UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, DC 20549
FORM 8-K/A
CURRENT REPORT
Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934
Date of Report (Date of earliest event reported): June 6, 2012
Orthofix International N.V.
(Exact name of Registrant as specified in its charter)
Curaçao |
|
0-19961 |
|
N/A |
(State or other jurisdiction of incorporation) |
|
(Commission File Number) |
|
(IRS Employer Identification No.) |
7 Abraham de Veerstraat |
|
N/A |
(Address of principal executive offices) |
|
(Zip Code) |
Registrants telephone number, including area code: 011-59-99-465-8525
Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions (see General Instruction A.2. below):
o Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)
o Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)
o Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))
o Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))
Item 1.01. Entry into a Material Definitive Agreement.
Explanatory Note: On June 7, 2012, Orthofix International N.V. (the Company) filed a Current Report on Form 8-K (the Original Form 8-K) describing the Companys entry into the following agreements:
· Settlement Agreement, entered into on June 6, 2012, among the United States of America, acting through the United States Department of Justice and on behalf of the Office of Inspector General of the Department of Health and Human Services, the TRICARE Management Activity, through its General Counsel, the Office of Personnel Management , in its capacity as administrator of the Federal Employees Health Benefits Program, the United States Department of Veteran Affairs, Orthofix International N.V. and relator Jeffrey J. Bierman (the BGS Settlement Agreement);
· Plea Agreement, entered into on June 7, 2012, among the United States Attorney for the District of Massachusetts, the Department of Justice and Orthofix Inc. (the Plea Agreement); and
· Corporate Integrity Agreement, entered into on June 6, 2012, between the Office of Inspector General of the Department of Health and Human Services and Orthofix International N.V. (the CIA).
As previously described in the Original Form 8-K, this amendment to the Original Form 8-K is being filed for the sole purpose of filing the text of the BGS Settlement Agreement, the Plea Agreement and the CIA. The descriptions of the BGS Settlement Agreement, the Plea Agreement and the CIA contained in the Original Form 8-K do not purport to be complete and are qualified in their entirety by the text of those agreements, which are filed herewith as Exhibits 10.1, 10.2 and 10.3, respectively, and incorporated by reference into Item 1.01 of the Original Form 8-K.
Item 9.01. Financial Statements and Exhibits.
(d) |
Exhibits |
|
|
10.1 |
Settlement Agreement, entered into on June 6, 2012, among the United States of America, acting through the United States Department of Justice and on behalf of the Office of Inspector General of the Department of Health and Human Services, the TRICARE Management Activity, through its General Counsel, the Office of Personnel Management , in its capacity as administrator of the Federal Employees Health Benefits Program, the United States Department of Veteran Affairs, Orthofix International N.V. and relator Jeffrey J. Bierman |
|
|
10.2 |
Plea Agreement, entered into on June 7, 2012, among the United States Attorney for the District of Massachusetts, the Department of Justice and Orthofix Inc. |
|
|
10.3 |
Corporate Integrity Agreement, entered into on June 6, 2012, between the Office of Inspector General of the Department of Health and Human Services and Orthofix International N.V. |
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.
|
Orthofix International N.V. | |
|
| |
|
By: |
/s/ Brian McCollum |
|
|
Brian McCollum |
|
|
Senior Vice President of Finance and Chief Financial Officer |
Date: June 7, 2012
EXHIBIT INDEX
Exhibit No. |
|
Description |
|
|
|
10.1 |
|
Settlement Agreement, entered into on June 6, 2012, among the United States of America, acting through the United States Department of Justice and on behalf of the Office of Inspector General of the Department of Health and Human Services, the TRICARE Management Activity, through its General Counsel, the Office of Personnel Management , in its capacity as administrator of the Federal Employees Health Benefits Program, the United States Department of Veteran Affairs, Orthofix International N.V. and relator Jeffrey J. Bierman |
|
|
|
10.2 |
|
Plea Agreement, entered into on June 7, 2012, among the United States Attorney for the District of Massachusetts, the Department of Justice and Orthofix Inc. |
|
|
|
10.3 |
|
Corporate Integrity Agreement, entered into on June 6, 2012, between the Office of Inspector General of the Department of Health and Human Services and Orthofix International N.V. |
Exhibit 10.1
SETTLEMENT AGREEMENT
This Settlement Agreement (Agreement) is entered into among the United States of America, acting through the United States Department of Justice and on behalf of the Office of Inspector General (OIG-HHS) of the Department of Health and Human Services (HHS), the TRICARE Management Activity (TMA), through its General Counsel; the Office of Personnel Management (OPM), in its capacity as administrator of the Federal Employees Health Benefits Program (FEHBP); and the United States Department of Veteran Affairs (VA) (collectively the United States), ORTHOFIX INTERNATIONAL NV (Orthofix NV), and JEFFREY J. BIERMAN (hereafter collectively referred to as the Parties), through their authorized representatives.
RECITALS
A. Orthofix International N.V. is a publicly traded (NASDAQ: OFIX) orthopedic products company offering a line of surgical and non-surgical products. Orthofix, Inc., a wholly owned subsidiary of Orthofix NV, designs, manufactures, markets, and distributes, among other products, non-invasive osteogenesis stimulator products (commonly known as bone growth stimulators) that are used to enhance the success rate of spinal fusions and to treat non-union fractures. (Orthofix NV and Orthofix, Inc., collectively, will be referred to as Orthofix.) Among Orthofix, Inc.s non-invasive osteogenesis stimulator products are Spinal-Stim, Cervical-Stim, and Physio-Stim (hereinafter, the Covered Devices).
B. On March 23, 2005, Relator Jeffrey Bierman filed a qui tam action in the United States District Court for the District of Massachusetts captioned United States ex rel. Bierman v. Orthofix Intl NV, et al., Civ. No. 05-10557-EFH, pursuant to the qui tam provisions of the False
Claims Act, 31 U. S.C. § 3730(b) (the Civil Action). The United States has not intervened in this action.
C. On such date as may be determined by the Court, Orthofix, Inc. will enter a plea of guilty pursuant to Fed. R. Crim. P. 11(c)(1)(C) (the Plea Agreement) to an Information filed in United States of America v. Orthofix, Inc., Criminal Action No. [to be assigned] (District of Massachusetts) (the Criminal Action) that will allege a violation of Title 18, United States Code, Section 1516, namely, the obstruction of a federal audit.
D. The Civil Action contends, on behalf of the United States, that Orthofix submitted, or caused to be submitted claims for payment to the Medicare Program (Medicare), Title XVIII of the Social Security Act, 42 U. S.C. §§ 1395-1395kkk-1; the Medicaid Program, Title XIX of the Social Security Act, 42 U.S.C. §§ 1396-1396v, the TRICARE Program, 10 U. S.C. §§ 1071-1110a; the FEHBP, 5 U.S.C. §§ 8901-8914; and the Veterans Affairs Program, 38 U.S.C. §§ 1701-1743 (collectively the Federal Health Care Programs).
E. Relator, on behalf of the United States, contends that the Government has certain civil claims against Orthofix as specified in Paragraph 4, below, for engaging in the following conduct during the time period January 1, 1999 through December 31, 2010 (hereinafter referred to as the Covered Conduct):
(i) Orthofix routinely waived federal healthcare program patient co-payments for the Covered Devices, thereby misstating true charges for those products and overcharging federal health programs;
(ii) Orthofix materially falsified or caused to be falsified Medicare Certificates of Medical Necessity (CMNs) and CMN supporting documentation for the Covered Devices, including, by falsifying the duration of time for which the Covered Devices were medically necessary, and/or by completing, signing, or obtaining CMNs or CMN supporting documentation in a manner contrary to applicable regulations;
(iii) With respect to the Covered Devices, Orthofix failed to comply with the Medicare Durable Medical Equipment, Prosthetics, Orthotics and Supplies (DMEPOS) Supplier Standards reflected in 42 C.F.R. § 424.57(c)(5), requiring that suppliers advise beneficiaries that they may either rent or purchase inexpensive or routinely purchased durable medical equipment; and
(iv) Orthofix offered and paid illegal remuneration in the form of fitter fees, referral fees, discounts, sold order arrangements, consulting arrangements, and waived co-payments, to healthcare professionals, their staff, their family members, independent sales agents, and/or patients, in a manner intended to induce the promotion, prescription, and/or purchase of the Covered Devices in violation of the Federal Anti-Kickback Statute, 42 U.S.C. § 1320a-7b(b).
