significant issues for false claims act and qui tam enforcement and compliance in 2014 live webcast

Speaker Firms and Organization:

Fried, Frank, Harris, Shriver & Jacobson LLPJennifer Wollenberg

Special Counsel

Thank you for logging into today’s event. Please note we are in standby mode. All Microphones will be muted until the event starts. We will be back with speaker instructions @ 11:55am. Any Questions? Please email: [email protected]

Group Registration Policy

Please note ALL participants must be registered or they will not be able to access the event. If you have more than one person from your company attending, you must fill out the group registration form. We reserve the right to disconnect any unauthorized users from this event and to deny violators admission to future events.

To obtain a group registration please send a note to [email protected] or call 646.202.9344.

Presented By:

October 03, 2014

1

Partner Firms:

AlixPartners, LLP Yogesh Bahl

Managing Director

Ropes & Gray LLPKirsten V. Mayer

Partner

Cozen O'ConnorIden Grant Martyn

Member

October 03, 2014

2

Follow us on Twitter, that’s @Know_Group to receive updates for this event as well as other news and pertinent info.

If you experience any technical difficulties during today’s WebEx session, please contact our Technical Support @ 866-779-3239.

You may ask a question at anytime throughout the presentation today via the chat window on the lower right hand side of your

screen. Questions will be aggregated and addressed during the Q&A segment.

Please note, this call is being recorded for playback purposes.

If anyone was unable to log in to the online webcast and needs to download a copy of the PowerPoint presentation for today’s

event, please send an email to: [email protected]. If you’re already logged in to the online webcast, we will post a link

to download the files shortly.

If you are listening on a laptop, you may need to use headphones as some laptops speakers are not sufficiently amplified enough to

hear the presentations. If you do not have headphones and cannot hear the webcast send an email to

[email protected] and we will send you the dial in phone number.

https://twitter.com/know_group

October 03, 2014

3

About an hour or so after the event, you'll be sent a survey via email asking you for your feedback on your experience with this

event today - it's designed to take less than two minutes to complete, and it helps us to understand how to wisely invest your time in

future events. Your feedback is greatly appreciated. If you are applying for continuing education credit, completions of the surveys

are mandatory as per your state boards and bars. 6 secret words (3 for each credit hour) will be given throughout the presentation.

We will ask you to fill these words into the survey as proof of your attendance. Please stay tuned for the secret word.

Speakers, I will be giving out the secret words at randomly selected times. I may have to break into your presentation briefly to read

the secret word. Pardon the interruption.

October 03, 2014

4

Welcome to the Knowledge Group Unlimited Subscription Programs. We have Two Options Available for You: FREE UNLIMITED: This program is free of charge with no further costs or obligations. It includes:

Unlimited access to over 15,000 pages of course material from all Knowledge Group Webcasts. Subscribers to this program can download any slides, white papers, or supplemental material covered during all live webcasts.

50% discount for purchase of all Live webcasts and downloaded recordings.

PAID UNLIMITED: Our most comprehensive and cost-effective plan, for a one-time fee:

Access to all LIVE Webcasts (Normally $199 to $349 for each event without a subscription). Including: Bring-a-Friend – Invite a client or associate outside your firm to attend for FREE. Sign up for as many webcasts as you wish.

Access to all of Recorded/Archived Events & Course Material includes 1,500+ hours of audio material (Normally $299 for each event without a subscription).

Free CLE/CPE/CE Processing (Normally $49 Per Course without a subscription). Access to over 15,000 pages of course material from Knowledge Group Webcasts. Ability to invite a guest of your choice to attend any live webcast Free of charge (Exclusive benefit only available for PAID

UNLIMITED subscribers). 6 Month Subscription is $299 with No Additional Fees Other options are available. Special Offer: Sign up today and add 2 of your colleagues to your plan for free Check the “Triple Play” box on the sign-up

sheet contained in the link below.

https://gkc.memberclicks.net/index.php?option=com_mc&view=mc&mcid=form_157964



October 03, 2014

5

Knowledge Group UNLIMITED PAID Subscription Programs Pricing: Individual Subscription Fees: (2 Options)Semi-Annual: $299 one-time fee for a 6 month subscription with unlimited access to all webcasts, recordings, and materials. Annual: $499 one-time fee for a 12 month unlimited subscription with unlimited access to all webcasts, recordings, and materials.

Group plans are available. See the registration form for details.

Best ways to sign up:1. Fill out the sign up form attached to the post conference survey email.2. Sign up online by clicking the link contained in the post conference survey email. 3. Click the link below or the one we just posted in the chat window to the right. https://gkc.memberclicks.net/index.php?option=com_mc&view=mc&mcid=form_157964

Discounts: Enroll today and you will be eligible for the “Triple Play” program and 3% off if you pay by credit card. Also we will waive the $49 CLE/CPE processing fee for today’s conference. See the form attached to the post conference survey email for details.

Questions: Send an email to: [email protected] with “Unlimited” in the subject.



mailto:[email protected]

Partner Firms:

October 03, 2014

6

AlixPartners, LLP (www.alixpartners.com) is a global business advisory firm offering comprehensive services in four major areas: enterprise improvement, turnaround and restructuring, financial advisory services and information management services. With offices located throughout Europe, the United States, and Middle East and Asia, we respond to urgent situations in real-time. Since 1981, we have taken a unique, small-team action-oriented approach to helping corporate boards and management, law firms, investment banks and investors respond to critical business issues. Our Financial Advisory Services professionals include accounting, forensic and valuation experts who assist companies and their legal counsel in urgent, high stakes disputes, litigation and investigations.

