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EXTERNAL AND INTERNAL INVESTIGATIONS AND

VOLUNTARY DISCLOSURES

Gabriel L. Imperato, Esq.Broad and Cassel

Fort Lauderdale, FLgimperato@broadandcassel.com

SCCE COMPLIANCE & ETHICS CONFERENCE

October 9, 2009

Minneapolis, Minnesota

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Response Strategy

� Key components for response strategy to government scrutiny and liability for violations of the health care fraud and abuse laws include:

�Conducting an internal investigation.

�Note: Information obtained may be discoverable and used in civil or criminal proceedings

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What is the Basis for the Investigation?

� What is Nature of Investigation?

�Criminal

�Civil

�Administrative

�Third Party proceeding

� Internal compliance matter

�All of the above.

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What is the Nature of the Investigation? (Cont’d.)

� What is Scope?

�Formal inquiry or complaint vs. “routine” –Is there really ever a “routine” investigation?• Search warrant

• Subpoena

• Request for documents

�Administrative

�Third Party Proceeding

�All of the above.

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When is Internal Investigation Warranted?

� Response to any external investigation or proceeding

� Credible evidence of misconduct or other non-compliant activity (i.e. overpayment)

� Actual notice of a potential violation thru third party action or audit

� Compliance program requirement�Hotline matter�Question�Auditing and monitoring.

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Enforcement and External Investigations

� DOJ� FBI� IRS� Attorney General� Other Federal and State Agencies

� SEC� OIG-HHS� State and Regulatory Licensing Agencies

� Multi-Agency Task Forces

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How Investigations are Initiated

� Competitor complaint

� Citizen/Consumer complaints

� Current or former employees –“Whistleblower” complaints

� Carrier and FI actions

� Insurance company complaints.

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Investigative Techniques

� Informal interviews (current and former employees)

� Insider informants (i.e. whistleblower)

� Search warrants

� Subpoenas

� Electronic Surveillance.

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When the Government Knocks to Obtain Documents. . .

� Subpoena or search warrant or simple request by government agent

� Employees should notify executives immediately

� Executives refer agent to company’s counsel.

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R E M E M B E R

� Search warrant

� Agents can seize originals

� Corporations do not have 5th amendment privilege – only individuals.

� If agent demands copy of personal records –(5th Amendment) respectfully decline and refer to counsel.

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If Search Warrant

� Request copy of warrant and affidavit (may not be available)

� Accept warrant and fax to counsel

� If you are not there – have employee fax to you and your counsel

� Send all employees (except Response Team or Coordinator) away from work location.

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And. . .

� DO NOT INTERFERE WITH AGENTS

� Review warrant carefully

� Agent can only seize what is identified on warrant

� Bring to agent’s attention if search areas are not listed in warrant

� List may include personal (5th Amendment) and corporate records and privileged documents.

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And. . .

� No requirement to speak to Agents or respond to questions

� Respectfully decline and refer Agent to counsel

� Search warrant is for documents and E-data, not testimonial evidence.

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If Search Warrant (cont’d.). . .

� Identify attorney/client privileged documents

� Identify and determine agency of each investigator and the agent in charge and request contact information

� Agents will request signature on a vague inventory of items seized – avoid execution of document

� Keep your own inventory of areas searched, items seized and questions asked by the agents.

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Post Search

� Request debriefing from investigators and/or government attorneys

� Consider public relations

� Debrief Employees and Response Coordinator/Team – prepare statement with counsel

� Employee rights

� Obstruction

� Hold documents

� Attempt to obtain copies of documents seized after search through counsel.

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Subpoena

� Served by mail or agent

� Does not require immediate response

� Typically has return date

� For documents and/or testimony

� Turn over to counsel.

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What to do. . .

When the Government Knocks to Interview You or Your Employees

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Your Rights

� May decline to speak with Agents

� May voluntarily speak to Agents, but no obligation to do so

� May be represented by counsel

� 5th Amendment Right to Refuse

� Ask Agent to contact your counsel

� Company can advance $$ for Employee legal fees

� Joint Defense Agreement – share information with others – still privileged.

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Your Employees’ Rights

� May volunteer information, but not obligated to speak with Agents

� Right to be represented by counsel at interview

� Organization’s counsel can assist, but not represent Employees personally

� Organization’s counsel represents organization

� Employee can retain their own counsel

� Don’t forbid Employee to speak to Government Agents

� Obstruction of Justice

� Ask Employees to advise if visited by Government Agents but do not mandate.

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Conducting An Internal Investigation of the Organization

� Proliferation of Federal and State government initiated investigations have led organizations to be prepared to respond to and manage such investigations.

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Conducting An Internal Investigation (Cont’d.)

� The initiation of an internal or parallel investigation of an organization with reference to the allegations raised against the organization is critical to a resolution of any internal or external matter

� It is also critical for any organization’s compliance program and compliance strategy.

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Scope and Accountability of Internal Investigation

� The most important initial consideration to be taken into account when directing and conducting an internal investigation of any organization involves a clear understanding regarding the scope of the review and inquiry.