As a result of the foregoing conduct, the Relator, on behalf of the United States, contends that Orthofix submitted and/or caused to be submitted false or fraudulent claims for the Covered Devices, or caused purchases by, Medicare and the other Federal Health Care Programs.
F. This Settlement Agreement is made in compromise of disputed claims. This Settlement Agreement is neither an admission of liability by Orthofix nor a concession by the United States and the Relator that their claims are not well founded. Orthofix expressly denies the allegations of the United States and the Relator set forth herein and in the Civil Action and denies that Orthofix, or any Orthofix subsidiaries or affiliates, have engaged in any wrongful conduct in connection with the Covered Conduct except as to such admissions as Orthofix, Inc. makes in connection with its guilty plea under the Plea Agreement. Neither this Agreement, its execution, nor the performance of any obligation under it, including any payment, nor the fact of settlement, is intended to be, or shall be understood as, an admission of liability or wrongdoing, or other expression reflecting upon the merits of the dispute by Orthofix.
G. Relator claims entitlement under 31 U.S.C. § 3730(d) to a share of the proceeds of this Settlement Agreement and to Relators reasonable expenses, attorneys fees and costs.
To avoid the delay, uncertainty, inconvenience, and expense of protracted litigation of the above claims, and in consideration of the mutual promises and obligations of this Settlement Agreement, the Parties agree and covenant as follows:
TERMS AND CONDITIONS
1. Orthofix NV agrees to pay to the United States the sum of THIRTY FOUR MILLION TWO HUNDRED THIRTY FOUR THOUSAND TWO HUNDRED SIXTY THREE DOLLARS ($34,234,263.00), together with interest accrued thereon at the rate of 3% from May 5, 2011 continuing until and including the day before payment is made (the Settlement Amount). The Settlement Amount shall constitute a debt immediately due and owing to the United States on the Effective Date of this Agreement. This debt shall be discharged by payment of the Settlement Amount by means of electronic funds transfer made pursuant to written instructions to be provided by the Office of the United States Attorney for the District of Massachusetts, no later than seven business days after the Effective Date of this Agreement.
2. Conditioned upon the United States receiving the Settlement Amount from Orthofix, and as soon as feasible after receipt, the United States shall pay $9,243,251.00 to Relator, plus their proportionate share of the interest accrued on the Settlement Amount described in Paragraph 1 above, as Relators share of the proceeds pursuant to 31 U.S.C. §3730(d). This payment shall be made by electronic funds transfer to Relators counsel of record. No other relator payments shall be made by the United States with respect to the matters covered by this Agreement.
3. If Orthofix, Inc.s agreed upon guilty plea pursuant to Fed. R. Crim. P. 11(c)(1)(C) in the Criminal Action described in Recitals Paragraph C is not accepted by the Court or the Court does not impose the agreed upon sentence for whatever reason, this Agreement shall be
null and void at the option of either the United States or Orthofix NV. If either the United States or Orthofix NV exercises this option, which option shall be exercised by notifying all Parties, through counsel, in writing within five (5) business days of the Courts decision, the Parties will not object and this Agreement will be rescinded. If this Agreement is rescinded, Orthofix NV will not plead, argue, or otherwise raise any defenses under the theories of statute of limitations, laches, estoppels, or similar theories, to any civil or administrative claims, actions, or proceedings arising from the Covered Conduct that are brought by the United States within 90 calendar days of rescission, except to the extent such defenses were available on the day on which the qui tam Complaint, referenced in Recitals Paragraph B, above, was filed.
4. Subject to the exceptions in Paragraph 10 (concerning excluded claims) below, and conditioned upon Orthofix NVs full payment of the Settlement Amount, the United States releases Orthofix NV, its predecessors, and its current and former divisions, parents, affiliates, subsidiaries, successors and assigns, and their current and former directors, officers, and employees (the Orthofix Entities), from any civil or administrative monetary claim the United States has for the Covered Conduct under the False Claims Act, 31 U. S.C. §§ 3729-3733; the Civil Monetary Penalties Law, 42 U. S.C. § 1320a-7a; the Program Fraud Civil Remedies Act, 31 U.S.C. §§ 3801-3812; any statutory provision creating a cause of action for civil damages or civil penalties for which the Civil Division of the Department of Justice has actual and present authority to assert and compromise pursuant to 28 C.F.R. Part 0, Subpart I, 0.45(d); or the common law theories of payment by mistake, unjust enrichment, and fraud.
5. Subject to the exceptions in Paragraph 10 below, and conditioned upon Orthofix NVs full payment of the Settlement Amount, Relator, for himself and for his heirs, successors,
attorneys, agents, and assigns, releases the Orthofix Entities from any civil monetary claim, including any and all claims, claims for relief, actions, rights, causes of action, suits, debts, obligations, liabilities, demands, losses, damages (including treble damages and any civil penalties), punitive damages, costs and expenses of any kind, character or nature whatsoever, known or unknown, fixed or contingent, in law or in equity, in contract or tort, or under any state or federal statute or regulation or otherwise that Relator has standing to bring, which Relator may now have or claim to have against the Orthofix Entities, arising in any way out of or connected in any way with the facts, claims and circumstances alleged in, arising under, or arising from the filing of, the Civil Action, or from any civil monetary claim the Relator has or may have on behalf of the United States for the Covered Conduct under the False Claims Act, 31 U.S.C. §§ 3729-3733, provided, however, that dismissal of all claims other than claims as to the Covered Conduct shall be with prejudice as to Relator and without prejudice as to the United States; however, Relators release of Orthofix does not extend to any claim for reasonable attorneys fees, expenses and costs resulting from the Civil Action pursuant to 31 U.S.C. § 3730(d), which claims are reserved and not released by this Agreement.
6. In consideration of the obligations of the Relator set forth in this Agreement, the Orthofix Entities, on behalf of themselves, their predecessors, and their current and former divisions, parents, subsidiaries, agents, successors, assigns, and their current and former directors, officers and employees, fully and finally release, waive, and forever discharge the Relator and his respective heirs, successors, assigns, agents, and attorneys from any claims or allegations that any of the Orthofix Entities have asserted or could assert in connection with the Covered Conduct, or related to the initiation, investigation or prosecution of the Civil Action by Relator and his attorneys against Orthofix or in connection with or related to the Governments
investigation of the Orthofix Entities. Provided, however, that Orthofix expressly reserves any defenses or claims with respect to Relators claim for attorneys fees, expenses, and costs under 31 U.S.C. 3730(d), which is reserved pursuant to paragraph 5 above.
7. In consideration of the obligations of Orthofix NV in this Agreement and the Corporate Integrity Agreement (CIA), entered into between OIG-HHS, Orthofix NV, and Orthofix, Inc., and conditioned upon Orthofix NVs full payment of the Settlement Amount, the OIG-HHS agrees to release and refrain from instituting, directing, or maintaining any administrative action seeking exclusion from Medicare, Medicaid, and other Federal health care programs (as defined in 42 U.S.C. § 1320a-7b(f)) against Orthofix NV or Orthofix, Inc. under 42 U.S.C. § 1320a-7a (Civil Monetary Penalties Law) or 42 U.S.C. § 1320a-7(b)(7) (permissive exclusion for fraud, kickbacks, and other prohibited activities) for the Covered Conduct, except as reserved in Paragraph 10 (concerning excluded claims), below, and as reserved in this Paragraph. The OIG-HHS expressly reserves all rights to comply with any statutory obligations to exclude Orthofix NV and/or Orthofix Inc. from Medicare, Medicaid, and other Federal health care programs under 42 U.S.C. § 1320a-7(a) (mandatory exclusion) based upon the Covered Conduct. Nothing in this Paragraph precludes the OIG-HHS from taking action against entities or persons, or for conduct and practices, for which claims have been reserved in Paragraph 10, below.