Established in 1970, Cozen O’Connor has 575 attorneys who help clients manage risk and make better business decisions. The firm counsels clients on their most sophisticated legal matters in all areas of the law, including labor & employment, commercial litigation, general corporate, and regulatory law. Representing a broad array of leading global corporations and ambitious middle market companies, Cozen O’Connor serves its clients’ needs through 23 offices across two continents.

http://theknowledgegroup.org/%22http:/www.alixpartners.com/%22

http://theknowledgegroup.org/%22http:/www.alixpartners.com/en/HowWeCanHelp/FinancialAdvisoryServices.aspx/%22

Partner Firms:

October 03, 2014

7

From offices located in the world's principal financial centers, Fried Frank, Harris, Shriver & Jacobson LLP’s lawyers provide advice to clients regarding their most critical legal and business needs. Fried Frank’s False Claims Act attorneys have extensive experience in every facet of the civil False Claims Act, and have been on the cutting edge of litigation and debate about the FCA's interpretation and scope. The Firm regularly represents financial industry, defense, health care, and other government contractors in high stakes cases. The Firm’s False Claims Act practitioners also assist and represent entities not normally associated with federal and state fraud investigations, such as municipal airport authorities, computer manufacturers, private and state universities, academic medical centers, import and export companies, major accounting and consulting firms, magazine publishers, and oil and gas exploration companies.

Ropes & Gray, a global law firm with more than 1,100 lawyers and professionals, has a rich history of achieving success for the world’s leading businesses, educational institutions and technology innovators from offices in the world’s major centers of business, finance, technology and government – Hong Kong, Shanghai, Tokyo, Seoul, London, New York, Washington, D.C., Boston, Chicago, San Francisco and Silicon Valley. The firm has consistently globally ranked practices in private equity, M&A, finance, investment management, hedge funds, life sciences, health care, intellectual property, litigation, securities litigation and government enforcement.

Brief Speaker Bios:

Yogesh Bahl

Yogesh Bahl is a Managing Director at AlixPartners with more than 20 years of experience as a business advisor specializing in investigations, compliance programs, litigation consulting, and enterprise improvement. Yogesh has developed global compliance programs and has evaluated antifraud programs and controls, including whistleblower hotlines. In addition, he has served as an industry and damages expert in litigation/arbitration; he has also served as an arbitrator. His experience includes managing risk-related operational issues across the research and development and commercial value chains, with particular emphasis on fraud, corruption, and third party risk. Yogesh has led investigations of companies in Asia, Europe, South America, and the United States. Yogesh has served as a guest lecturer at a number of universities and has written articles involving industry practices, fraud, supply chain risks, and intellectual property issues. He earned his MBA in Finance and Statistics and BS in Accounting and International Business from New York University’s Stern School of Business; he is a Certified Public Accountant.

October 03, 2014

8

Iden Grant Martyn

Iden Grant Martyn is a member of Cozen O’Connor’s Criminal Defense and Internal Investigations practice.

Mr. Martyn focuses his practice on complex commercial litigation and white collar defense, representing corporations and senior-level corporate officials in both civil and criminal fraud matters. He has extensive experience handling False Claims Act matters for clients from a broad range of industry sectors, including healthcare, financial services, energy, education and defense.

Prior to entering private practice, Mr. Martyn served as an Assistant United States Attorney in the Northern District of Ohio. During his tenure, he handled a wide variety of matters in the areas of civil and criminal health care fraud. His work was recognized by the Department of Justice, leading to a position with the Executive Office for United States Attorneys (EOUSA) in Washington, D.C. While at EOUSA, Mr. Martyn served as Principal Deputy Director – the second-highest position in the agency. During his years with the Department of Justice, he was the recipient of numerous awards, including the "Director's Award," the highest award bestowed by his agency.

Brief Speaker Bios:

Jennifer Wollenberg

Jennifer M. Wollenberg, special counsel at Fried Frank and a member of the Firm’s False Claims Act and Qui Tam practice group, represents corporations in a variety of complex civil litigation matters, with an emphasis on cases arising under the civil FCA and, in particular, cases involving the financial, aerospace, and defense industries. Ms. Wollenberg has been a contributing co-author of FraudMail Alert®, which regularly reports on significant developments in the FCA arena, and has published articles on various aspects of the FCA. Ms. Wollenberg received her JD from Cornell Law School and is admitted to practice in the District of Columbia, New York, the United States Court of Appeals (Second, Ninth, and District of Columbia Circuits), the United States Court of Federal Claims, and the United States District Court for the District of Columbia.

October 03, 2014

9

Kirsten V. Mayer

Kirsten V. Mayer is a Partner at Ropes & Gray LLP in Boston. Ms. Mayer represents health care and life sciences clients in criminal, civil and regulatory enforcement matters and in related complex civil litigation. Drawing on her extensive experience defending corporations and individuals in a wide range of investigations, Kirsten has helped clients win or favorably resolve matters involving both federal and state enforcement agencies. In addition to defending clients in litigation, Kirsten advises clients with respect to fraud and abuse and compliance in several contexts, including CIA implementation, internal investigations, and strategic transactions in the health care industry. Ms. Mayer is a frequent speaker on health care compliance and fraud and abuse enforcement, and has been a faculty member for National Institute of Trial Advocacy (NITA) programs since 2005.

► For more information about the speakers, you can visit: http://theknowledgegroup.org/event_name/significant-issues-for-false-claims-act-and-qui-tam-enforcement-and-compliance-in-2014-live-webcast/

http://theknowledgegroup.org/event_name/significant-issues-for-false-claims-act-and-qui-tam-enforcement-and-compliance-in-2014-live-webcast/

http://theknowledgegroup.org/event_name/significant-issues-for-false-claims-act-and-qui-tam-enforcement-and-compliance-in-2014-live-webcast/

In a two hour live webcast, a panel of key thought leaders and professionals assembled by The Knowledge Group will have an in-depth discussion of the fundamentals as well as updates regarding the False Claims Act and Qui Tam Enforcement.

