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									                   Health Care Fraud
               Enforcement Update
           Healthcare Financial Managers Assn.

                       December 1, 2006
                   Westborough, Massachusetts

                         Michael K. Fee
                       Ropes & Gray LLP
                     Boston, Massachusetts

                   Current Landscape
   Pursuit of health care fraud continues.
   Last year I noted that some reductions
   have occurred as law enforcement
   priorities have shifted.
   Overall activity appears to reflect this
   trend: stable results, stable case volume.
   Recoveries are large, but large cases.
   Control of Congress has changed.
                            Michael K. Fee
December 1, 2006           Ropes & Gray LLP

    Monetary Recoveries, Sanctions
            and Penalties
   October 2006 Report on the Health Care Fraud
   and Abuse Control Account-FY 2005
   $1.47 billion in judgments and settlements
   $1.55 billion transferred to the Medicare Trust
   Fund. ($8.85 billion transferred since inception,
   U.S. Attorneys reported: 935 new criminal health
   care fraud cases; 1,689 investigations pending;
   778 new civil investigations; and 266 complaints
   or interventions in whistleblower actions.
                      Michael K. Fee
December 1, 2006     Ropes & Gray LLP

Justice Department Civil Recoveries
   The False Claims continues to be fertile ground
   for Justice Department civil recoveries. Calendar
   2006 recoveries:
       - $900 million from Tenet Health.
       - $435 million from Schering Plough.
       - $265 million from St. Barnabas Hospitals.
       - $64.2 million from Edgewater Hosp. COO.
       - $25.1 million from Pediatrix.
       - $36.9 million from InterMune.
       - $14 million from University Hospital (CLE).
                      Michael K. Fee
December 1, 2006     Ropes & Gray LLP

  Exclusions from Federal Programs
   3,805 providers excluded in FY 2005.
   3,293 providers excluded in FY 2004.
   Of the 3,805 providers excluded in the last
   fiscal year:
       53% excluded due to license revocation;
       20% excluded due to healthcare-related
       crimes; and
       8.5% excluded because of patient abuse or
                         Michael K. Fee
December 1, 2006        Ropes & Gray LLP

   U.S. Attorney’s Office continues to focus on what has
   yielded results: Pharmaceutical Companies.

   Schering Plough (August 2006) -- $435 million from
   criminal and civil resolutions. Alleged misrepresentation
                       price.” Off-
   of Medicaid “best price.” Off-label marketing/promotion
   of Temodar. Company alleged to have conducted “lavish
   entertainment” of physicians and operated “sham
   advisory boards” to encourage off label use.

   James Taylor, Vejay Oxygen Inc., West Suburban
   Medical Rental, Westborough Home Health. Respiratory
   home health care equipment never delivered.

                         Michael K. Fee
December 1, 2006        Ropes & Gray LLP

   USAO intervened in False Claims Act case
   against Dey Pharmaceuticals: alleged
   manipulation of price (500% mark-up) to
   create remunerative “spread.”
   Numerous other pharmaceutical
   companies are under investigation for off-
   label marketing activity.
   Physicians involved as witnesses or worse?
   U.S. v. Gleason, U.S.D.C. Brooklyn, NY.

                         Michael K. Fee
December 1, 2006        Ropes & Gray LLP

  Massachusetts Attorney General: participated in case
  against Omnicare, a national operator of nursing
  Omnicare paid 42 states $49.5 million for an improper
  “therapeutic interchange program. Massachusetts
  share, $848,841.
  Nursing home operators indicted (October 2006).
  Logan brothers alleged to have committed numerous
  crimes. Indictments followed a three-year
  Nursing Assistant sentenced to jail for patient abuse.
  Peoples Benefit Services: consent decree arising from
  deceptive prescription drug program for seniors.
  Glaxo Smith Kline – multi-state settlement involving
  delay of generic competitors to Paxil.
                         Michael K. Fee
December 1, 2006        Ropes & Gray LLP

