CODE OF ETHICS PROGRAM

Transcription

1 1 Ethical Guidelines for Legal Compliance for Radiation Therapy Vendors and Health Care Providers Dining With Doctors: The Only Industry Where Being Nice to Your Customer Can Land You In Jail 2 CODE OF ETHICS PROGRAM Clark Silcox, General Counsel National Electrical Manufacturers Assn Medical Imaging & Technology Alliance (MITA) Cla_Silcox@nema.org Judith Waltz, Partner Foley & Lardner LLP One Maritime Plaza, 6th Floor San Francisco, CA jwaltz@foley.com (415)

2 3 Why Are We Here Today? Medicare Act Anti-kickback provisions Anti-fraud (false claims) provisions Proliferation of industry guidelines beginning in 2003 addressing interactions between vendors and health care providers The law applies to both vendors and doctors and health care institutions It s about transactions between them involving something of value 4 What Are The Issues? Vendor Sponsored Product Training and Education Supporting Third-Party Educational Conferences Sales and Promotional Meetings Arrangements with Consultants Gifts, paid entertainment, recreation, meals Providing Reimbursement and other Economic Information Charitable Donations Research Grants 2

3 The Recent History of Our Story Starts Here 5 TAP Pharmaceuticals pleads guilty in 2001 and pays $885mm fine for violation of anti-kickback laws under Medicare Act Indictment issues against several TAP employees Indictment later issues against 4 doctors for solicitation of kickback 6 Dr. Jacob Zamstein Medical Education: University of Texas Medical School (San Antonio, TX) Residency: College of Medicine and Dentistry (Newark, NJ) University of Connecticut Health Center (Farmington, CT) Certification: American Board of Urology Hospital Affiliations: St. Francis / Mt. Sinai Hospital Hartford Hospital 3

4 Excerpts from the Transcript of Sentencing 7 THE COURT: All right. So why don t I hear you with respect to sentencing overall. MR. McGUIGAN: Thank you very much, your Honor. This has been a difficult * * * case for us. Dr. Zamstein has been an outstanding, highly competent, and, more importantly, I think if you look at all those letters from patients and doctors, a compassionate doctor whose caring for his patients is really uncommon. He is not only a wonderful doctor, but his conduct, he recognizes, is inexcusable. He s ashamed and guilt ridden by what he has done. He has brought, in his eyes, disgrace to his family and to himself. * * * Excerpts from the Transcript of Sentencing 8 THE COURT: Thank you, Mr. McGuigan. Dr. Zamstein, is there anything you d like to say? DR. ZAMSTEIN: Thank you. I m deeply sorry and I m very ashamed of what I did. I know I deserve to be punished, and I know that whatever the Court chooses to do with me today will be fair 4

5 9 Anti-Kickback Settlements with OIG: physicians caught up in the wake of the TAP Pharmaceuticals criminal case September 30, 2004 A California physician agreed to pay $57,500 and to enter into an Integrity Agreement to resolve his liability under the CMP provisions applicable to false claims and kickbacks. The OIG alleged that the physician received free samples of the prostate cancer drug Lupron from Tap Pharmaceutical Products, Inc. and billed at least some of those samples to Medicare and other payers. September 15, 2004 A Texas physician agreed to pay $38, and to enter into an Integrity Agreement to resolve his liability under the CMP provisions applicable to false claims and kickbacks. The OIG alleged that the physician received free samples of the prostate cancer drug Lupron from Tap Pharmaceutical Products, Inc. and billed at least some of those samples to Medicare and other payers. August 20, 2003 A Tennessee physician agreed to pay $71,400 and to enter into an Integrity Agreement to resolve his liability under the CMP provisions applicable to false claims and kickbacks. The OIG alleged that the physician received free samples of the prostate cancer drug Lupron from Tap Pharmaceutical Products, Inc. and billed at least some of those samples to Medicare and other payers. 10 Anti-Kickback Settlements with OIG: physicians caught up in the wake of the TAP Pharmaceuticals criminal case July 3, 2003 A Monterey Park, California, physician agreed to pay $80,000 and to enter into an Integrity Agreement to resolve his liability under the CMP provisions applicable to false claims and kickbacks. The OIG alleged that the physician received free samples of the prostate cancer drug Lupron from Tap Pharmaceutical Products, Inc. and billed at least some of those samples to Medicare and other payers. February 19, 2003 A Chula Vista, California, physician agreed to pay $64,326 and enter into an Integrity Agreement to resolve his liability under the CMP provisions applicable to false claims and kickbacks. The OIG alleged that the physician received free samples of the prostate cancer drug Lupron from TAP Pharmaceutical Products, Inc. and billed at least some of those samples to Medicare and other payors. 5