Key topics include:

• Overview on False Claims Act and Qui Tam• False Claims Acts Enforcement and Settlement• Qui Tam Enforcement Mechanism• FCA Amendments on Reverse False Claim Cases• Government Investigation Methods• Compliance Strategies and Whistleblower Programs• Risk Mitigation and Negotiation with Federal and State Authorities• Outside Counsel for False Claims Matters• Ethical Issues in FCA and Qui Tam

October 03, 2014

10

Featured Speakers:

October 03, 2014

11

Yogesh BahlManaging DirectorAlixPartners, LLP

Iden Grant MartynMemberCozen O'Connor

Jennifer WollenbergSpecial CounselFried, Frank, Harris, Shriver & Jacobson LLP

Kirsten V. MayerPartnerRopes & Gray LLP

SEGMENT 1: SEGMENT 2:


Introduction

Yogesh Bahl is a Managing Director at AlixPartners with more than 20 years of experience as a business advisor

specializing in investigations, compliance programs, litigation consulting, and enterprise improvement. Yogesh has

developed global compliance programs and has evaluated antifraud programs and controls, including whistleblower

hotlines. In addition, he has served as an industry and damages expert in litigation/arbitration; he has also served as an

arbitrator. His experience includes managing risk-related operational issues across the research and development and

commercial value chains, with particular emphasis on fraud, corruption, and third party risk. Yogesh has led investigations

of companies in Asia, Europe, South America, and the United States. Yogesh has served as a guest lecturer at a number

of universities and has written articles involving industry practices, fraud, supply chain risks, and intellectual property

issues. He earned his MBA in Finance and Statistics and BS in Accounting and International Business from New York

University’s Stern School of Business; he is a Certified Public Accountant.

October 03, 2014

12


SEGMENT 1:

False Claims Act – Quick Overview

October 03, 2014

13


SEGMENT 1:

The False Claims Act (“FCA”) – An Overview

October 03, 2014

14


Also known as Lincoln Law, the FCA was first passed in 1863 by a Congress under Abraham Lincoln who was concerned that suppliers of goods to the Union and Army during the Civil War were defrauding the Army.

SEGMENT 1:

The False Claims Act (“FCA”) – An Overview

A FCA case can originate in two ways: by the U.S. itself or a private litigant can bring an action on behalf of the U.S. under the qui tam provision.

Establishes liability when any person or entity improperly receives from or avoids payment to the Federal government. The Act prohibits: Knowingly presenting, or causing to be presented a false claim for payment or approval; Knowingly making, using, or causing to be made or used, a false record or statement material to

a false or fraudulent claim; Conspiring to commit any violation of the False Claims Act; Falsely certifying the type or amount of property to be used by the Government; Certifying receipt of property on a document without completely knowing that the information is

true; Knowingly buying Government property from an unauthorized officer of the Government, and; Knowingly making, using, or causing to be made or used a false record to avoid, or decrease an

obligation to pay or transmit property to the Government.

October 03, 2014

15


SEGMENT 1:

The False Claims Act (“FCA”) – Qui Tam Provision

The Qui Tam provision allows a private person, referred to as a “relator”, to file suit for violations of the FCA on behalf of the government.

The relator need not have been personally harmed by the defendant’s conduct. A qui tam action must be filed with the court under seal. The government can:

proceed or intervene with an action as plaintiff, decline to intervene but allow the relator to pursue the case, settle with defendant, or or move to dismiss the case.

If the government intervenes, the relator is entitled to receive 15% – 25% of the amount recovered by the government.

If the government declines to intervene the percentage increases to 25% - 30%.

If the qui tam action is successful, the relator may also be entitled to legal fees and other fees to be paid by the defendant.

October 03, 2014

16


SEGMENT 1:

The False Claims Act (“FCA”) – Questions Raised

Questions have been raised as to whether the FCA has served to prevent violations beyond punishing and recovering monies.

Is the likelihood of the case moving forward impacted by whether the government intervenes? What signals does government intervention send to the court? What is the impact on the overall case if the government intervenes only on some of the claims and

not all of the claims?

October 03, 2014

17


SEGMENT 1:

The Evolution of the FCA – 1986 Amendments

The elimination of the "government possession of information" bar against qui tam lawsuits; The establishment of defendant liability for "deliberate ignorance" and “reckless disregard” of the

truth; Restoration of the “preponderance of the evidence” standard for all elements of the claim including

damages; Imposition of treble damages and civil fines of $5,000 to $10,000 per false claim; Increased rewards for qui tam plaintiffs of between 15–30 percent of the funds recovered from the

defendant; Defendant payment of the successful plaintiff's expenses and attorney's fees, and; Employment protection for whistleblowers including reinstatement with seniority status, special

damages, and double back pay.

October 03, 2014

18


SEGMENT 1:


The FCA was amended in 2009 under the Fraud Enforcement and Recovery Act of 2009 (“FERA”): Expanding liability for “reverse” false claims by imposing liability for knowingly or recklessly

retaining overpayments from the government, even in the absence of any false statement; Creating liability for claims presented to entities administering government funds; Permitting the government’s complaint to relate back to the filing of the relator’s complaint, which

allows the DOJ to conduct longer investigations; and Expanding the anti-retaliation provisions to cover contractors and agents in addition to

employees.

October 03, 2014

19


SEGMENT 1:


The March 2010 healthcare reform legislation, the Patient Protection and Affordable Care Act (“PPACA”) also made important changes to the FCA, primarily by significantly narrowing the public-disclosure bar against relators’ qui tam actions. Because of the PPACA: Defendants can no longer use certain types of public sources (such as state and local

administrative reports) to demonstrate that a relator’s claim was publicly disclosed prior to the complaint;

Public disclosure is now an affirmative defense (rather than a jurisdictional bar) and dismissal is forbidden if the government opposes it;

Definition of “original source” allows the relator to have “independent knowledge that materially adds to the publicly disclosed allegations” (instead of “direct knowledge”); and

A company must report and return a Medicare or Medicaid overpayment within 60 days of discovery to avoid FCA liability.