8. In consideration of the obligations of Orthofix NV set forth in this Agreement, conditioned upon Orthofix NVs full payment of the Settlement Amount, TMA agrees to release and refrain from instituting, directing, or maintaining any administrative action seeking exclusion or suspension from the TRICARE Program against Orthofix NV, its current and
former divisions, subsidiaries, affiliates, successors, and assigns, under 32 C.F.R. § 199.9 for the Covered Conduct, except as reserved in Paragraph 10 (concerning excluded claims), below, and as reserved in this Paragraph. TMA expressly reserves authority to exclude Orthofix NV from the TRICARE Program under 32 C.F.R. §§ 199.9 (f)(1)(i)(A), (f)(1)(i)(B), and (f)(1)(iii), based upon the Covered Conduct. Nothing in this Paragraph precludes TMA or the TRICARE Program from taking action against entities or persons, or for conduct and practices, for which claims have been reserved in Paragraph 10, below.
9. In consideration of the obligations of Orthofix NV in this Agreement, conditioned upon Orthofix NVs full payment of the Settlement Amount, OPM agrees to release and refrain from instituting, directing, or maintaining any administrative action seeking debarment from the FEHBP against Orthofix NV, its current and former divisions, subsidiaries, affiliates, successors, and assigns, under 5 U. S.C. § 8902a or 5 C.F.R. Part 919 for the Covered Conduct, except as reserved in Paragraph 10 (concerning excluded claims), below and except if excluded by the OIG-HHS pursuant to 42 U. S.C. § 1320a-7(a). Nothing in this Paragraph precludes OPM from taking action against entities or persons, or for conduct and practices, for which claims have been reserved in Paragraph 10, below.
10. Notwithstanding the releases given in paragraphs 4 and 5 of this Agreement, or any other term of this Agreement, the following claims of the United States are specifically reserved and are not released:
a. Any liability arising under Title 26, U.S. Code (Internal Revenue Code);
b. Any criminal liability;
c. Except as explicitly stated in this Agreement, any administrative liability, including mandatory exclusion from Federal health care programs;
d. Any liability to the United States (or its agencies) for any conduct other than the Covered Conduct;
e. Any liability based upon obligations created by this Agreement;
f. Any liability for express or implied warranty claims or other claims for defective or deficient products or services, including quality of goods and services;
g. Any liability for failure to deliver goods or services due;
h. Any liability for personal injury or property damage or for other consequential damages arising from the Covered Conduct; or
i. Any liability of individuals (including current or former directors, officers, employees, agents, or shareholders of Orthofix NV) who receive written notification that they are the target of a criminal investigation (as defined in the United States Attorneys Manual), are indicted or charged, or who enter into a plea agreement, related to the Covered Conduct.
11. Relator and his heirs, successors, attorneys, agents, and assigns shall not object to this Agreement but agree and confirm that this Agreement is fair, adequate, and reasonable under all the circumstances, pursuant to 31 U. S.C. § 3730(c)(2)(B), and expressly waive the opportunity for a hearing on any objections to the Settlement Agreement pursuant to 31 U.S.C. § 3730(c)(2)(B). Conditioned upon Relators receipt of the payment described in Paragraph 2, Relator and his heirs, successors, attorneys, agents, and assigns fully and finally release, waive, and forever discharge the United States, its agencies, officers, agents, employees, and servants, from any claims as to Orthofix arising from the filing of the Civil Action or under 31 U. S.C. §
3730, and from any claims as to Orthofix to a share of the proceeds of this Agreement and/or the Civil Action.
12. Orthofix NV waives and shall not assert any defenses Orthofix NV may have to any criminal prosecution or administrative action relating to the Covered Conduct that may be based in whole or in part on a contention that, under the Double Jeopardy Clause in the Fifth Amendment of the Constitution, or under the Excessive Fines Clause in the Eighth Amendment of the Constitution, this Agreement bars a remedy sought in such criminal prosecution or administrative action. Nothing in this paragraph or any other provision of this Agreement constitutes an agreement by the United States concerning the characterization of the Settlement Amount for purposes of the Internal Revenue laws, Title 26 of the United States Code.
13. Orthofix NV fully and finally releases the United States, its agencies, officers, agents, employees, and servants, from any claims (including attorneys fees, costs, and expenses of every kind and however denominated) that Orthofix NV has asserted, could have asserted, or may assert in the future against the United States, its agencies, officers, agents, employees, and servants, related to the Covered Conduct and the United States investigation and prosecution thereof.
14. The Settlement Amount shall not be decreased as a result of the denial of claims for payment now being withheld from payment by any Medicare, TRICARE or FEHBP, carrier or intermediary or any state payer, related to the Covered Conduct; and Orthofix agrees not to resubmit to any Medicare, TRICARE or FEHBP carrier or intermediary or any state payer any previously denied claims related to the Covered Conduct, and agrees not to appeal any such denials of claims.
15. Orthofix NV agrees to the following:
a. Unallowable Costs Defined: All costs (as defined in the Federal Acquisition Regulation, 48 C.F.R. § 31.205-47; and in Titles XVIII and XIX of the Social Security Act, 42 U. S.C. §§ 1395-1395kkk-1 and 1396-1396w-5; and the regulations and official program directives promulgated thereunder) incurred by or on behalf of Orthofix NV, its present or former officers, directors, employees, shareholders, and agents in connection with:
(1) the matters covered by this Agreement and any related plea agreement;
(2) the United States audit(s) and civil and any criminal investigation(s) of the matters covered by this Agreement;
(3) Orthofix NVs investigation, defense, and corrective actions undertaken in response to the United States audit(s) and civil and any criminal investigation(s) in connection with the matters covered by this Agreement (including attorneys fees);
(4) the negotiation and performance of this Agreement and any Plea Agreement;
(5) the payment Orthofix NV makes to the United States pursuant to this Agreement and any payments that Orthofix NV may make to Relator, including costs and attorneys fees, under any separate agreement or pursuant to Court order; and
(6) the negotiation of, and obligations undertaken pursuant to the CIA to:
(i) retain an independent review organization to perform annual reviews as described in Section III of the CIA; and
(ii) prepare and submit reports to the OIG-HHS, are unallowable costs for government contracting purposes and under the Medicare Program, Medicaid Program, TRICARE Program, and Federal Employees Health Benefits Program (FEHBP) (hereinafter
referred to as Unallowable Costs). However, nothing in this paragraph 15.a.(6) that may apply to the obligations undertaken pursuant to the CIA affects the status of costs that are not allowable based on any other authority applicable to Orthofix NV.
b. Future Treatment of Unallowable Costs: Unallowable Costs shall be separately determined and accounted for by Orthofix NV, and Orthofix NV shall not charge such Unallowable Costs directly or indirectly to any contracts with the United States or any State Medicaid program, or seek payment for such Unallowable Costs through any cost report, cost statement, information statement, or payment request submitted by Orthofix NV or any of its subsidiaries or affiliates to the Medicare, Medicaid, TRICARE, or FEHBP Programs.
c. Treatment of Unallowable Costs Previously Submitted for Payment: Orthofix NV further agrees that within 90 days of the Effective Date of this Agreement it shall identify to applicable Medicare and TRICARE fiscal intermediaries, carriers, and/or contractors, and Medicaid and FEHBP fiscal agents, any Unallowable Costs (as defined in this Paragraph) included in payments previously sought from the United States, or any State Medicaid program, including, but not limited to, payments sought in any cost reports, cost statements, information reports, or payment requests already submitted by Orthofix NV or any of its subsidiaries or affiliates, and shall request, and agree, that such cost reports, cost statements, information reports, or payment requests, even if already settled, be adjusted to account for the effect of the inclusion of the unallowable costs. Orthofix NV agrees that the United States, at a minimum, shall be entitled to recoup from Orthofix NV any overpayment plus applicable interest and penalties as a result of the inclusion of such Unallowable Costs on previously-submitted cost reports, information reports, cost statements, or requests for payment.
Any payments due after the adjustments have been made shall be paid to the United States pursuant to the direction of the Department of Justice and/or the affected agencies. The United States reserves its rights to disagree with any calculations submitted by Orthofix NV or any of its subsidiaries or affiliates on the effect of inclusion of Unallowable Costs (as defined in this Paragraph) on Orthofix NV or any of its subsidiaries or affiliates cost reports, cost statements, or information reports.
d. Nothing in this Agreement shall constitute a waiver of the rights of the United States to audit, examine, or re-examine Orthofix NVs books and records to determine that no Unallowable Costs have been claimed in accordance with the provisions of this Paragraph.
