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Institutional Compliance Strategies at the University of Pennsylvania

Institutional Compliance Strategies at the University of Pennsylvania. WHAT IS INSTITUTIONAL COMPLIANCE?. A formal process to reaffirm Penn’s commitment to uphold the internal and external laws which govern it. DEFINITIONS. Compliance Program

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Institutional Compliance Strategies at the University of Pennsylvania

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  1. Institutional Compliance Strategiesat the University of Pennsylvania

  2. WHAT IS INSTITUTIONAL COMPLIANCE? Aformal process to reaffirm Penn’s commitment to uphold the internal and external laws which govern it

  3. DEFINITIONS Compliance Program A”voluntary” undertaking by an entity or Health Care Provider to assure compliance with governing laws (including Medicare and Medicaid laws) Integrity Program Program mandated by government (usually by IG or USAO) as a condition of continuing participation in a government program after addressing patterns of conduct by an organization which violates federal law

  4. BENEFITS OF AN EFFECTIVE COMPLIANCE PROGRAM RESOURCE • To Protect Entity From Liability • Limits Exposure Liability of Trustees, CEOs • Mitigates Exposure/Liability of Principal Investigators and Other Key Business Administrators • Mitigates Risk of Civil and Criminal Exposure for all Compliant Individuals

  5. CONSEQUENCES OF NON-COMPLIANCE • Fines and penalties • Institution considered “exceptional” by funding agencies • Additional oversight/monitoring by the government • Loss of expanded authorities and participation in FDP • Potential reduction in Federal funding • Loss of letter of credit funding authorization • Professional integrity compromised • Suspension, debarment, exclusion of individuals

  6. HOW DO PRINCIPAL INVESTIGATORS AND BUSINESS ADMINISTRATORS FIT INTO AN EFFECTIVE INSTITUTIONAL COMPLIANCE MATRIX? • As corporate agent and manager, you set the tone at the top • Evaluate operational impact that non compliance may have on the University, the school and you individually • Public relations impact potential impact that public disclosure of non-compliance would have on reputational risk of institution and your professional reputation • Effective managers have to be an active part of the solution • Compliance is everyone’s responsibility

  7. FAILURE TO MANAGE THESE BUSINESS RISKS HAS RESULTED IN REPUTATIONAL DAMAGE TO SOME OF THE WORLD’S MOST RESPECTED INSTITUTIONS University of MichiganChief Urologist charged with Conflict of Interest$100,000 penalty1 year probation University of MinnesotaMisuse federal grants$2.5-32 mil Thomas Jefferson UniversityMedicare over-billing$12 mil Miscellaneous Scientific MisconductJohns HopkinsHarvard (2)Yale New York University Medical CenterInflated research grant costs$15.5 mil Public DemandforImproved Control Stanford UniversityInflated research overhead costs$1.2 mil Yale UniversityMedical over-billing$5.6 mil University of TexasUnderpayment of royalties whistle blower$12 mil University of ChicagoResearch fraud and abuse$650,000 Duke UniversitySexual harassment $0.5 mil

  8. ISSUES & PERSPECTIVES GOVERNMENT ENFORCEMENTPERSPECTIVE UNIVERSITY PERSPECTIVE INSTITUTION ISSUES OUTCOME Wisconsin Madison Overstating # of Sponsors on Grant Application Fraud Mere Puffery - Listed on his grant application in hopes that they actually would become sponsors 10K Fine 3 months imprison-ment for PI

  9. ISSUES & PERSPECTIVES GOVERNMENT ENFORCEMENTPERSPECTIVE UNIVERSITY PERSPECTIVE INSTITUTION ISSUES OUTCOME Asserts that the United States was specifically aware of wrongful conduct for nearly two decades, which it failed to communicate to the University, and concerning which it deliberately chose not to take action, thereby itself causing the results which it pleaded in the Complaint. Answer to amended complaint 2/23/98 attorneys from regents of U of Minn. 32 Million Dollar Fine Loss of Expanded Authority • Effort Reporting Irregularities • Failure to obtain informed consent in Clinical Trial • Scientific Misconduct • Direct Costs-supplies not related to Grant were charged to Grant • Violations of: • Civil False Claims Act • Federal Food Drug & Cosmetic Act • Anti-Kickback Act • Scientific Misconduct • Public Health Service Act • Title XVII Social Security Act MINNESOTA

  10. ISSUES & PERSPECTIVES GOVERNMENT ENFORCEMENTPERSPECTIVE UNIVERSITY PERSPECTIVE INSTITUTION ISSUES OUTCOME New York University Federal Research Indirect Cost Rates for 1982-1993 Allegation of improper calculation of indirect cost rate leading to excessive reimbursement Acknowledge accounting & administrative mistakes made in calculating rate Public Relations $15.5 Million Settlement

  11. FEDERAL FALSE CLAIMS ACT or “How a Seemingly Insignificant Amount of Money Can Become an Enormous Fine”

  12. WHAT IS THE FALSE CLAIMS ACT? • Law which targets government contractors that submit false claims for goods and services • Has been used to combat fraud in a number of industries, most notably defense and Healthcare • Carries both criminal and civil penalties • Penalties include triple damages and fines of between $5,000 and $10,000 per false claim Source: Modern Healthcare

  13. FEDERAL FALSE CLAIMS ACT(31 U.S.C. Section 3729)(Civil) LEGAL CONTEXT PROHIBITS Anyone who knowingly: • Presents False/Fraudulent Claim for Payment From Government • Presents False Record or Statement to Get False or Fraudulent Claim Paid by Government

  14. FEDERAL FALSE CLAIMS ACT(Continued) PROHIBITSAnyone who knowingly: • Conspires to defraud the government • Uses False Record Statement to conceal, avoid, decrease obligation to pay money or property to government

  15. FEDERAL FALSE CLAIMS ACT(Continued) Government must prove: • Actual Knowledge of the False Information • Act in Deliberate Ignorance of Truth or Falsity of Information; or • Act in Reckless Disregard of Truth or Falsity of Information* *No Proof of Specific Intent to Defraud Required

  16. FEDERAL FALSE CLAIMS ACT(Continued) Civil Penalty (Per False Claim) • Not less than $5,000; Not more than $10,000 Plus • Treble damages (Double damages if cooperate and no criminal proceeding) • Also liable for costs to government in bringing civil action

  17. EXAMPLE: MD • MD Bills 50 Level “5” Cases That Should Have Been Level “3” ($60 Difference) • “Pattern or Practice” Established • 50 X $10,000 = $500,000 • ($60 X 50=$3,000) X (3) = $9,000 • Total Payback Could be up to $509,000 on a $3,000 “Overbill” • Plus cost to Government in bringing action/Attorney Fees(Qui Tam)

  18. FEDERAL FALSE CLAIMS ACT(18 U.S.C. Section 287)(Criminal) Substantive Offense:FALSE, FICTITIOUS OR FRAUDULENT CLAIM • Not greater than 5 years imprisonment • Fine not greater than $250,000* *If submitted to Defense Department, maximum fine is $1,000,000 (18 U.S.C. Section 3623)

  19. FEDERAL FALSE CLAIMS ACT(18 U.S.C. Section 286)(Criminal) CONSPIRACY TO DEFRAUD GOVERNMENT WITH RESPECT TO CLAIMS • Not greater than 10 years imprisonment • Fine of not greater than $250,000 • Or both

  20. QUI TAM PROVISIONSCIVIL FALSE CLAIMS ACT • Action filed under seal • If successful, “ Whistleblower”(relator) receives up to 30% of the Settlement/Judgment Against the Provider

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