The Dodd-Frank Wall Street Reform and Consumer Protection Act in 2010 also strengthened the provisions of the FCA prohibiting retaliation against whistleblowers, expanding protected conduct to include efforts of the employee to investigate or stop FCA violations.

October 03, 2014

20


SEGMENT 1:

False Claims Act – Historical Recoveries Most FCA recoveries in the last 10 years have come from the health care sector

October 03, 2014

21


SEGMENT 1:

FCA – 2013 Year in Review

$3.8 billion recoveries in 2013, which ranks 2nd largest of annual recovery in history (2012 ranks 1st with $5 billion) and brings the total recovered in the last five years to $17 billion (largest five-year total) $2.6 billion of recoveries related to health care fraud cases, of which $1.8 billion related to fraud

and false claims in the pharmaceutical and medical device industries. $887 million secured in settlement and judgments from alleged procurement fraud, primarily

related to defense contracts 846 new cases filed under the FCA in 2013, 752 (90%) filed by qui tam provisions (“whistleblowers”)

who earned $387 million in share awards Whistleblowers initiated more matters in 2013 than in any prior year

The increased in recoveries can be attributed to the courts’ expansion of the scope of the FCA, making virtually any violation of any rule or regulation that is a condition of government payment actionable.

Expanded its reach in almost every industry including health care, education, defense contracting, and financial services.

October 03, 2014

22


SEGMENT 1:

FCA – 2014 Settlement Activity

In the first half of 2014, the government has secured $2.06 billion in FCA settlements. Many of these settlements included resolution to qui tam suits. Although healthcare settlements do not make up the majority of the amounts recovered in 2014, this

industry continues to remain a focus of the FCA enforcement with the largest number of settlements to date.

FCA settlements have also included the government’s procurement and defense activities as well as financial services.

October 03, 2014

23


SEGMENT 1:

October 03, 2014

24


False Claims Act – Damages

SEGMENT 1:

FCA Damages and Penalties

Defendants in violation of the FCA are required to pay the government a civil penalty and potentially three times the amount of damages. FCA penalties range from $5,500 to $11,000 per false claim

FCA damages is one of the most critical issues in a qui tam case A customized approach is required and calculations vary based on the alleged fraud Mischarges and overcharging damages

Mischarges – calculated as if the government received nothing in return for its payment. Overcharges – difference between the amount paid and the amount that would have been paid if the

claims were truthful. False Negotiation Cases; Bid Rigging Cases; Defective Pricing Cases; Medicare and Medicaid Kickback

Cases; False Certification Cases; Reverse False Claim Cases

The FCA also includes a reduced damages provision (double instead of treble) based on self-disclosure and cooperation. To qualify: Voluntary disclosure must take place 30 days after first obtaining information; and Must occur before having actual knowledge that a criminal prosecution, civil action or administrative

action has commenced

October 03, 2014

25


SEGMENT 1:

Calculating Double or Treble FCA Damages

There is a circuit court split on the method used to calculate the doubling or trebling of damages when there are potential offsets. Courts have used either:

The gross multiplier rule – the court trebles the amount paid by the government and only then subtracts any value received by the government.

The net multiplier rule – the court deducts the value received by the government from the single damages figure before it is trebled or doubled.

The gross trebling approach is advocated and applied by the government, relying on a decision of the Supreme Court in United States v. Bornstein.

In 2013, the Seventh Circuit rejected the gross multiplier approach in United States v. Anchor Mortgage Corp. In adopting the net multiplier rule, the Seventh Circuit joined the Second, Sixth and DC Circuits

in using the net multiplier rule.

October 03, 2014

26


SEGMENT 1:

Gross vs. Net FCA Damages – An Illustrative Example

Allegations: Government paid $10,000,000 for services that had a value of $2,000,000

Gross Trebling Approach ($10,000,000 x 3) - $2,000,000 = $28,000,000

Net Trebling Approach ($10,000,000 - $2,000,000) x 3 = $24,000,000

Under either approach, determining a realistic and believable damages amount requires: Knowledge of the industry The underlying businesses The transaction terms Potential impact in other areas.

October 03, 2014

27


SEGMENT 1:

Introduction

Iden Grant Martyn is a member of Cozen O’Connor’s Criminal Defense and Internal Investigations practice.

Mr. Martyn focuses his practice on complex commercial litigation and white collar defense, representing corporations and

senior-level corporate officials in both civil and criminal fraud matters. He has extensive experience handling False Claims

Act matters for clients from a broad range of industry sectors, including healthcare, financial services, energy, education

and defense.

Prior to entering private practice, Mr. Martyn served as an Assistant United States Attorney in the Northern District of Ohio.

During his tenure, he handled a wide variety of matters in the areas of civil and criminal health care fraud. His work was

recognized by the Department of Justice, leading to a position with the Executive Office for United States Attorneys

(EOUSA) in Washington, D.C. While at EOUSA, Mr. Martyn served as Principal Deputy Director – the second-highest

position in the agency. During his years with the Department of Justice, he was the recipient of numerous awards, including

the "Director's Award," the highest award bestowed by his agency.

October 03, 2014

28


SEGMENT 2:

Expanding the Reach of the False Claims Act (FCA)

October 03, 2014

29


SEGMENT 2:


• Legislation over the past several years has significantly enhanced the application and enforcement of the FCA.

• The Fraud Enforcement and Recovery Act (FERA) and the Patient Protection and Affordable Care Act (PPACA) amended various aspect of the FCA, including:1

– Expanded the reach of the FCA to any recipient of funds, even if through a grantee or intermediary.

– Broadened the definition of what constitutes a “material” false statement to include any statement “having a natural tendency to influence or being capable of influencing the payment or receipt of money or property.”