6 More Cases Follow NEW YORK -- Pfizer Inc. (PFE) in January took a $427 million pre-tax charge to gird against a final settlement in Neurontin marketing-related litigation, so Thursday s decision to plead guilty US picking up pace of device inquiries Probes to focus on allegations of fraud, abuse By Ross Kerber, Boston Globe Staff May 19, 2004 Cases against other device makers ''are going to be coming into the pipeline," Morris said. USA Today April 1, 2005: Artificial joint makers probed At least five companies (Biomet, J & J, Stryker, Zimmer and Smith & Nephew) have received subpoenas in a federal investigation of contracts between makers of orthopedic devices and surgeons who implant artificial knees and hips. Shares of all five companies fell Thursday as investors reacted to news of the investigation. The only industry where being nice to your customer can land you in jail. Inspector General Issues Guidelines 12 HHS Office of Inspector General Guidelines for Pharmaceutical Manufacturers

7 13 Other Segments of Industry React AdvaMed Code of Ethics February Other Segments of Industry React American Medical Association Opinion E8.061 Gifts to Physicians from Industry Updated June

8 15 Other Segments of Industry React NEMA Code Ethics On Interactions with Health Care Providers November The reaction spills over our border Not just in the United States EUCOMED November 2004 MEDEC (Canada) COCIR October

9 17 Health Care Institutions React 18 Health Care Institutions React Stanford University Guidelines for Interactions with Pharmaceutical, Biotech and Medical Device Supplier Industries November

10 19 It s Hitting the News 20 It s Hitting the News 10

11 21 It s Hitting the News 22 It s Hitting the News 11

12 23 FOR IMMEDIATE RELEASE TUESDAY, JULY 18, Medtronic to Pay United States $40 Million to Settle Kickback Allegations WASHINGTON Medtronic Inc. has agreed to pay the United States $40 million to settle civil allegations that its Medtronic Sofamor Danek division (MSD) paid kickbacks to doctors to induce them to use MSD s spinal products, the Justice Department announced today. The government had alleged that, between 1998 and 2003, Medtronic paid kickbacks in a number of forms, including sham consulting agreements, sham royalty agreements and lavish trips to desirable locations. The Justice Department contended that these kickbacks violated the Anti-Kickback Statute and the False Claims Act. The government s investigation was triggered by the filing of a qui tam action. Under the False Claims Act, private parties may file whistleblower suits on behalf of the United States and collect a share of any recovery. Anti-Kickback Settlements With OIG: Golf, Entertainment, Meals 24 Kickback and Physician Self-Referral 2006 May 15, 2006 Lincare Holdings, Inc. & Lincare, Inc. (Lincare), Florida, agreed to pay $10 million and to enter into a 5-year integrity agreement to resolve its liability under the Anti-Kickback Statute provision of the CMPL and the Stark Law. The OIG alleged that Lincare offered and paid remuneration to potential and existing referral sources to induce referrals of patients to Lincare for the furnishing of durable medical equipment. The remuneration included sporting and entertainment event tickets, gift certificates, rounds of golf, golf equipment, fishing trips, meals, advertising expenses, office equipment, and medical equipment, as well as payments pursuant to purported consulting agreements. February 16, 2006 Two south Florida pulmonologists, agreed to pay $65,066 and $57,030, respectively, and enter into a 3-year Integrity Agreement to resolve their liability under the Anti-Kickback Statute provision of the CMPL and the Stark Law. The OIG alleged that the doctors violated those laws by accepting gifts, including Miami Dolphins tickets and meals, from a durable medical equipment (DME) supplier in exchange for patient referrals. 12