16. Orthofix NV agrees to cooperate fully and truthfully with the United States investigation of individuals and entities not released in this Agreement. Upon reasonable notice, Orthofix NV shall encourage, and agrees not to impair, the cooperation of its directors, officers, and employees, and shall use its best efforts to make available, and encourage, the cooperation of former directors, officers, and employees for interviews and testimony, consistent with the rights and privileges of such individuals. Orthofix NV further agrees to furnish to the United States, upon request, complete and unredacted copies of all non-privileged documents, reports, memoranda of interviews, and records in its possession, custody, or control concerning any investigation of the Covered Conduct that it has undertaken, or that has been performed by another on its behalf.
17. This Agreement is intended to be for the benefit of the Parties only. The Parties do not release any claims against any other person or entity, except to the extent explicitly provided for in this Agreement.
18. Orthofix NV agrees that it waives and shall not seek payment for any of the health care billings covered by this Agreement from any health care beneficiaries or their parents, sponsors, legally responsible individuals, or third party payors based upon the claims defined as Covered Conduct.
19. Upon receipt of the payment described in Paragraph 1, above, the Parties shall promptly sign and file in the Civil Action a Joint Stipulation of Dismissal of all claims against Orthofix NV and Orthofix, Inc. that are asserted in the Civil Action pursuant to Rule 41(a)(1); such dismissal shall be with prejudice as to all claims asserted by Relator against Orthofix NV and Orthofix, Inc., and without prejudice as to the United States, except with respect to claims for the Covered Conduct, which shall be dismissed with prejudice.
20. Each Party shall bear its own legal and other costs incurred in connection with this matter, including the preparation and performance of this Agreement, except with respect to Relators claims under 31 U.S.C. § 3730(d) for expenses or attorneys fees, which are reserved pursuant to paragraph 5 above.
21. Each party and signatory to this Agreement represents that it freely and voluntarily enters in to this Agreement without any degree of duress or compulsion.
22. This Agreement is governed by the laws of the United States. The exclusive jurisdiction and venue for any dispute relating to this Agreement is the United States District Court for the District of Massachusetts. For purposes of construing this Agreement, this Agreement shall be deemed to have been drafted by all Parties to this Agreement and shall not, therefore, be construed against any Party for that reason in any subsequent dispute.
23. This Agreement constitutes the complete agreement between the Parties. This Agreement may not be amended except by written consent of the Parties.
24. The undersigned counsel represent and warrant that they are fully authorized to execute this Agreement on behalf of the persons and entities indicated below.
25. This Agreement may be executed in counterparts, each of which constitutes an original and all of which constitute one and the same Agreement.
26. This Agreement is binding on Orthofix NVs successors, transferees, heirs, and assigns.
27. This Agreement is binding on Relators successors, transferees, heirs, and assigns.
28. All parties consent to the United States disclosure of this Agreement, and information about this Agreement, to the public.
29. This Agreement is effective on the date of signature of the last signatory to the Agreement (Effective Date of this Agreement). Facsimiles of signatures shall constitute acceptable, binding signatures for purposes of this Agreement.
THE UNITED STATES OF AMERICA | ||||
|
|
|
| |
|
|
|
| |
|
|
|
CARMEN M. ORTIZ | |
|
|
|
United States Attorney | |
|
|
|
District of Massachusetts | |
|
|
|
| |
|
|
|
| |
DATED: |
6/6/12 |
|
BY: |
/s/ Zachary A. Cunha |
|
|
|
Zachary A. Cunha | |
|
|
|
Shannon T. Kelley | |
|
|
|
Assistant United States Attorneys | |
|
|
|
| |
|
|
|
| |
|
|
|
STUART F. DELERY | |
|
|
|
Acting Assistant Attorney General | |
|
|
|
Civil Division | |
|
|
| ||
|
|
| ||
DATED: |
6/6/12 |
|
BY: |
/s/ David T. Cohen |
|
|
|
Michael D. Granston, Acting Director | |
|
|
|
Patricia R. Davis, Assistant Director | |
|
|
|
David T. Cohen, Senior Trial Counsel | |
|
|
|
Commercial Litigation Branch, Civil Division | |
|
|
|
U.S. Department of Justice |
DATED: |
5/31/2012 |
|
BY: |
/s/ Shirley R. Patterson |
|
|
|
SHIRLEY R. PATTERSON | |
|
|
|
Assistant Director for Federal Employee Insurance | |
|
|
|
Operations | |
|
|
|
United States Office of | |
|
|
|
Personnel Management | |
|
|
|
| |
|
|
|
| |
DATED: |
5/31/2012 |
|
BY: |
/s/ David Cope |
|
|
|
DAVID COPE | |
|
|
|
Debarring Official | |
|
|
|
Office of the Assistant Inspector General | |
|
|
|
for Legal Affairs | |
|
|
|
United States Office of | |
|
|
|
Personnel Management |
DATED: |
6/6/12 |
|
BY: |
/s/ Gregory E. Demske |
|
|
|
GREGORY E. DEMSKE | |
|
|
|
Chief Counsel to the Inspector General | |
|
|
|
Office of Counsel to the | |
|
|
|
Inspector General | |
|
|
|
Office of Inspector General | |
|
|
|
United States Department of | |
|
|
|
Health and Human Services |
DATED: |
June 4, 2012 |
|
BY: |
/s/ Paul J. Hutter |
|
|
|
PAUL J. HUTTER | |
|
|
|
General Counsel | |
|
|
|
TRICARE Management Activity | |
|
|
|
United States Department | |
|
|
|
of Defense |
FOR ORTHOFIX INTERNATIONAL NV | ||||
|
|
|
| |
|
|
|
| |
DATED: |
5/31/12 |
|
|
/s/ Jeffrey M. Schumm |
|
|
|
ORTHOFIX INTERNATIONAL NV | |
|
|
|
| |
|
|
|
| |
DATED: |
5/31/2012 |
|
BY: |
/s/ Brien T. OConnor |
|
|
|
Brien T. OConnor, Esq. | |
|
|
|
Kirsten V. Mayer, Esq. | |
|
|
|
Nicholas J. Linder, Esq. | |
|
|
|
Ropes & Gray, LLP | |
|
|
|
Prudential Tower | |
|
|
|
800 Boylston Street | |
|
|
|
Boston, MA 02199-3600 |
Exhibit 10.2
|
U.S. Department of Justice
Carmen M. Ortiz United States Attorney District of Massachusetts |
|
|
Main Reception: (617) 748-3100 |
John Joseph Moakley United States Courthouse |
|
1 Courthouse Way |
|
Suite 9200 |
|
Boston, Massachusetts 02210 |
June 5, 2012
Brien T. OConnor
Ropes & Gray, LLP
800 Boylston Street
Boston, MA 02199
Re: United States v. Orthofix, Inc.,
Dear Mr. OConnor:
This letter sets forth the Agreement between the United States Attorney for the District of Massachusetts (the U.S. Attorney) and the Department of Justice (collectively, the United States Department of Justice and the U.S. Attorney will be referred to as the United States) and your client, Orthofix, Inc. (Defendant or Orthofix), in the above-referenced case. The Agreement is as follows:
1. Change of Plea
At the earliest practicable date, Defendant shall waive indictment and plead guilty to the Information attached to this Agreement as Exhibit A charging it with: Obstruction of Federal Audit in violation of 18 U.S.C. §1516. Defendant expressly and unequivocally admits that it committed the crime charged in the Information, did so knowingly and intentionally, with an intent to deceive or defraud the United States, and is in fact guilty of that offense. Defendant also agrees to waive venue and any legal or procedural defects in the Information.
2. Penalties
With respect to the count of conviction, Defendant faces the following maximum penalties:
a. A fine of $500,000, or twice the gross gain/loss, whichever is greater. 18 U.S.C. §§3571(c) and (d). The gross gain resulting from the offense is $6,471,448. Thus the maximum fine is $12,942,896.
b. A term of probation of not more than five (5) years. 18 U.S.C. §3561(c)(1);
c. Restitution to any victims of the offense. See 18 U.S.C. §3563(b)(2); and
d. With respect to the count of conviction, Defendant shall pay a mandatory special assessment of $400. 18 U.S.C. §3013.