– Expanded the use of Civil Investigative Demands (CID) and provided additional FCA enforcement resources.

1. This presentation only focuses on certain key amendments to the FCA. Time does not permit a detailed discussion of all the relevant amendments to the FCA pursuant to FERA and PPACA

October 03, 2014

30


SEGMENT 2:


– Enhanced Whistleblower Opportunities and Protections including:• The original source rule permitting a whistleblower to participate in a FCA claim and

recover a fee has been broadened.• The jurisdictional bar to bringing a whistleblower action has been eliminated; it is now a

matter of judicial discretion. • The public disclosure bar to a whistleblower’s filing a claim has been substantially

narrowed. • A whistleblower retaliation claim has been made easier to bring: it only requires an

evidence of an attempt to stop an FCA violation.• Retaliation claims can now be brought by employees, contractors, or agents

October 03, 2014

31


SEGMENT 2:


• An expanded FCA, along with enhanced enforcement tools, increased resources, and an empowered whistleblower community has resulted in:

– An ever increasing number of cases being brought by whistleblowers; and– a more aggressive enforcement posture by the US Department of Justice (DOJ).

• A brief review of the FCA in the for profit education sector demonstrates that reality.

October 03, 2014

32


SEGMENT 2:

For Profit Education Sector: Background

• Government funding at issue: federal student loans and grants.• Individuals apply for student loans and grants to cover the cost of their education. The student

application process and repayment obligation is between the individual and the Department of Education (either directly, or as a guarantor).

• Federal student loans and grants may be used at any educational institution previously approved by the Department of Education.

• The Department of Education’s requirements for approval include, among other things, that the educational institution is properly accredited and financially sound.

• The Department of Education also regulates certain activity at the educational institutions, including how to compensate recruiters.

October 03, 2014

33


SEGMENT 2:


• The Department of Education limits the manner in which educational institutions receiving federal student loans and/or grant money may reimburse recruiters. 34 C.F.R. 668.14(b)(22)(ii)(A) allows for:

– “Fixed compensation, such as a fixed annual salary or fixed hourly wage, as long as that compensation is not adjusted up or down more than twice during any twelve month period, and any adjustment is not based solely on the number of students recruited, admitted, enrolled or awarded financial aid.” (emphasis added)

– The Department of Education has said that “solely” is to have a “dictionary” definition. 67 Fed. Reg. 67055 (Nov. 1, 2002)

• Webster’s “solely”: “without another or others; alone; only, exclusively, merely, or altogether.”

October 03, 2014

34


SEGMENT 2:


• The penalty for violating this provision was left to the Department of Education. • The Department of Education issued guidance on this issue in 2002. Specifically, the Deputy

Education Secretary issued a memorandum indicating that "the appropriate sanction" for a violation of the incentive compensation ban should "be the imposition of a fine," rather than the limitation, suspension, or termination of Title IV student aid eligibility. "The direction provided by this memorandum should result in the imposition of appropriately measured sanctions for improper incentive payments by institutions [emphasis added]," he wrote.

October 03, 2014

35


SEGMENT 2:

For Profit Education Sector: Alleged Violation of the FCA

• Whistleblowers have filed claims alleging that educational institutions violated the incentive compensation ban by reimbursing recruiters based on enrollments.

• The measure of damages includes all federal student loan and grant funds received by the educational institution from its students.

October 03, 2014

36


SEGMENT 2:

For Profit Education Sector: DOJ Intervention

• The DOJ has taken an aggressive enforcement posture with regard to these cases despite the fact that:

– There was no federal payment based on a claim submitted by the Educational Institution. Rather, funds were provided to students, which then used those funds to pay for their education. The Educational Institution is not alleged to have made a false statement to the student or to the Department of Education in order to get the student to pay the school with those funds.

– The Department of Education, through its written policy, has clearly indicated that the failure to comply with the incentive compensation plan is not a condition of payment, and thus, not a violation of the FCA.

October 03, 2014

37


SEGMENT 2:

For Profit Education Sector: DOJ Intervention

• The DOJ’s aggressive enforcement posture is consistent with the expansion of the FCA. • In the for profit education sector, the theories for liability under the FCA continue to expand and now

include almost any inconsistency between the participation agreement and the school’s conduct.• The overwhelming number of cases under review have been initiated by a whistleblower.

October 03, 2014

38


SEGMENT 2:

How to Minimize Risk in Today’s Enforcement Environment

• Understand regulatory requirements and create an environment that places a priority on strict compliance.

• Pay attention to your employees.– provide a mechanism for reporting concerns– listen to and respect your employees– investigate each and every concern thoroughly– if appropriate, let the employee know how the issue was resolved

• Establish an effective compliance program.• Move quickly on any identified issue.

October 03, 2014

39


SEGMENT 2:

October 03, 2014

40

CLE PROCESSINGThe Knowledge Group offers complete CLE processing solutions for your webcasts and land events. This comprehensive service includes everything you need to offer CLE credit at your conference: Complete end-to-end CLE credit Solutions Setting up your marketing collateral properly. Completing and filing all of the applications to the state bar. Guidance on how to structure content meet course material requirements for the state Bars. Sign up forms to be used to check & confirm attendance at your event. Issuing official Certificates of Attendance for credit to attendees.

Obtaining CLE credit varies from state to state and the rules can be complex. The Knowledge Group will help you navigate the complexities via complete cost effective CLE solutions for your conferences. Most CLE processing plans are just $499 plus filing fees and postage.