13 Anti-Kickback Settlements With OIG: Golf, Entertainment, Meals 25 a number of physicians were paid $5,000 for every five new patients tested with an ANS product. The OIG alleged that this program did not have any significant clinical value but rather served as a marketing tool to increase ANS sales. In addition, the OIG alleged that ANS sales and marketing personnel provided physicians with sports tickets, free trips, free dinners, grants, and other gifts during the relevant time period. 26 Anti-Kickback Convictions U.S. v. Westerburger (S.D.Fl. 2006) Dr. Westerburger established referral relationships with certain vendors of equipment and medications. Vendors referred patients to Dr. Westerburger and told her what type of equipment or medications she needed to prescribe. Vendors paid Dr. Westerburger a $50 - $200 cash kickback for each prescription Sentenced to 46 months in jail, and ordered to pay $2.3 million in restitution Also charged with tax evasion 13

14 What does it Take to Violate the Anti-Kickback Statute? 27 The anti-kickback statute may be violated if: Anything of value is offered or given Even one purpose of the offer or gift is to influence the recipient's reason or judgment with respect to referring, ordering, recommending or arranging for items or services that may be covered under a federal or state health care program (e.g. Medicare and Medicaid) What Constitutes Something of Value? 28 Cash or other compensation Gifts and other free items and/or services Meals, entertainment and travel expenses 14

15 29 The OIG goes where the $ flows Anything of value from Company to customer (physician, hospital, GPO) raises a question for the OIG: Is it intended to induce purchase? Bottom Line Will it increase costs? Will it harm beneficiaries? Is there another legitimate business reason? 30 Reality-based Guidelines 15

16 Supporting Third-Party Educational Conferences 31 NEMA Code Members should not make educational grants directly to the Health Care Providers so that they might attend the conference TAP Indictment Allegations Free Trips and Conferences: The TAP Conspirators invited urologists to attend all-expenses paid weekend conferences at golf, ski and beach resorts as "consultants" to TAP These events,... generally cost about $200,000, or $5,000, more or less, per attending urologist,... Between 1995 and 1998, the TAP Conspirators held in excess of ten such events, at... the Ritz-Carlton Aspen, Aspen, Colorado; the Scottsdale Princess, Scottsdale, Arizona; the Four Seasons Biltmore, Santa Barbara, California; and the South Seas Plantation, Captiva Island, Florida Supporting Third-Party Educational Conferences 32 NEMA Code Members should not make educational grants directly to the Health Care Providers so that they might attend the conference Members may provide a grant directly to the Conference sponsor who have a genuine educational purpose of function TAP Indictment Allegations Educational Grants: The TAP Conspirators offered and gave so-called educational grants to urologists, hospitals, and health maintenance organizations, and to doctors and other individuals who held positions at such institutions which positions gave to those individuals the authority and ability to influence that institution's drug purchasing decisions,... 16

17 Member Sponsored Product Training and Education 33 NEMA Code Hospitality at such training programs should be modest in value and subordinate to the focus on training Members should not pay for hospitality in the form of sporting tickets or golf TAP Indictment Allegations In order to induce Dr. S to switch his patients from Zoladex to Lupron, the sales representative, with the defendant Mark Smith s approval, gave him numerous things of value, including monies for golf outings in 1997, 1998 and Sales and Promotional Meetings 34 NEMA Code (FAQs) A Member may not take a Health Care Provider to a golfing or professional sporting activity because it is viewed as improper inducement by relevant governmental authorities TAP Indictment Allegations Dr. S had told her that while he has been a longstanding loyal Lupron customer for years and feels one good deed deserves another TAP needed to be aware of his needs, that other companies were holding large golf outings and providing things etc. that TAP has never offered and that he would do what he feels necessary with his Lupron business if TAP does not agree to provide what other companies offer generously. TAP thereafter provided to the doctor $1,950 for a golf tournament 17