3. Fed. R. Crim. P. 11(c)(1)(C) Plea
This plea agreement is made pursuant to Fed. R. Crim. P. 11(c)(1)(C), and Defendants plea will be tendered pursuant to that provision. In accordance with Fed. R. Crim. P. 11(c)(1)(C), if the District Court (Court) accepts this plea agreement, the Court must include the agreed disposition in the judgment. If the Court rejects any aspect of this plea agreement, the U.S. Attorney may deem the Agreement null and void. Defendant expressly understands that it may not withdraw its plea of guilty unless the Court rejects this Agreement under Fed. R. Crim. P. 11(c)(5).
4. Sentencing Guidelines
The parties agree jointly to take the following positions at sentencing under the United States Sentencing Guidelines:
a. The parties agree that the Guideline Manual in effect as of November 1, 2010 should be used in determining Defendants sentence. See U.S.S.G. §§1B1.11(a).
b. The parties agree that the base fine is $6,471,448, in that such amount was the pecuniary gain to Defendant from the offense. See U.S.S.G. §§8C2.4(a)(2).
c. Pursuant to U.S.S.G. §8C2.5, the culpability score is 6 as determined as follows:
(1) Base culpability score is five (5) pursuant to U.S.S.G. §8C2.5(a);
(2) Add three (3) points pursuant to U.S.S.G. §8C2.5(b)(3)(A), in that the organization had 200 or more employees and an individual within high-level personnel of the organization participated in, condoned, or was willfully ignorant of the offense;
(3) Deduct two (2) points pursuant to U.S.S.G. §8C2.5(g)(2).
d. Pursuant to U.S.S.G. §8C2.6, the appropriate multiplier range associated with a culpability score of 6 is 1.2 to 2.4.
e. Thus, the Guideline Fine Range is $7,765,737 to $12,942,896. See 18 U.S.C. §§3571(c) and (d) (maximum fine is twice the gross gain or gross loss).
f. The parties agree that: (1) disgorgement pursuant to U.S.S.G. §8C2.9 is not necessary; (2) there is no basis for a downward departure or deviation under the U.S.S.G.; and (3) a fine within the guideline range will result in a reasonable sentence taking into consideration all of the factors set forth in 18 U.S.C. §§3553(a), 3572.
The U.S. Attorney may, at her sole option, be released from her commitments under this Agreement, including, but not limited to, her agreement that Paragraph 5 constitutes the appropriate disposition of this case, if at any time between Defendants execution of this Agreement and sentencing, Defendant:
(a) Fails to admit a complete factual basis for the plea;
(b) Fails to truthfully admit its conduct in the offenses of conviction;
(c) Falsely denies, or frivolously contests, relevant conduct for which Defendant is accountable under U.S.S.G. §1B1.3;
(d) Fails to provide truthful information about its financial status;
(e) Gives false or misleading testimony in any proceeding relating to the criminal conduct charged in this case and any relevant conduct for which Defendant is accountable under U.S.S.G. §1B1.3;
(f) Engages in acts which form a basis for finding that Defendant has obstructed or impeded the administration of justice under U.S.S.G. §3C1.1;
(g) Commits a crime; or
(h) Attempts to withdraw its guilty plea.
5. Agreed Disposition
Pursuant to Fed. R. Crim. P. 11(c)(1)(C), the U.S. Attorney and Defendant agree that the following is a reasonable and appropriate disposition of this case:
(a) a criminal fine in the amount of $7,765,737, to be paid within two business days of the date of sentencing;
(b) a mandatory special assessment in the amount of $400;
(c) in light of the pending civil actions, including United States ex rel. Bierman v. Orthofix International, N.V., et al, C.A. No. 05-10557-EFH (District of Massachusetts), and the Civil Settlement Agreement between Orthofix and others and the United States relating to the civil action, which is being signed contemporaneously with this plea agreement, and attached hereto as Exhibit B, which requires payment of $34,234,263 plus interest, the parties agree that the complication and prolongation of the sentencing process that would result from an attempt to fashion a restitution order outweighs the need to provide restitution to the non-federal victims, if any, in this case. See, 18 U.S.C. §3663(a)(1)(B)(ii). Therefore the United States agrees that it will not seek a separate restitution order as to Orthofix as part of the resolution of the Information and the Parties agree that the appropriate resolution of this case does not include a restitution order.
(d) The United States agrees that it will not seek a term of probation in light of the Corporate Integrity Agreement entered into between Orthofix and the Office of Inspector General of the Department of Health and Human Services, attached as Exhibit C.
6. No Further Prosecution of Orthofix
Pursuant to Fed. R. Crim. P. 11(c)(1)(A), the United States agrees that, other than the charge in the attached Information, it shall not further prosecute Orthofix for any additional federal criminal charges with respect to the conduct: (a) covered by the Information; or (b) was the subject of the investigation of Orthofix by the federal grand jury in Massachusetts; or (c) currently known to the United States regarding illegal sales, promotion and marketing practices in connection with Orthofix bone growth stimulators (Spinal-Stim, Physio-Stim and Cervical-Stim) during the period 1999 through 2010.
This declination is expressly contingent on:
(1) the guilty plea of Orthofix being accepted by the Court and not withdrawn;
(2) Orthofixs performance of all of its obligations, including without limitation its cooperation obligations, as set forth in this Agreement. If Orthofixs guilty plea is not accepted by the Court or is withdrawn for any reason, or if Orthofix should fail to perform an obligation under this Agreement, this declination of prosecution shall be null and void.
The United States reserves the right to prosecute any individual, including but not limited to present and former officers, directors, employees, and agents of Orthofix, in connection with the
conduct encompassed by this plea agreement, within the scope of the grand jury investigation, or known to the U.S. Attorney.
7. Payment of Mandatory Special Assessment
Defendant agrees to pay the mandatory special assessment to the Clerk of the Court on or before the date of sentencing.
8. Cooperation
Orthofix acknowledges that its prior, ongoing, and future cooperation is important and a material factor underlying the decision by the United States to enter into this Agreement, and therefore, Orthofix agrees to continue to cooperate fully and actively with the United States, and any other agency of the government designated by the United States regarding any matter about which Orthofix has knowledge or information in any ongoing investigation, trial, or other proceeding arising out of any ongoing federal investigation of its current and former officers, agents, and employees on the subject matters identified in paragraphs 6(a)-(c) above. Orthofixs above cooperation shall include, but not be limited to the following:
(a) Completely and truthfully disclosing all non-privileged information in its possession about which the United States may inquire, including but not limited to all information about activities of Orthofix and present and former officers, directors, employees and agents of Orthofix;
(b) Assembling, organizing and providing all non-privileged documents, records, and other evidence in Orthofixs possession, custody, or control as may be requested by the United States;
(c) Using its reasonable best efforts to make available its present and former officers, directors and employees to provide information and/or testimony as requested by the United States, including testimony before a grand jury, a trial court, other court proceeding, as well as interviews with law enforcement authorities. Cooperation under this paragraph shall include identification of witnesses who, to Orthofixs knowledge, obtained in the ordinary course of business, auditing or monitoring, have material information concerning any criminal prosecution and/or trial, civil trial, or other legal proceedings brought by the United States against any present or former officer, director, or employee of Orthofix;
(d) Providing testimony or information necessary to identify or establish the original location, authenticity, or other basis for admission into evidence of documents or physical evidence in any criminal or other proceeding as requested by the United States; and
(e) Providing active assistance, including assistance by current counsel (including undersigned counsel) and/or successor counsel, internal or external, in connection with any
investigation, criminal prosecution, and/or trial, civil trial, or other legal proceeding brought by the United States against any present or former officer, director, or employee of Orthofix.
However, notwithstanding any provision of this agreement, Orthofix is not required to: (1) request of its current or former officers, agents, or employees that they forego seeking the advice of an attorney nor that they act contrary to that advice; (2) take any action against its officers, agents, or employees for following their attorneys advice; and (3) waive any claim of privilege or work product protection.
9. Probation Department Not Bound By Agreement
The sentencing disposition agreed upon by the parties and their respective calculations under the Sentencing Guidelines are not binding upon the United States Probation Office.
10. Civil and Administrative Liability
By entering into this Agreement, the U.S. Attorney does not compromise any civil or administrative liability, including but not limited to any False Claims Act or tax liability, which Orthofix may have incurred or may incur as a result of Orthofixs conduct and its plea of guilty to the charges specified in Paragraph 1 of this Agreement.
Orthofixs civil liability to the United States in connection with certain of the matters under investigation by the United States is resolved in the Civil Settlement Agreement, attached as Exhibit B, according to the terms set forth in that Agreement.