To learn more email us at [email protected] or CALL 646-202-9344


October 03, 2014

41

PRIVATE LABEL PROGRAM & INTERNAL TRAINING The Knowledge Group provides complete private label webcasts and in-house training solutions. Developing and executing webcasts can be a huge logistical nightmare. There are a lot of moving parts and devolving a program that is executed smoothly and cost effectively can prove to be a significant challenge for companies who do not produce events on a regular basis. Live events require a high level of proficiency in order to execute proficiently. Our producers will plan and develop your webcast for you and our webcast technicians will execute your live event with expert precision. We have produced over 1000 live webcasts. Put our vast expertise to work for you. Let us develop a professional webcast for your firm that will impress all your clients and internal stakeholders. Private Label Programs Include: Complete Project Management Topic Development Recruitment of Speakers (Or you can use your own) Marketing Material Design PR Campaign Marketing Campaign Event Webpage Design Slides: Design and Content Development Speaker coordination: Arranging & Executing Calls, Coordinating Slides & Content Attendee Registration Complete LIVE Event Management for Speaker and Attendees including:

o Technical Supporto Event Moderatoro Running the Live event (All Aspects)o Multiple Technical Back-ups & Redundancies to Ensure a Perfect Live Evento Webcast Recording (MP3 Audio & MP4 Video)o Post Webcast Performance Survey

CLE and CPE Processing Private Label Programs Start at just $999

October 03, 2014

42

RESEARCH & BUSINESS PROCESS OUTSOURCING The Knowledge Group specializes in highly focused and intelligent market and topic research. Outsource your research projects and business processes to our team of experts. Normally we can run programs for less than 50% of what it would cost you to do it in-house. Here are some ideal uses for our services: Market Research and Production

o List Research (Prospects, Clients, Market Evaluation, Sales Lists, Surveys)o Design of Electronic Marketing Collateralo Executing Online Marketing Campaigns (Direct Email, PR Campaigns)o Website Designo Social Media

Analysis & Research

o Research Companies & Produce Reportso Research for Cases o Specialized Research Projects

eSales (Electronic Inside Sales – Email and Online)

o Sales Leads Developmento eSales Campaigns

Inside Sales people will prospect for leased, contact them and coordinate with your sales team to follow up. Our Inside eSales reps specialize in developing leads for big-ticket enterprise level products and services.

o Electronic Database Building – Comprehensive service which includes development of sales leads, contacting clients, scoring leads, adding notes and transferring the entire data set to you for your internal sales reps.

eCustomer Service (Electronic Inside Sales – Email and Online)

o Real-Time Customer Service for Your clients Online Chat Email

o Follow-Up Customer Service Responds to emails Conducts Research Replies Back to Your Customer

Please note these are just a few ways our experts can help with your Business Process Outsourcing needs. If you have a project not specifically listed above please contact us to see if we can help.

Introduction

Jennifer M. Wollenberg, special counsel at Fried Frank and a member of the Firm’s False Claims Act and Qui Tam practice

group, represents corporations in a variety of complex civil litigation matters, with an emphasis on cases arising under the

civil FCA and, in particular, cases involving the financial, aerospace, and defense industries. Ms. Wollenberg has been a

contributing co-author of FraudMail Alert®, which regularly reports on significant developments in the FCA arena, and has

published articles on various aspects of the FCA. Ms. Wollenberg received her JD from Cornell Law School and is admitted

to practice in the District of Columbia, New York, the United States Court of Appeals (Second, Ninth, and District of

Columbia Circuits), the United States Court of Federal Claims, and the United States District Court for the District of

Columbia.

October 03, 2014

43


SEGMENT 3:

Recent Developments: FCA Expansion to New Industry and Older Claims

October 03, 2014

44


SEGMENT 3:

Expansion to Financial Services Industry

October 03, 2014

45


SEGMENT 3:

FCA Expansion to Various Industries / Situations

Traditionally, Procurement Cases were the Sources of FCA Litigation

Typical case: a defense contractor providing aircraft or tanks to the government

Over the Years, FCA Litigation has Expanded to Other Areas, including

o Oil and gas (royalties)

o Education (grants)

o Customs

o Healthcare

Recent Development: Expansion to Financial Services Cases

o Wherever there is government money

October 03, 2014

46


SEGMENT 3:

Financial Services: Initiatives, Theories, and Recoveries

• Various USG Initiatives

o Coordination between agencies

o Encouragement to relators

• Variety of Theories and Strategies

o FHA and VA-insured mortgages, loan sales to GSEs, modification programs, etc.

o Jointly with Financial Institutions Reform, Recovery, and Enforcement Act (“FIRREA”) claims

o Naming individuals

• Resolutions to Date

o Large recoveries and unique settlement provisions

October 03, 2014

47


SEGMENT 3:

October 03, 2014

48


The Wartime Suspension of Limitations Act

SEGMENT 3:

FCA Statute of Limitations / Statute of Repose

• Standard Six-Year Statute of Limitations

• Longer period allowed under certain circumstances, but ten-year statute of repose • Language of the FCA (31 U.S.C. § 3731(b))

A civil action under section 3730 may not be brought—

(1) more than 6 years after the date on which the violation of section 3729 is committed, or

(2) more than 3 years after the date when facts material to the right of action are known or reasonably should have been known by the official of the United States charged with responsibility to act in the circumstances, but in no event more than 10 years after the date on which the violation is committed, whichever occurs last.

October 03, 2014

49


SEGMENT 3:

Wartime Suspension of Limitations Act (“WSLA”)

• Brief History of the WSLA

o WWI and WWII roots

o Recent changes

• Current Language of the WSLA (18 U.S.C. § 3287):

When the United States is at war or Congress has enacted a specific authorization for the use of the Armed Forces. . . the running of any statute of limitations applicable to any offense (1)

involving fraud or attempted fraud against the United States or any agency thereof in any manner, whether by conspiracy or not . . . shall be suspended until 5 years after the termination of hostilities as proclaimed by a Presidential proclamation, with notice to Congress, or by a concurrent resolution of Congress.