         MFCU Activity Nationwide
   MFCUs claim to have recovered $709 million in
   FY 2005.
   MFCUs claim exclusions in ’04 and ’05 totaled
   1,267 (18% of OIG’s total).
   Nationally, MFCUs pledge additional hires,
   additional coordination and activity in the
   following areas:
       Payments for patent transportation (medical
       Claims for care by unlicensed or excluded providers;
       Durable Medical Equipment (necessary? delivered?);
       Abuse, neglect and poor quality of care (majority of
                           Michael K. Fee
December 1, 2006          Ropes & Gray LLP

         Some Litigation Success for
   United States ex rel. Health Outcomes
   Technologies v. Hallmark Health, et al.
       U.S. District Court for D. Mass. (Jan. 2006) appeal
       abandoned by United States, July 2006.
       Challenge to the United States’ complaint under the
       False Claims Act.
       U.S. and relator alleged improper “upcoding” of
       inpatient pneumonia cases at three community
       Case was part of national initiative that involved over
       100 hospitals around the country.
       Only case in which the government’s complaint was
       dismissed in its entirety: violation of statute of
                           Michael K. Fee
December 1, 2006          Ropes & Gray LLP

         Some Litigation Success for
   In re Cardiac Device Qui Tam Litigation:
   Second Circuit, November 2006.
       40 teaching hospitals (including three from
       Massachusetts) sued under FCA by a relator
       and the United States.
       Alleged false billing for investigational cardiac
       devices (pre-new regulation in 1995).
       Second Circuit ruled case barred by statute of
                          Michael K. Fee
December 1, 2006         Ropes & Gray LLP

         Some Litigation Was Not So
   Amerigroup Corp. (False Claims Act Jury verdict
   October 27, 2006).
       Medicaid managed care organization.
       Alleged “discrimination” against enrolling pregnant
       $48 million in damages. 18,130 “claims” found to be
       “This is a warning to every company out there. If the
       feds show up and suit up, it’s not time to lawyer up,
       it’s time to settle up.” Spokesman for Taxpayers
       it’                 up.”
       Against Fraud
                          Michael K. Fee
December 1, 2006         Ropes & Gray LLP

What Can We Expect in the Coming
   Whistleblowers will continue, in part, to
   help set the agenda for the enforcers.
   Taxpayers Against Fraud claim that 80%
   of the FCA cases brought by the U.S.
   originate with whistleblowers.
   More law being developed under the FCA.
   More litigation?

                    Michael K. Fee
December 1, 2006   Ropes & Gray LLP

What Can We Expect in the Coming
   Continued focus on pharmaceutical
   Ambulance company-hospital
   relationships: interest in Part A/Part B
   “swapping” arrangements.”
   Cost Report Fraud: St. Elizabeth Regional
   Medical Center, failure to return
   overpayments achieved through the help
   of a consultant (unallowable costs).
                    Michael K. Fee
December 1, 2006   Ropes & Gray LLP

What Can We Expect in the Coming
   Additional congressional pressure and oversight.
       Pete Stark returns as chairman of the Health Care
       Subcommittee of the House Ways & Means
       Congressman Stark interested in:
            Kickbacks to doctors receiving software and support for
            access to Electronic Medical Records.
            Fraud prompted by Medicare Part D.
            Specialty hospitals “cherry picking” less sick and more
            remunerative patients.

                               Michael K. Fee
December 1, 2006              Ropes & Gray LLP

What Can We Expect in the Coming
   Federal (IRS) interest in executive pay.
       Out of 540 nonprofit hospitals surveyed by the IRS
       last summer, 30 have been selected for focused
   Inpatient upcoding: Tried and true theory. Most
   recently used to obtain $2.3 million from
   Danbury (CT) hospital. (septicemia and
   respiratory infections).
   Inpatient physician E&M claims. Pinacle Business
   Solutions (Carrier for Arkansas, Rhode Island
   and Louisiana) has announced an audit plan.
                               Michael K. Fee
December 1, 2006              Ropes & Gray LLP

