Legal Intelligencer article by Lamb McErlane PC Health Law attorneys Vasilios J. Kalogredis, Esq. and Rachel E. (Lusk) Klebanoff, Esq.

             A corporate integrity agreement (“CIA”) is frequently a part of civil settlements between the Office of the Inspector General of the US Department of Health and Human Resources (“OIG”) and a healthcare provider or entity, including pharmaceutical companies. By entering into the CIA, a provider or entity agrees to various obligations in exchange for the OIG’s agreement that it will not seek to exclude the provider or entity from participation in Medicare, Medicaid, or other Federal health care programs.

Purpose of a Corporate Integrity Agreement

The purpose of a CIA is twofold: to improve the quality of health care and promote integrity and compliance with health care regulations.  They are not meant to be punitive.  They are but instead intended to drive compliant behavior and set minimum standards by which a health care provider or entity should be held accountable. An organization wishing to settle a government investigation is not guaranteed the option of a CIA and settlement.  Rather it is at the discretion of the OIG whether to agree to a settlement with a provider or entity and negotiate a CIA.

While the focus of a CIA will be the specific compliance failure of the subject entity and may incorporate elements of a preexisting compliance program, all CIAs have common elements. A comprehensive CIA typically lasts five years and requires the provider or entity to: (1) hire a compliance officer and/or appoint a compliance committee; (2) enhance its compliance program by developing, implementing and monitoring various compliance areas; (3) hire an Independent Review Organization (“IRO”) to conduct annual reviews and assessments;  (4) notify the OIG of “reportable events”(such as overpayments, ongoing investigations or legal proceedings, or the filing of a bankruptcy petition); and (5) provide an implementation report and annual reports to the OIG on the status of the entity’s compliance activities.

Selecting the IRO

Selecting the right IRO is a crucial decision. The entity must not only ensure that the IRO can fulfill the requirements set forth in the CIA, but also that the IRO is one it can work with successfully. Selecting the wrong IRO can lead to a very painful five years, requiring the entity to expend even more money on personnel dedicated to CIA compliance.

The OIG does not maintain a list of recommended or approved IROs. It is up to the entity to determine the most appropriate accounting firm, law firm, or consultant to engage as its IRO. However, most CIAs include language that gives the OIG the opportunity to notify an entity or provider that its choice of IRO is unacceptable within 30 days after the OIG receives written notice of the identity of the IRO. If, during the term of the CIA, the OIG has concerns about the quality of the review or the qualifications or independence of the IRO, the OIG will make those concerns known to the entity or provider and may request that the entity or provider terminate its agreement with the existing IRO and retain a new one.

If the CIA requires the subject provider or entity to engage an IRO to monitor the entity or provider, conduct annual reviews and prepare annual reports, the IRO must:

• Have expertise in the industry and in Federal health care program requirements (including the Federal Anti-Kickback Statute and the False Claims Act);
• Assign individuals to design and select samples for transactions reviews who are knowledgeable about statistical sampling techniques and testing appropriate for the industry and customized for the company;
• Have sufficient staff and resources to conduct the reviews required by the CIA on a timely basis.

Additionally, the CIA usually requires the IRO to (1) conduct a review assessment of the company’s system, processes and procedures twice during the duration of the CIA, and (2) conduct annual transactional reviews, which includes testing of selected areas defined in the CIA.

Potential Penalties

CIAs also include breach and default provisions that allow the OIG to impose certain monetary penalties (referred to as stipulated penalties) for the failure to comply with certain obligations set forth in the CIA. In addition, a material breach of the CIA constitutes an independent basis for the provider’s exclusion from participation in the Federal health care programs.

Successor Liability

In the event that, during the term of its CIA, the entity decides to sell any or all of its business that is subject to the CIA (whether through an asset sale, a sale of stock, or other type of transaction), the CIA shall be binding on the purchaser of the business unless the provider obtains a written determination from the OIG that the proposed purchaser and the business will not be subject to the requirements of the CIA following the closing of the transaction. To obtain such a determination, the entity must notify the OIG in writing at least 30 days in advance of the proposed sale and provide a description of the business being sold, the terms of the transaction, and the identity of the prospective purchaser. A determination regarding successor liability will depend on the facts and circumstances of the proposed transaction and other information determined to be relevant by the OIG.

Takeaway

The OIG website (https://oig.hhs.gov/) contains a plethora of information related to the enforcement of, compliance with, and liability under CIAs. The OIG publishes for public review all of its current CIAs.  We recommend that anyone interested in this subject should check out this website.

CIA’s are an important tool in the OIG arsenal to resolve an allegation of fraud and settle a False Claims Act case without excluding the provider or entity. A CIA can be a helpful resource for a healthcare organization to enhance its compliance if properly implemented and respected by the health care organization.

Click here to read the article online in the Legal Intelligencer. 

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Vasilios J. (Bill) Kalogredis, Esq. has been advising physicians, dentists, and other health care professionals and their businesses as to contractual, regulatory and transactional matters for over 45 years. He is Chairman of Lamb McErlane PC’s Health Law Department. bkalogredis@lambmcerlane.com. 610-701-4402.

Rachel E. (Lusk) Klebanoff, Esq. is a senior associate at Lamb McErlane PC who focuses on health law and health care litigation. She represents physicians, dentists, nurses, medical group practices, and other health-related entities in transactional, regulatory, and compliance matters. rlusk@lambmcerlane.com. 610-701-4416.