• Recent Development: DOJ and Relators Attempt to Invoke Wartime Suspension of Limitations Act

o Across jurisdictions and industriesOctober 03, 2014

50


SEGMENT 3:

Concerns with Application of the WSLA

• WSLA-FCA Concerns

o Only applies to the criminal context – Title 18 “offenses”

o Not all modern FCA violations require “fraud”

o Meant for the USG, not relators (also limited to conduct involving wartime contracting/fraud)

o Statute of repose

• Other Concerns with WSLA Application (not limited to civil FCA context)

o Authorization, termination, and retroactivity

• Many of These are Subject to Supreme Court Review

o United States ex rel. Carter v. Kellogg Brown & Root Servs., Inc., 710 F.3d 171 (4th Cir. 2013), cert. granted, No. 12-1497 (U.S. July 1, 2014)

October 03, 2014

51


SEGMENT 3:

October 03, 2014

52


Conclusion

SEGMENT 3:

Predictions and What to Watch

• Expect Continued Attempts to Expand the FCA and FCA Recoveries

o Greater USG coordination, more CID usage, and highly-incentivized relators

o Creative legal theories, including damages and penalties calculations

• Expect Complications in Joint FCA-FIRREA Cases

o Intent, statute of limitations, and damages/penalties

• Look for Any Impact of the Financial Services Model on More Traditional Cases

o Executive/employee accountability, admissions, and alternative relief

• Watch What Happens in United States ex rel. Carter v. Kellogg Brown & Root Servs., Inc.

o WSLA and first-to-file issues

October 03, 2014

53


SEGMENT 3:

Introduction

Kirsten V. Mayer is a Partner at Ropes & Gray LLP in Boston. Ms. Mayer represents health care and life sciences clients in

criminal, civil and regulatory enforcement matters and in related complex civil litigation. Drawing on her extensive

experience defending corporations and individuals in a wide range of investigations, Kirsten has helped clients win or

favorably resolve matters involving both federal and state enforcement agencies. In addition to defending clients in

litigation, Kirsten advises clients with respect to fraud and abuse and compliance in several contexts, including CIA

implementation, internal investigations, and strategic transactions in the health care industry. Ms. Mayer is a frequent

speaker on health care compliance and fraud and abuse enforcement, and has been a faculty member for National Institute

of Trial Advocacy (NITA) programs since 2005.

October 03, 2014

54


SEGMENT 4:

The False Claims Act of the Future?Efforts to expand FCA’s scope in the healthcare area

• Use of the FCA to police compliance with other legal requirements is on the rise– FCA’s whistleblower reward provisions make it an attractive tool

• Right to pursue civil litigation even if government does not see value in the case• Up to 30% of recovery if government does not intervene • Relator share payouts totaled $318 million last year

– Some -- though not all -- circuits have recognized “implied certification” FCA theories – The healthcare industry has seen massive statutory and regulatory change over the last few

years, including in areas that impact FCA risk• New FCA filings reached a record high

– In healthcare, 522 new matters filed/opened last year

October 03, 2014

55


SEGMENT 4:

The False Claims Act of the Future? Efforts to expand FCA’s scope in the healthcare area

• Enforcing other legal requirements with the FCA: The Basics– Generally, FCA prohibits submitting or causing the submission of a false claim, or making false

statements that are material to a false claim– Key first question: Why are the claims at issue allegedly false?– Claims can be false on their face: factual falsity

• E.g., claim for payment from Medicare for a service that was not provided – Claims can also be false because they violate a condition of payment by the government– That condition of payment can be compliance with another distinct legal requirement

• E.g., courts have held that claims caused by a violation of the anti-kickback statute are not eligible for Medicare payment

– But not all contractual, statutory or regulatory non-compliance triggers the FCA

October 03, 2014

56


SEGMENT 4:


• Enforcing other legal requirements with the FCA: The Basics– Key second question: How can you tell whether compliance with another legal requirement is a

condition of payment?• Healthcare and life sciences companies are subject to complex and far reaching legal

requirements• Conditions of participation vs. conditions of payment

– Does it have to say so explicitly, in an authoritative source? • Express vs. implied certification• What can serve as a source? A Statute? Contract? Program Manual? Provider Agreement?• Does it depend on whether the legal requirement itself is from a contract or a statute or

regulation?– Key third question: If it does not say so explicitly, in an authoritative source, should the FCA be

used to enforce the legal requirement anyway?• Will the FCA’s “knowledge” and “materiality” elements sufficiently protect innocent

defendants?• Would this read the FCA’s “falsity” element out of the statute?

October 03, 2014

57


SEGMENT 4:


• The Second and Third “Key Questions” are hotly contested• What is the current state of play?

– How can you tell whether compliance with another legal requirement is a condition of payment?• U.S. ex rel Connor v. Salina (10th Cir. 2008)

– Failing to comply with a condition of participation does not make claims ineligible for payment: conditions of participation and conditions of payment are different

• U.S. ex rel Hobbs v. MedQuest (6th Cir. 2013) (same)• U.S. ex rel FoxRx v. Omnicare et al (S.D.N.Y. 2014) (appeal pending)

– Relator alleged defendant pharmacies failed to comply with state mandatory generic substitution regulations and dispensed drugs beyond their NDC termination date

– Court dismissed complaint, holding the regulations at issue were not conditions of payment; the regulations themselves were irrelevant to payment decisions and no other regulation or statute conditioned payment on compliance

October 03, 2014

58


SEGMENT 4:


• What is the current state of play? (cont.)– Does an authoritative source have to state expressly that compliance is a condition of payment?

• U.S. v. Medco Health Systems, Inc. (D.N.J. 2014)– Court denied motion to dismiss, holding that certification in Provider Agreement was

enough for charitable donation/excess gift kickback scheme alleged in Complaint• Virginia ex rel Hunter Laboratories v. Quest Diagnostics et al (E.D.Va. 2014)

– Court dismissed complaint because complaint did not allege a false certification; certification is required because the contractual violation at issue was not an “inherently false act” – it is the certification that no violation occurred that triggers the FCA

• U.S. v. Science Applications International Corp. (D.C. Cir. 2010)– False certification of compliance with a government contract can be implied where

government contractor submits claim for payment, but withholds information about non-compliance with material contractual requirements

October 03, 2014

59


SEGMENT 4:


• What is the current state of play? (cont.)– Where are relators trying to take the law?