11. Waiver of Defenses
If Orthofixs guilty plea is not accepted by the Court for whatever reason, or is later withdrawn for whatever reason, or if Orthofix breaches this Agreement, Orthofix hereby waives, and agrees it will not interpose, if charges are filed within six months of the date on which such guilty plea is rejected or withdrawn or a breach is declared by the USAO, any defense to any charges brought against it which it might otherwise have under the Constitution for pre-indictment delay, any statute of limitations, or the Speedy Trial Act, except any such defense that Orthofix may already have for conduct occurring before November 13, 2004.
12. Breach of Agreement
If the U.S. Attorney determines that Orthofix has failed to comply with any material provision of this Agreement, the United States may, at its sole option, be released from its commitments under this Agreement in its entirety by notifying Orthofix, through counsel or otherwise, in writing. The United States may also pursue all remedies available under the law, even
if it elects not to be released from its commitments under this Agreement. Orthofix recognizes that no such breach by Orthofix of an obligation under this Agreement shall be grounds for withdrawal of its guilty plea. Orthofix understands that should it breach any material provision of this Agreement, the U.S. Attorney will have the right to use against Orthofix before any grand jury, at any trial or hearing, or for sentencing purposes, any statements which may be made by Orthofix, and any information, materials, documents or objects which may be provided by it to the government subsequent to this Agreement, without any limitation.
Orthofix understands and agrees that this Rule 11(c)(1)(C) plea agreement and its agreed upon criminal disposition:
a. are wholly dependent upon Orthofixs timely compliance with the provisions of the attached Civil Settlement Agreement, including the requirement in the agreement that Orthofix pay to the United States the amount of $34,234,263, plus interest continuing until and including the day before complete payment is made in accord with the terms of the Civil Settlement Agreement; and that
b. failure by Orthofix to comply fully with the terms of this Agreement or the attached Civil Settlement Agreement will constitute a breach of this Agreement; provided, however, that a breach of the Corporate Integrity Agreement (CIA) attached hereto as Exhibit C does not constitute a breach of this Plea Agreement, and any disputes arising under the CIA shall be resolved exclusively through the dispute resolution provisions of the CIA.
In the event Orthofix at any time hereafter breaches any material provision of this Agreement, Orthofix understands that: (1) the United States will as of the date of that breach be relieved of any obligations it may have in this Agreement and the attached Civil Settlement Agreement, including but not limited to the promise not to further prosecute Orthofix as set forth in this Agreement; and (2) Orthofix will not be relieved of its obligation to make the payments set forth in this Agreement and the attached Civil Settlement Agreement, nor will it be entitled to return of any monies already paid. Moreover, in the event of a breach, Orthofix hereby waives, and agrees it will not interpose, any defense to any charges brought against it which it might otherwise have under the Constitution for pre-indictment delay, any statute of limitations, or the Speedy Trial Act, except any such defense that Orthofix may already have for conduct occurring before November 13, 2004.
13. Corporate Authorization
Orthofixs acknowledgment of this Agreement and execution of this Agreement on behalf of the corporation is attached as Exhibit D. Orthofix shall provide to the U.S. Attorney and the Court a certified copy of a resolution of Orthofix, Inc.s governing authority, affirming that it has authority to enter into the Plea Agreement and has (1) reviewed the Information in this case and the
proposed Plea Agreement; (2) consulted with legal counsel in connection with the matter; (3) voted to enter into the proposed Plea Agreement; (4) voted to authorize Orthofix to plead guilty to the charge specified in the Information; and (5) voted to authorize the corporate officer identified below to execute the Plea Agreement and all other documents necessary to carry out the provisions of the Plea Agreement. A copy of the resolution is attached as Exhibit E. Orthofix agrees that either a duly authorized corporate officer or a duly authorized attorney for Orthofix, at the discretion of the Court, shall appear on behalf of Orthofix and enter the guilty plea and will also appear for the imposition of sentence.
14. Who Is Bound By Agreement
This Agreement is binding upon Orthofix and the Office of the United States Attorney for the District of Massachusetts, the United States Attorneys Offices for each of the other 93 judicial districts of the United States, the Consumer Protection Branch of the Department of Justice, and the Criminal Division of the United States Department of Justice on the matters set forth above in Paragraph 6. A copy of the letter to United States Attorney Carmen M. Ortiz from Lanny A. Breuer, Assistant Attorney General, Criminal Division, Department of Justice, authorizing this Agreement is attached as Exhibit F. Orthofix understands that this Agreement does not bind any state or local prosecutive authorities, the Tax Division of the U.S. Department of Justice, or the Internal Revenue Service of the U.S. Department of the Treasury.
15. Complete Agreement
This letter contains the complete and only agreement between the parties relating to the disposition of this case. No promises, representations or agreements have been made other than those set forth in this Agreement and its attachments. This Agreement supersedes prior understandings, if any, of the parties, whether written or oral. This Agreement can be modified or supplemented only in a written memorandum signed by the parties or on the record in court.
If this letter accurately reflects the agreement between the United States and Orthofix, please have the authorized representative of Orthofix, Inc. sign the Acknowledgment of Agreement below. Please also sign as Witness and return the original of this letter to Assistant U.S. Attorney David Schumacher of the United States Attorneys Office for the District of Massachusetts.
|
|
Very truly yours, |
|
|
|
|
|
|
|
|
/s/ Carmen M. Ortiz |
|
|
CARMEN M. ORTIZ |
|
|
UNITED STATES ATTORNEY |
|
|
DISTRICT OF MASSACHUSETTS |
|
|
|
|
|
|
|
By: |
/s/ David S. Schumacher |
|
|
DAVID S. SCHUMACHER |
|
|
Assistant U.S. Attorney |
|
|
|
|
|
|
|
By: |
/s/ Jeremy M. Sternberg |
|
|
JEREMY M. STERNBERG |
|
|
Assistant U.S. Attorney |
ACKNOWLEDGMENT OF PLEA AGREEMENT
The Board of Directors of Orthofix Inc. (the Board) has authorized me to execute this Plea Agreement on behalf of Orthofix Inc. The Board has read this Plea Agreement and the attached criminal Information, in their entirety and has discussed them fully in consultation with Orthofix Inc.s attorneys. The Board acknowledges that these documents fully set forth Orthofix Inc.s agreement with the United States. The Board further states that no additional promises or representations have been made to Orthofix Inc. by any officials of the United States in connection with the disposition of this matter, other than those set forth in the Plea Agreement.
Dated: |
June 7, 2012 |
|
/s/ Jeffrey M. Schumm |
|
|
Jeffrey M. Schumm | |
|
|
Senior Vice President, General Counsel, and | |
|
|
Corporate Secretary | |
|
|
Orthofix, Inc. | |
|
|
| |
|
|
| |
Dated: |
June 5, 2012 |
|
/s/ Brien T. OConnor |
|
|
Brien T. OConnor | |
|
|
Ropes & Gray, LLP | |
|
|
Counsel for Orthofix, Inc. |
Exhibit 10.3
CORPORATE INTEGRITY AGREEMENT
BETWEEN THE
OFFICE OF INSPECTOR GENERAL
OF THE
DEPARTMENT OF HEALTH AND HUMAN SERVICES
AND
ORTHOFIX INTERNATIONAL, N.V.
I. PREAMBLE
Orthofix International, N.V. (Orthofix N.V.) hereby enters into this Corporate Integrity Agreement (CIA) with the Office of Inspector General (OIG) of the United States Department of Health and Human Services (HHS) to promote compliance by Orthofix N.V. and its U.S. subsidiaries with the statutes, regulations, and written directives of Medicare, Medicaid, and all other Federal health care programs (as defined in 42 U.S.C. § 1320a-7b(f)) (Federal health care program requirements) and with the statutes, regulations, and written directives of the Food and Drug Administration (FDA requirements). Contemporaneously with this CIA, Orthofix N.V. and its wholly owned subsidiary, Orthofix, Inc. (OFX) are entering into a settlement agreement with the United States. Further, it is anticipated that in the near future Blackstone Medical Inc. d/b/a Orthofix Spinal Implants (OSI), a wholly owned subsidiary of Orthofix, N.V., will be entering into a separate settlement agreement with the United States. Hereafter, Orthofix N.V., along with its U.S. subsidiaries, will be referred to collectively as Orthofix.
