Qui Tams and Fraud Claims. Current Strategies and Developments

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1 Qui Tams and Fraud Claims Current Strategies and Developments

2 Perspective from the Chief of the Health Care & Government Fraud Unit, USAO-DNJ Maureen Ruane U.S. Attorney s Office, District of New Jersey Head of Health Care Fraud Unit Previously a partner at Lowenstein Sandler Represented pharmaceutical and health care companies in civil matters and investigations 2

3 Perspective of In-House Litigation Counsel Ron Castle Fresenius Medical Care NA Senior Vice President and Deputy General Counsel for Litigation Arent Fox partner, Currently responsible for: United States ex rel. Williams v. Renal Care Group, Inc., 2009 Civ (M.D. Tenn.); United States ex rel. Gonzalez v. Fresenius Medical Care Holdings, Inc. et al., 2007 Civ (W.D. Tex.) and No (5th Cir.); United States ex rel. Woodard v. Fresenius Medical Care Holdings, Inc. et al., 2005 Civ (E.D. Tex.) 3

4 Perspective of Outside Litigation Counsel Juanita Brooks Principal, Fish & Richardson PC Currently assisting with: United States ex rel. Williams v. Renal Care Group, Inc., United States ex rel. Gonzalez v. Fresenius Medical Care Holdings, Inc. et al. Previously assisted with: United States ex rel. National Health Labs United States ex rel. Dr. Jeffrey Rutgard United States ex rel. Lucas Aerospace United States ex rel. Cubic Corporation 4

5 Perspective of a Former Prosecutor and Chief Compliance Officer Jose Sierra Principal, Fish & Richardson PC Litigation and Risk Management, focusing on pharmaceutical and medical device compliance, internal investigations, and qui tam defense Previously, Chief Compliance Officer for Sepracor Inc; former Assistant U.S. Attorney, District of New Jersey 5

6 Perspective from the Chief of the Health Care & Government Fraud Unit, USAO-DNJ Greater Focus on Health Care Fraud Prosecutions Recent changes at the USAO DNJ Increased focus on Health Care Fraud - New tools, including data mining - Greater collaboration between Criminal and Civil - Active investigations in all areas and at all levels - Large upswing in qui tam filings, voluntary disclosures 6

7 Perspective from the Chief of the Health Care & Government Fraud Unit, USAO-DNJ Focus of DOJ/USAO Scrutiny Effectiveness of Corporate Compliance Program - Auditing and Monitoring - Reporting Line Cooperation Voluntary Disclosure 7

8 Perspective from the Chief of the Health Care & Government Fraud Unit, USAO-DNJ Result of Non-Compliance Best Case: DPAs, NPAs; Monitors; Corporate Integrity Agreements! Worst Case: Prosecution of Companies and Corporate Officers or Individuals (either for culpable conduct or under the Park Doctrine ) 8

9 Perspective of a Former Prosecutor and Chief Compliance Officer Preventative Medicine - The Need for an Effective Compliance Program Before There is a Problem Diagnostic Examination Corporate Structure - Accountability Policies and Training Risk Assessments Monitoring/Auditing Internal Process for Corrective Action/Discipline 9

10 Perspective of a Former Prosecutor and Chief Compliance Officer Prescriptive Medicine - After a Problem has Materialized Developing the "Counter-Narrative" Effective Internal Investigation Working with in-house counsel and compliance Finding all material facts good and bad Developing Company story that is accurate, truthful and a positive alternative to the other "Narrative Almost all Health Care Companies have a Positive Story to Tell! Cooperation and Voluntary Disclosure 10 NPA's, DPA's, CIA's

11 Perspective of a Former Prosecutor and Chief Compliance Officer The Government Means Business Park Doctrine Dodd-Frank more whistleblowers! 11

12 The Non-Debate never goes away More likely to be discovered than anything else Once you ve pressed send or opened it, don t even think about deletion or retrieval Same evidentiary value as old-fashioned formal letter on letterhead Unreasonable and impractical not to use Therefore, You cannot ignore it; you must manage it Inference that you read it 12

13 Four Deadly Sins of 1. Being Funny, Cute, or a Regular Guy Humor will be lost or misinterpreted Subjects in the same will be read as connected 2. Stating As Fact What You Don t Know If you assert it as fact, and it hurts, adversaries and juries will treat it as true 3. Selling & Persuading Why is critical to most theories of liability Unless you re the decision-maker or the decisionmaker has told you why you do not know 4. Pretending You Didn t See It Do not leave bad hanging 13

14 Four Things to Ask Yourself 1. Do you mean it? Would Judge Judy find this funny? Do you want to connect all the thoughts in this message? 2. Are you certain? Did you see it, hear it, or gather the data? 3. Why are you explaining or arguing reasons by ? Were you the decision-maker? Did a decision-maker ask you both (i) to make a recommendation and (ii) explain your recommendation? If this were a paper for a high school business writing class, would it get an A? 4. How could you ever explain not responding to this? Who is going to follow up on this? 14

15 The Point About Not a matter of avoiding commitment of ideas and purposes to paper But training yourself to identify, segregate and eliminate inappropriate motives and objectives from your reasoning 15

16 Role of In-House Counsel You are the advisor Do not become the decision-maker If you make the decision, you may be required to testify as to why you decided Risk of full subject matter waiver From first moment of project, identify the decision-maker who will Incorporate advice into her decision Testify about why decision was made 16

17 Attorney-Client Privilege Not a gimmick for concealing documents that should be produced In litigation-driven U.S. system, it is the one reliable process by which company officials may think preliminarily and brainstorm without fear of having the thought process misused If abused -- not only can benefits be lost, but results may be made worse Inferences about reasons for involving lawyers Lawyers may be forced to testify Subject matter waiver 17

18 Advice of Counsel Advice, not just approval Reasoning must be clear; Why? must be answered Objectively reasonable Not required to be correct with the benefit of hindsight or in the prosecutor s or adversary s viewpoint Did the advice stem from a reasonable process? Fully informed Client must have followed the advice Adversary is entitled to discover all the advice on the subject matter Defense defeated by partial compliance 18

19 Perspective of Trial Counsel Preventive Compliance Programs Damage Control Internal Investigations Going to the mat Effective Trial Strategies 19