• U.S. ex rel Escobar v. United Health Services (D. Mass. 2014) (appeal pending)– Defendant’s reimbursement requests were allegedly false because defendant had

violated state regulations regarding qualifications, staffing and supervision for certain medical services

– Court granted motion to dismiss: complaint alleged violations of a condition of participation not of payment

– Relator has appealed, arguing that the district court improperly looked for “magic words” when evaluating whether a regulatory requirement was a condition of payment; instead court should ask whether compliance was material to the government’s decision to pay

October 03, 2014

60


SEGMENT 4:


• What is the current state of play? (cont.)– Where are relators trying to take the law?

• U.S. ex rel Rostholder v. Omnicare Inc. (4th Cir 2014)– Relator alleged that defendant’s violations of cGMP in packaging facility made claims

for products produce there false; products that are adulterated due to FDCA violations are ineligible for government program reimbursement

– The district court dismissed the complaint and the Fourth Circuit affirmed, holding that no statute or regulation conditioned payment on compliance with the regulations at issue

– Relator has petitioned for certiorari, asking the Supreme Court to address whether an FCA action predicated on statutory or regulatory violations requires an express statement that compliance is a condition of payment

October 03, 2014

61


SEGMENT 4:


• Conclusion and key takeaways:– The law in this area is evolving; the trend over the last decade has been one of expansion, not

contraction of the scope of the FCA• Amendments to the statute• Active and coordinated relators bar• Statute of limitations is long

– Even where the FCA cannot be used enforce other legal requirements, relators are still bringing potential violations to DOJ’s attention, and DOJ is listening

• September 2014 speech by Assistant Attorney General--Criminal Division, Leslie Caldwell to TAFEF conference

– FCA enforcement risk in the healthcare area remains high

October 03, 2014

62


SEGMENT 4:

► You may ask a question at anytime throughout the presentation today. Simply click on the question mark icon located on the floating tool bar on the bottom right side of your screen. Type your

question in the box that appears and click send.

► Questions will be answered in the order they are received.

Q&A:

October 03, 2014

63







October 03, 2014

64

Welcome to the Knowledge Group Unlimited Subscription Programs. We have Two Options Available for You: FREE UNLIMITED: This program is free of charge with no further costs or obligations. It includes:

Unlimited access to over 15,000 pages of course material from all Knowledge Group Webcasts. Subscribers to this program can download any slides, white papers, or supplemental material covered during all live webcasts.

50% discount for purchase of all Live webcasts and downloaded recordings.

PAID UNLIMITED: Our most comprehensive and cost-effective plan, for a one-time fee: Access to all LIVE Webcasts (Normally $199 to $349 for each event without a subscription). Including: Bring-a-Friend – Invite a

client or associate outside your firm to attend for FREE. Sign up for as many webcasts as you wish. Access to all of Recorded/Archived Events & Course Material includes 1,500+ hours of audio material (Normally $299 for each

event without a subscription). Free CLE/CPE/CE Processing3 (Normally $49 Per Course without a subscription). Access to over 15,000 pages of course material from Knowledge Group Webcasts. Ability to invite a guest of your choice to attend any live webcast Free of charge. (Exclusive benefit only available for PAID

UNLIMITED subscribers.) 6 Month Subscription is $299 with No Additional Fees. Other options are available. Special Offer: Sign up today and add 2 of your colleagues to your plan for free. Check the “Triple Play” box on the sign-up

sheet contained in the link below.




October 03, 2014

65

Knowledge Group UNLIMITED PAID Subscription Programs Pricing: Individual Subscription Fees: (2 Options)Semi-Annual: $299 one-time fee for a 6 month subscription with unlimited access to all webcasts, recordings, and materials. Annual: $499 one-time fee for a 12 month unlimited subscription with unlimited access to all webcasts, recordings, and materials.

Group plans are available. See the registration form for details.

Best ways to sign up:1. Fill out the sign up form attached to the post conference survey email.2. Sign up online by clicking the link contained in the post conference survey email. 3. Click the link below or the one we just posted in the chat window to the right. https://gkc.memberclicks.net/index.php?option=com_mc&view=mc&mcid=form_157964

Discounts: Enroll today and you will be eligible for the “Triple Play” program and 3% off if you pay by credit card. Also we will waive the $49 CLE/CPE processing fee for today’s conference. See the form attached to the post conference survey email for details.

Questions: Send an email to: [email protected] with “Unlimited” in the subject.




October 03, 2014

66

ABOUT THE KNOWLEDGE GROUP, LLC.

The Knowledge Group, LLC is an organization that produces live webcasts which examine regulatory

changes and their impacts across a variety of industries. “We bring together the world's leading

authorities and industry participants through informative two-hour webcasts to study the impact of

changing regulations.”

If you would like to be informed of other upcoming events, please click here.

Disclaimer:

The Knowledge Group, LLC is producing this event for information purposes only. We do not intend to provide or offer business advice. The contents of this event are based upon the opinions of our speakers. The Knowledge Group does not warrant their accuracy and completeness. The statements made by them are based on their independent opinions and does not necessarily reflect that of The Knowledge Group‘s views. In no event shall The Knowledge Group be liable to any person or business entity for any special, direct, indirect, punitive, incidental or consequential damages as a result of any information gathered from this webcast.

Certain images and/or photos on this page are the copyrighted property of 123RF Limited, their Contributors or Licensed Partners and are being used with permission under license. These images and/or photos may not be copied or downloaded without permission from 123RF Limited

http://theknowledgegroup.org/

http://theknowledgegroup.org/all-events-list/