  Recent Developments: Biomedical
   OIG and whistleblowers continue to be active in this
   OIG Work Plan includes focus on NIH monitoring of
   conflicts of interest, level of commitment (effort) by
   investigators, monitoring of subrecipients.
   OIG released Draft Compliance Guidance for Recipients
   of PHS Research Awards on November 28, 2005. OIG
   seeks comments by December 28. Risk areas include:
       Proper allocation of grant charges.
       Time and effort reporting of commitment by researchers.
       Reporting financial support from other sources.
   Senator Grassley calls FDA “corrupt” and announces
   focus on human subjects research.
                             Michael K. Fee
December 1, 2006            Ropes & Gray LLP

               Deficit Reduction Act
   Signed into law February 8, 2006.
   Congress directed CMS to establish a
   Comprehensive Medicaid Integrity Plan.
   CMIP will provide for review of provider activity
   by outside contractors and provide support to
   states to aid their anti-fraud efforts.
   Training Requirement for Medicaid Providers:
       Providers receiving $5 million or more in Medicaid.
       Written policies and procedures on the False Claims
       Act, penalties and whistleblower protections.
       Must be completed by January 1, 2007.
                             Michael K. Fee
December 1, 2006            Ropes & Gray LLP

    Compliance Program Reviews
   Still best repellent for whistleblowers and government.
   Periodic review of codes and procedures are necessary.
   Careful selection of topics for monitoring/auditing in line
   with visible enforcement priorities.
       Purchasing of devices and pharmaceuticals, financial or other
       relationships with industry.
       HIPAA issues
   Focused training programs for discrete functions; e.g.
   purchasing, billing, patient registration, physicians,
   Consider updating or implementing vendor certifications.
   Consider integrating compliance functions into employee
   performance reviews.
   Consider surveys to test program effectiveness and
   employee awareness.
                                Michael K. Fee
December 1, 2006               Ropes & Gray LLP

          Taxpayers Against Fraud
   “[Michael] Sullivan spoke at the Taxpayers Against Fraud Education
   Fund Conference in Washington, D.C., and reported that the
   Department of Justice (DOJ) recovered more than $2.3 billion in
                             2006.” Millin’
   recoveries in fiscal year 2006.” Millin’s Health Fraud Monitor,
   September 25, 2006. (www.taf.org)
   TAF’s mission is both activist and educational. Established in 1986,
   TAF serves to:
       Inform and educate the general public, the legal community,
       government officials, the media, and other interested groups about the
       False Claims Act and it qui tam provisions;
       Contribute to understanding of the Act’s nature, workings and critical
       importance to the public interest;
       Vigorously defend against any attempts to repeal or weaken the Act;
       Facilitate meritorious qui tam suits;
       Advance public and government support for qui tam;

                                Michael K. Fee
December 1, 2006               Ropes & Gray LLP

     Who Are the Taxpayers Against
   Board of Directors:
       Chairman, Neil Getnick (Managing partner of the qui tam
       relators’ firm, Getnick & Getnick in New York, “major qui tam
       whistleblower cases broiught by Getnick & Getnick to date have
       resulted in close to $400 million for the United States
       John Phillips (Partner, Phillips & Cohen LLP, “Attorney John R.
                            firm’                             nation’
       Phillips, one of the firm’s founding partners, is ‘the nation’s
       premier whistleblower attorney,’ according to the National Law
       Journal and The wall Street Journal.”)
       Albert Campbell (whistleblower against Lockheed Martin in $37.9
       million case).
       Joseph Gerstein (former TAHP Medical Director, whistelblower
       against TAP Pharmaceuticals.

                             Michael K. Fee
December 1, 2006            Ropes & Gray LLP

                   Closing Thoughts

   Do not be complacent.
   Do not think “it could never happen here.”
   Monitor developments, priorities, issues.
   Ask the right questions.
   Take advantage of available resources.
   Take advantage of educational
                             Michael K. Fee
December 1, 2006            Ropes & Gray LLP

 If Asked, “Why You Are You Being
           So Persistent?”

   “The mission is too important to allow you
   to jeopardize it.”

            HAL the Computer explaining why he won’t let the
            spaceship’s commander back on board. 2001: A
            Space Odyssey (Stanley Kubrick, 1968)

                            Michael K. Fee
December 1, 2006           Ropes & Gray LLP


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