II. TERM AND SCOPE OF THE CIA
A. The period of the compliance obligations assumed by Orthofix under this CIA shall be five years from the effective date of this CIA. The Effective Date shall be the date on which the final signatory of this CIA executes this CIA. Each one-year period, beginning with the one-year period following the Effective Date, shall be referred to as a Reporting Period.
B. Sections VII, X, and XI shall expire no later than 120 days after OIGs receipt of: (1) Orthofixs final annual report; or (2) any additional materials submitted by Orthofix pursuant to OIGs request, whichever is later.
C. The scope of this CIA shall be governed by the following definitions:
1. Arrangements shall mean every arrangement or transaction that:
a. involves, directly or indirectly, the offer, payment, solicitation, or receipt of anything of value; and is between Orthofix and any actual or potential source of health care business or referrals to Orthofix, or any actual or potential recipient of health care business or referrals from Orthofix. The term source of health care business or referrals shall mean any individual or entity that refers, recommends, arranges for, orders, leases, or purchases any good, facility, item, or service for which payment may be made in whole or in part by a Federal health care program and the term recipient of health care business or referrals shall mean any individual or entity (1) to whom Orthofix refers an individual for the furnishing or arranging for the furnishing of any item or service, or (2) from whom Orthofix purchases, leases or orders or arranges for or recommends the purchasing, leasing, or ordering of any good, facility, item, or service for which payment may be made in whole or in part by a Federal health care program; or
b. is between Orthofix and a physician (or a physicians immediate family member (as defined at 42 C.F.R. § 411.351)) who makes a referral (as defined at 42 U.S.C. § 1395nn(h)(5)) to Orthofix for designated health services (as defined at 42 U.S.C. § 1395nn(h)(6)).
2. Arrangements Covered Persons includes each Covered Person who is involved with the development, approval, management, or review of Orthofixs Arrangements.
3. Arrangements Related Functions includes developing, approving, managing, or reviewing any of Orthofixs Arrangements.
4. Covered Persons includes:
a. all owners of Orthofix who are natural persons (other than shareholders who: (1) have an ownership interest of less than 5% and (2) acquired the ownership interest through public trading);
b. all officers, directors, and employees of Orthofix;
c. all contractors, subcontractors, agents, independent distributors or sales personnel, and other persons who provide patient care items or services or who perform billing or coding functions on behalf of Orthofix, excluding vendors whose sole connection with Orthofix is selling or otherwise providing medical supplies or equipment to Orthofix and who do not bill the Federal health care programs for such medical supplies or equipment; and
d. all contractors, subcontractors, agents, independent distributors or sales personnel, and other persons who perform Arrangements Related Functions, Government Reimbursement Related Functions, or Promotional and Product Services Related Functions (as defined in Section II.C) on behalf of Orthofix.
Notwithstanding the above, this term does not include part-time or per diem employees, contractors, subcontractors, agents, and other persons who are not reasonably expected to work more than 160 hours per year, except that any such individuals shall become Covered Persons at the point when they work more than 160 hours during the calendar year.
5. Focus Arrangements means every Arrangement that:
a. is between OFX or OSI and any actual source of health care business or referrals to OFX or OSI and involves, directly or indirectly, the offer, payment, or provision of anything of
value, excluding Arrangements between OFX or OSI and independent distributors or sales personnel; or
b. is between OFX or OSI and any physician (or a physicians immediate family member) (as defined at 42 C.F.R. § 411.351)) who makes a referral (as defined at 42 U.S.C. § 1395nn(h)(5)) to OFX or OSI for designated health services (as defined at 42 U.S.C. §1395nn(h))(6)).
Notwithstanding the foregoing provisions of Section II.C.5, any Arrangement that satisfies the requirements of 42 C.F.R. § 411.356 (ownership or investment interests), 42 C.F.R. § 411.357(g) (remuneration unrelated to the provision of designated health services); 42 C.F.R. § 411.357(i) (payments by a physician for items and services); 42 C.F.R. § 411.357(k) (non-monetary compensation); 42 C.F.R. § 411.357(m) (medical staff incidental benefits), 42 C.F.R. § 411.357(o) (compliance training), 42 C.F.R. § 411.357(q) (referral services), 42 C.F.R. § 411.357(s) (professional courtesy), 42 C.F.R. § 357(u) (community-wide health information systems), or any exception to the prohibitions of 42 U.S.C. § 1395nn enacted following the Effective Date that does not require a written agreement shall not be considered a Focus Arrangement for purposes of this CIA.
6. Government Reimbursement Covered Persons includes all Covered Persons whose job responsibilities relate to preparation or submission of claims for reimbursement from any Federal health care program.
7. Government Reimbursed Products refers to all products of Orthofix that are promoted or sold by Orthofix in the United States that are reimbursed by Federal health care programs.
8. Government Reimbursement Related Functions refers to the preparation or submission of claims for reimbursement from any Federal health care program.
9. Promotional and Product Services Covered Persons includes all Covered Persons whose job responsibilities relate to Promotional and Product Services Related Functions.
10. Promotional and Product Services Related Functions includes: (a) the promotion, marketing, advertising, and sale of Government Reimbursed Products; (b) the development, preparation, or dissemination of materials or information about, or the provision of services relating to, Government Reimbursed Products; and (c) post-marketing research, development, and publication related activities involving Government Reimbursed Products.
11. Third Party Educational Activity shall mean any third party continuing medical education (CME), disease awareness, or other scientific, educational, or professional program, meeting, or event governed by Federal health care program and/or FDA requirements, and supported by Orthofix, including but not limited to, sponsorship of symposia at medical conferences.
III. CORPORATE INTEGRITY OBLIGATIONS
Orthofix shall establish and maintain a Compliance Program that includes the following elements:
A. Chief Compliance Officer and Committee
1. Chief Compliance Officer. Prior to the Effective Date, Orthofix appointed a Chief Compliance Officer. Orthofix shall maintain a Chief Compliance Officer for the term of the CIA. The Chief Compliance Officer shall be responsible for developing and implementing policies, procedures, and practices designed to ensure compliance with the requirements set forth in this CIA and with Federal health care program and FDA requirements. The Chief Compliance Officer shall be a member of senior management of Orthofix N.V., shall report directly to the Chief Executive Officer of Orthofix N.V., shall make periodic (at least quarterly) reports regarding compliance matters directly to the Audit Committee of the Board of Directors of Orthofix N.V. (Audit Committee), and shall be authorized to report on such matters to the Audit Committee at any time. The Chief Compliance Officer shall not be or be subordinate to the General Counsel or Chief Financial Officer. The Chief Compliance Officer shall be responsible for monitoring the day-to-day compliance activities engaged in by Orthofix as well as for any reporting obligations created under this CIA. Any noncompliance job responsibilities of the Chief Compliance Officer shall be limited and must not interfere with the Chief Compliance Officers ability to perform the duties outlined in this CIA.
Orthofix shall report to OIG, in writing, any changes in the identity, reporting relationship, position description, or authority of the Chief Compliance Officer, or any actions or changes that would affect the Chief Compliance Officers ability to perform the duties necessary to meet the obligations in this CIA, within five days after such a change.
2. Compliance Committee. Prior to the Effective Date, Orthofix established a Compliance Committee. The Compliance Committee shall, at a minimum, include the Chief Compliance Officer and other members of senior management necessary to meet the requirements of this CIA (e.g., senior executives of relevant departments, such as billing, legal, sales, marketing, human resources, regulatory operations, audit, and operations). The Chief Compliance Officer shall chair the Compliance Committee and the Committee shall support the Chief Compliance Officer in fulfilling his/her responsibilities (e.g., shall assist in the analysis of Orthofixs risk areas and shall oversee monitoring of internal and external audits and investigations). The Compliance Committee shall meet at least quarterly.
Orthofix shall report to OIG, in writing, any changes in the composition of the Compliance Committee, or any actions or changes that would affect the Compliance Committees ability to perform the duties necessary to meet the obligations in this CIA, within 15 days after such a change.
3. Audit Committee Compliance Obligations. The Audit Committee shall be responsible for the review and oversight of matters related to compliance with Federal health care program and FDA requirements and the obligations of this CIA.