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Overview of Internal Investigation

� Internal Investigation

�Scope and Accountability of Internal Investigation

�Matters of Privilege

�Managing the Investigation

� Investigative Methodology

�Directing & Documenting the Results

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Scope and Accountability ofInternal Investigation

� Understand the scope, method and accountability and reporting between:

� the law firm directing the investigation;

� the consultants conducting the investigation;

� And

� the client organization which is authorizing the internal investigation.

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Investigative Process

Validate Whether There Is An Issue

Yes

Detailed Work plan

Execute Work plan

Corrective Action Plan

Execute Corrective Action Plan

Take Remedial Actions

Follow-Up to See if CAP Worked

No

Stop and Document Closure

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Validation and Planning

� Even OIG says it is OK to validate whether there is an issue

� Too many providers rush to judgment

� “Chicken Little” approach

� Siege mentality

� Grapevine gets ahead of investigation

� You never end up where you thought you would

� Privileges and protections get ignored.

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Doing Nothing is Risky

� Diversion of attention from core activities

� Harm to reputation

� Careers get ruined

� Financial penalties, exclusion

� Lawsuits naming people individually

� Fees for counsel, consultants, experts

� Compliance with a government request for information (even if ill-founded) can be expensive and resource-intensive.

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Actual Failures Due to Lack of Investigation

� Compliance issues walk out the door

� Demotions, counseling, and bad evaluations after compliance issues reported

� Promotions of employees who caused non-compliance

� Complaints dismissed because employee was rude, incompetent, lazy, fill in the blank

� CFO knew of issue and commented, “If anyone finds out, we’ll all go to jail.”

� Multiple internal audit reports identified the issue and management ignored it

� Administrator looked the other way because the physician was a high admitter.

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Practical Initial Questions

� Differing agendas in integrated settings?

� Conflicts of interest?

� What is the time period at issue?

� What if there are collateral issues?

� Who are the point people internally?

� Who is and who is not on the team?

� How to preserve privilege?

� How much to reserve or escrow?

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Beginning an Internal Investigation

� Compliance program road map

� Establish privileges and protections

� Use consultants only if under privilege

� Remove stakeholders from the process

� Create work plan

� Secure documents

� Document processes

� Anticipate the endgame.

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Discussing the Scope of the Internal Investigation

� Subject matter to be addressed

� Who the law firm will be accountable to within the client organization

� Who the investigative team will be accountable to within the client organization; and

� The extent which the team will proffer conclusions of fact and/or law.

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Stakeholders Removed from Process

� Independence

� Objectivity

� Candor

� Credibility

� Fairness

� Effective compliance program

� Anti-retaliation.

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Actual Stakeholder Quotes

� “I don’t want to be squeaky clean. Just clean enough.”

� “I don’t want to be a poster child for compliance.”

� “I can’t believe he admitted doing that.”

� “Oh, I thought you were against us. Now let me tell you the real story.”

� “I can’t imagine a situation in which I would admit we’ve done anything wrong.”

� “Your job is to keep [Compliance Officer] out of our facility.”

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Solutions for These Challenges

� Regular counsel and consultants may not be the best choice

� Build relationships and confidence in non-crisis situations

� Understand disconnect between clinical, regulatory, business, and legal matters

� Don’t shoot from the hip

� Have an “Investigation orientation” up front� Obtain buy-in on the process in advance

� Acknowledge and discuss these viewpoints

� Establish a provider’s non-delegable responsibility to document, code, and bill correctly.

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Getting Counsel Involved

� Expertise in white collar and health care compliance

� Familiarity with government regulators

� Conflicts of interest

� Government’s perception

� Familiarity with organization and industry segment

� Cost

� Independence

� Objectivity

� Disruption

� Availability.

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Considerations with Consultants

� “Bad paper”

� Privilege and work product protection

� Scope of engagement

� Flow of information

� Stakeholders cannot participate.

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Document Requests

� Appoint document custodian

� Delegate authority

� “Internal Subpoenas”

� Attestations

� Label and index documents

� Control access

� Stop document destruction/data archiving.

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Witness Interviews

� Who counsel represents and right to counsel

� Potential to use information with government

� Options regarding speaking to agents

� Search warrant policy

� Anti-retaliation policy

� Confidentiality

� Cooperate fully and completely

� Must be truthful

� Discuss other issues.

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Corrective Action Plan

� Specific

� Accountability at operational level

� Deadlines

� Column for documenting closure

� Remedial measures

� Policy and system changes

� Personnel changes

� Refund overpayments

� Voluntary disclosure

� Follow-up to see if remedial measures worked.

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Reporting Responsibility

� The investigative team may report to:

�the Board of Directors

�a special committee of the Board of Directors (i.e. Audit Committee);

�the General Counsel for the organization; and/or

�CEO or other members of the management team.

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Matters of Privilege

� Law firm must document the investigative process in order to ensure the application of the:

�the attorney-client privilege;

�work product privilege; and

�self-evaluative privileges.

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Consider Issues of Future Disclosure

� Findings and conclusion may be disclosed to government in the context of resolutions

� Potential waiver of attorney-client and work product privilege by sharing with third-party

� Joint Privilege Agreements

� DOJ Principles of Corporate Prosecution.

