust DevelopmentsGovernment Merger Review Process

• HSR Act requires filing with federal agencies• For transactions valued above $68 million• 30-day “clock” delays closing while agency reviews• Closing further delayed by agency “second request” for more information from

parties

• Deals that did not require filing may be reviewed• Agencies have investigated and challenged smaller and consummated

transactions

• Federal court must enjoin transaction• FTC continues in administrative proceeding, DOJ in court• Both appeal to U.S. Court of Appeals

Topic 4: Antitrust DevelopmentsRecent Challengers to All Kinds of Mergers

• Hospitals• Physicians• Health Plans• PBMs• Pharmacies• Dialysis Centers

Take Home

Government is litigating and often winning merger challenges

Topic 4: Antitrust DevelopmentsMerger Challenges

• Internal Company Documents • The key to Government lawsuits• Be cautious in describing your position and rivals’ competition in

strategic planning and premerger documents• Antitrust agency will use your documents against you

Topic 4: Antitrust DevelopmentsSecond Term of Obama Administration

• Aggressive rhetoric, investigations, and enforcement actions

• Challenges to small and consummated deals• Efforts to expand authority• Willingness to litigate

• New leadership at both agencies

• Little change in enforcement programs

Thank you.Questions?

Additional Media:www.thecomplianceblog.com

www.healthcarelawmatters.comTwitter:@hclawyer

Frank E. Sheeder, Esq.Partner, DLA Piper

frank.sheeder@dlapiper.com(214) 743-4560

Kevin Lyles, Esq.Partner, Jones Day

kdlyles@jonesday.com(614) 281-3821

Diane MeyerChief Compliance and Privacy Officer

Stanford University Medical CenterDMeyer@stanfordmed.org

(650) 724-2572