18 Consulting Arrangements 35 NEMA Code (FAQs) Members may enter into bona fide consulting arrangements with a Health Care Provider and pay reasonable compensation for services actually performed, where a legitimate need has been identified in advance TAP Indictment Allegations Employment as a Consultant : As an inducement for Lupron purchases, the TAP Conspirators at times made payments to certain urologists as consultants under agreements in which TAP paid the urologist s expenses in attending a conference without expecting to receive, or in fact receiving, any consulting services 36 Research Funding The NEMA Code: Separation of Church (Sales) and State (Research Funding) Legitimate, well-defined milestones, deliverables, and in writing Research proposal evaluated, negotiated, and managed by persons who have NO ROLE in Sales NO CONDITIONS LINKING PAST, PRESENT OR FUTURE PRODUCT PURCHASES TO RESEARCH 18

19 37 Research Grants R&D Grants not permitted. Government does not look on unrestricted funding with favor Can an institution talk to a vendor s sales representative about research funding? Yes, but the better way to inquire is simply to ask the vendor s sales person who inside your company can I talk to about a research project? 38 Prosecution of Health Care Fraud & Abuse Cases 19

20 Sources of Referrals 39 Employee Complaints Investigative Agency Referrals Patient Complaints Competitor Complaints United States Attorney s Office Citizen Complaints Qui Tam Complaints Audit Agency Reviews Hotlines 40 Enforcement In determining whether to prosecute, the IG looks at a variety of factors: Increased charges or costs reported for items paid by Medicare or Medicaid Possible encouragement of over-utilization Other inappropriate influences on patient treatment Whether there is a legitimate business purpose, which the arrangement is reasonably designed to carryout Intent of the parties Common Industry Practice is not a defense 20

21 Civil & Criminal Fraud Referrals 41 United States Attorneys offices have established close ties with numerous governmental law enforcement agencies In addition to the HHS-OIG, they work closely with the Federal Bureau of Investigation, IRS Criminal Investigation Division, the Drug Enforcement Administration, the Department of Defense, and state and local investigators 42 Enforcement Options Civil Criminal Administrative 21

22 Civil Enforcement Efforts 43 False Claims Act Qui Tam Provisions The United States recovered $1.4 billion in fraud and false claims settlements and judgments for fiscal year ending Sept. 30, 2005, bringing total recoveries since 1986 to $15 billion* As in the last several years, health care accounted for the lion's share of fraud settlements and judgments," amounting to $1.1 billion* Lawsuits initiated by whistleblowers under the FCA qui tam provisions accounted for $1.1 billion of the $1.4 billion* * Department of Justice Press Release Civil Enforcement Efforts 44 False Claims Act 31 U.S.C Whistleblower statute that financially rewards persons who successfully prove that claims submitted to the government are false or fraudulent Attorneys actively seek case from disgruntled employees and competitors Responsible for most of government s largest recoveries 22

23 Civil Enforcement Efforts 45 False Claims Act 31 U.S.C The False Claims Act provides that liability may be imposed: on any person who knowingly presents, or causes to be presented to the United States, a false or fraudulent claim for payment or approval Civil Enforcement Efforts 46 False Claims Act 31 U.S.C Intent to defraud not necessary Burden of proof is preponderance of the evidence As compared to clear and convincing As compared to "beyond a reasonable doubt Penalty provision gives government leverage - penalties are non-discretionary with the court 23

24 Civil Enforcement Efforts 47 False Claims Act Theories Used Against Device Manufacturers Billing for services not provided Upcoding Code Jamming (Incorrect ICD-9) Billing for non-covered service Forged documents [e.g. CMNs] Kickbacks Beneficiary solicitation /inducements Stark violations Bundled sales Billing experimental or off-label use Improper use of reimbursement coding Civil Enforcement Efforts 48 False Claims Act Damages & Penalties Civil penalties between $5,500 and $11,000 for each false claim Three times the amount of damages sustained by the government 24

25 49 Anti-kickback Statute Penalties Criminal Felony Up to 5 years in prison, and up to $250,000/$500,000 in fines Exclusion from Medicare/Medicaid and other federal procurement and non-procurement programs and activities Civil Exclusion from Medicare/Medicaid and other federal procurement and non-procurement programs and activities Other Discovery Tools 50 Civil subpoena Civil discovery process Interrogatories Requests for admissions Depositions Administrative subpoena Grand jury subpoena Search warrants 25