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Managing the Investigation

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Organization’s Expectations

� Time frame for completion;

� The resources necessary;

� What types of experts may be needed; and

� The potential scope of the culpability.

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Simultaneous Internal and Government Investigations

� Communicate organization’s intentions with the government;

� Seek cooperation from the government in delaying or completing their own investigation.

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Investigative Methodology

� The investigative techniques and methodology should be discussed with the client organization.

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Addressing the Investigative Methodology

� What documents have to be reviewed?

� Do any computers have to be downloaded and searched? Scope of E-discovery

� Will offices have to be secured and searched?

� How many current or former employee interviews are likely?

� Does your client’s company currently have a compliance program? How effective?

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Directing and Documenting the Results

� Providing the client organization with periodic updates so it is aware of the status of the investigation.

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Documenting the Results

� Determine:

�whether to have one or two people present during the interviews;

�who should take notes and whether those notes should be memorialized in written interview memoranda; and

�Whether to retain the original notes or dispose of them after the write-ups are finalized.

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What Do You Do With the Results of the Internal Investigation?

� Check the rules and regulations

� If confusing or ambiguous, seek clarification from:

�Counsel

�CMS, OIG, Carrier, Fiscal Intermediary

�Outside Experts (accountants, certified coder, etc.).

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IMPORTANT

� If the results of the investigation may be turned over to the government, determine:

�Whether there will be a written or oral presentation of findings; and

�What impact this may have upon the attorney-client and work product privileges

�Cooperation/Waiver of Privilege.

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Results (Cont’d.)

� The organization, attorneys and investigative team should consider whether to disclose findings to the government:

� If the results do not deal with an overpayment (i.e. Anti-kickback Statute violation) you do not have a duty to report.

�However, the issue could be disclosed to governmental agency or be the subject of a qui tam lawsuit.

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Voluntary Disclosure

� Providers who have discovered that they have received overpayment from a Federal health care program or have identified non-compliant activity or misconduct have a variety of voluntary disclosure options available to them.

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OVERVIEWProviders May Choose to Self-

Disclose To:

� An intermediary or carrier;

� CMS

� The OIG-HHS;

� The appropriate State Medicaid Fraud Control Unit;

� The State governing body that regulates the provider’s practice; and/or

� The Department of Justice (the “DOJ”).

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MANDATORY DISCLOSURE

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Duty to Disclose

� General Rule: Businesses and individuals are under no legal obligation to report non-compliance and/or misconduct to the government.

� Fifth Amendment: Protects individuals from compelled disclosure of incriminating evidence. The Fifth Amendment does not protect corporations and fictitious persons

� Federal health program participants are required to “return known overpayments.”

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Disclosure to the Carrier or Intermediary

� No indication of Intentional Wrongdoing:

� Disclose as an overpayment refund to the Carrier or Intermediary. Disclosure should be in writing and should identify:

1. The error that caused the overpayment;

2. An overpayment estimate with an explanation of the method of calculating the overpayment;

3. The period of time reviewed; and

4. The corrective action the provider took to remedy the problems, if it was not a government error.

� The provider returns a check to the Intermediary.

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False Claims Act Disclosure

� Offers providers incentives to disclose matters within its scope voluntarily.

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Incentives

� The provider will be required to refund only double damages instead of facing treble damages.

� The provider will not face the per claim penalties otherwise applicable and ranging between $5,500 and $11,000 per claim; and

� The possibility of preventing Qui Tam actions from being instituted with respect to the matters disclosed.

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Disclosure Requirements

� First, the disclosure must be made to the Department of Justice (“DOJ”)

� Second, the disclosure must be made by the person or entity that violated the FCA.

� Third, the disclosure must be made within 30 days after the provider first obtains information about the FCA violation.

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OIG’s Provider Self-Disclosure Protocol

1. Initial Disclosure

2. Internal Investigation

3. Self-Assessment Guidelines

4. OIG’s Verification

5. Cooperation with the OIG

6. Payments.

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Internal Investigation

� Review should comply with OIG’s guidelines

� Matter will not be resolved with OIG until completion of assessment

� Conduct an internal investigation

� Submit a Voluntary Disclosure Report which must:

� identify potential causes

� describe the incident

� identify period incident occurred

� identify parties who knew of the incident; and

� estimate the monetary impact.

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Self-Assessment Guidelines

� OIG requires the provider to:

� Complete an internal investigation and disclose the facts

� Conduct a self-assessment and quantify potential liability

� Assist OIG in verification process.

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OIG’s Verification

� Upon receipt of the provider’s report, the OIG will begin verifying the disclosed information

� The OIG requires full access to all audit work papers without the assertion of privileges.

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Payments

� The OIG will not accepts payments of presumed overpayments by provider until the OIG has verified the disclosed matter.

� Therefore, should place estimated overpayments in an interest-bearing escrow account.

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Cooperation with the OIG

� If a provider fails to work in good faith, the OIG will consider that an aggravating factor.

� Any intentional submission of false or untruthful information will likely be referred to the DOJ or other Federal agencies.

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