The Audit Committee shall, at a minimum, be responsible for the following:
a. meeting at least quarterly to review and oversee Orthofixs Compliance Program, including but not limited to the performance and activities of the Chief Compliance Officer, Compliance Committee, and Compliance Office personnel; and
b. for each Reporting Period of the CIA, adopting a resolution, signed by each member of the Audit Committee summarizing its review and oversight of Orthofixs compliance with Federal health care program requirements, FDA
requirements, and the obligations of this CIA.
At minimum, the resolution shall include the following language:
The Audit Committee has made a reasonable inquiry into the operations of Orthofixs Compliance Program including the performance of the Chief Compliance Officer and the Compliance Committee. Based on its inquiry and review, the Audit Committee has concluded that, to the best of its knowledge, OFX and OSI have implemented an effective Compliance Program to meet Federal health care program requirements, and the obligations of the CIA.
If the Audit Committee is unable to provide such a conclusion in the resolution, the Audit Committee shall include in the resolution a written explanation of the reasons why it is unable to provide the conclusion and the steps it is taking to implement an effective Compliance Program at OFX and OSI.
Orthofix shall report to OIG, in writing, any changes in the composition of the Audit Committee, or any actions or changes that would affect the Audit Committees ability to perform the duties necessary to meet the obligations in this CIA, within 15 days after such a change.
4. Management Accountability and Certifications. In addition to the responsibilities set forth in this CIA for all Covered Persons, certain Orthofix officers or employees (Certifying Employees) are specifically expected to monitor and oversee activities within their areas of authority and shall annually certify that the applicable Orthofix business unit, department, or functional area is compliant with applicable Federal health care program requirements, and with the obligations of this CIA. These Certifying Employees shall include, at a minimum, the following: the Presidents and Chief Financial Officers for the Orthofix Spine Global Business Unit and for the Orthofix Orthopedics Global Business Unit, the Chief Executive Officer of Orthofix N.V., and, to the extent that an OFX or OSI business unit, department, or functional area performs functions related to government reimbursement, promotion, marketing, sales, contracting, Arrangements, or compliance and is not covered by one of the above certifications, such other appropriate executives, vice-presidents, and directors, as would be necessary to ensure that there is a certifying officer or employee covering each such business unit, department, or functional area.
For each Reporting Period, each Certifying Employee except the Chief Executive Officer of Orthofix N.V. shall sign a certification that states:
I have been trained on and understand the compliance requirements and responsibilities as they relate to [department or functional area], an area under my supervision. My job responsibilities include ensuring compliance with regard to the [insert name of the department or functional area.] To the best of my knowledge, except as otherwise described herein, the [insert name of department or functional area] of [OFX or OSI, as applicable] is in compliance with all applicable Federal health care program and FCA requirements, and the obligations of the CIA.
For each Reporting Period, the Chief Executive Officer of Orthofix N.V shall sign a certification that states:
I have been trained on and understand the compliance requirements and responsibilities as they relate to OFX and OSI. My job responsibilities include oversight of OFX and OSI. I have made reasonable inquiry regarding OFX and OSIs compliance with all applicable Federal health care program requirements, and the obligations of the CIA. To the best of my knowledge, except as otherwise described herein, OFX and OSI are in compliance with all applicable Federal health care program requirements, and the obligations of the CIA.
If any Certifying Employee is unable to provide such a conclusion in the certification, the Certifying Employee shall provide a written explanation of the reasons why he or she is unable to provide the certification outlined above and the steps being taken to address the issue(s) identified in the certification.
B. Written Standards
1. Code of Conduct. Prior to the Effective Date, Orthofix developed, implemented, and distributed a written Code of Conduct to all Covered Persons. Orthofix shall continue to make the promotion of, and adherence to, the Code of Conduct an element in evaluating the performance of all employees. The Code of Conduct shall, at a minimum, set forth:
a. Orthofixs commitment to full compliance with all Federal health care program requirements, including its commitment
to prepare and submit accurate claims and to contract and enter into Arrangements consistent with such requirements;
b. Orthofixs commitment to full compliance with all FDA requirements, including its commitment to comply with all requirements relating to Promotional and Product Services Related Functions and to market, sell, promote, research, develop, provide information about, and advertise its products in accordance with Federal health program requirements and FDA requirements.
c. Orthofixs requirement that all of its Covered Persons shall be expected to comply with all Federal health care program and FDA requirements and with Orthofixs own Policies and Procedures as implemented pursuant to Section III.B.2;
d. the requirement that all of Orthofixs Covered Persons shall be expected to report to the Chief Compliance Officer, or other appropriate individual designated by Orthofix, suspected violations of any Federal health care program requirements or FDA requirements or of Orthofixs own Policies and Procedures; and
e. the right of all individuals to use the Disclosure Program described in Section III.E, and Orthofixs commitment to nonretaliation and to maintain, as appropriate, confidentiality and anonymity with respect to such disclosures.
To the extent not already accomplished, within 120 days after the Effective Date, Orthofixs Code of Conduct shall be distributed to each Covered Person and each Covered Person shall certify, in writing or in electronic form, that he or she has received, read, understood, and shall abide by Orthofixs Code of Conduct. New Covered Persons shall receive the Code of Conduct and shall complete the required certification within 30 days after becoming a Covered Person or within 120 days after the Effective Date, whichever is later.
Orthofix shall periodically review the Code of Conduct to determine if revisions are appropriate and shall make any necessary revisions based on such review. Any
revised Code of Conduct shall be distributed within 30 days after any revisions are finalized. Each Covered Person shall certify, in writing, that he or she has received, read, understood, and shall abide by the revised Code of Conduct within 30 days after the distribution of the revised Code of Conduct.
2. Policies and Procedures. Prior to the Effective Date, Orthofix has implemented written Policies and Procedures regarding the operation of Orthofixs compliance program and Orthofixs obligation to comply with Federal health care program requirements. To the extent not already accomplished, within 120 days after the Effective Date, Orthofix shall implement written Policies and Procedures regarding the compliance program requirements outlined in this CIA and Orthofixs compliance with Federal health care program and FDA requirements. The Policies and Procedures shall also address:
a. the Federal health care program requirements regarding the accurate submission of claims;
b. 42 U.S.C. § 1320a-7b(b) (Anti-Kickback Statute) and 42 U.S.C. § 1395nn (Stark Law), and the regulations and other guidance documents related to these statutes, and business or financial arrangements or contracts that generate unlawful Federal health care program business in violation of the Anti-Kickback Statute or the Stark Law;
c. the requirements set forth in Section III.D.2 and 3 (compliance with the Anti-Kickback Statute and Stark Law).
d. appropriate ways to conduct Promotional and Product Services Related Functions in compliance with all applicable FDA and Federal health care program requirements;
e. the materials and information that may be distributed by Orthofix sales representatives about Orthofix products and the manner in which Orthofix sales representatives respond to requests for information about Orthofixs products;
f. the materials and information that may be distributed by Orthofixs clinical affairs or regulatory affairs departments in
response to requests for clinical information about Orthofix products and the mechanisms through, and manner in which, such clinical or regulatory affairs personnel receive and respond to requests for information about uses of the products; the form and content of the information disseminated by Orthofix in response to such requests; and the internal review process for the information disseminated;
g. review of all promotional and other materials and information intended to be disseminated outside Orthofix by appropriate qualified personnel (such as legal, clinical, and/or regulatory personnel) in a manner designed to ensure that legal, regulatory, and/or clinical concerns are properly addressed during Orthofixs review and approval process and are elevated when appropriate. The Policies and Procedures shall be designed to ensure that such materials and information, when finally approved, comply with all applicable Federal health care program and FDA requirements. The Policies and Procedures shall require review by appropriately qualified personnel of all promotional materials prior to the distribution or use of such materials;
h. programs to educate sales representatives. These Policies and Procedures shall be designed to ensure that the programs are used in accordance with applicable Federal health care program and FDA requirements;
i. consultant or other fee-for-service arrangements entered into with any health care professional (HCP) or health care institution (HCI) (including, but not limited to, speaker programs, speaker training programs, advisory boards, or any other financial relationship with an HCP or HCI) and all events and expenses relating to such engagements or arrangements. These Policies and Procedures shall be designed to ensure that the arrangements and related events are used for legitimate and lawful purposes in accordance with applicable Federal health care program and FDA requirements. The Policies shall include requirements about
the content and circumstances of such arrangements and events;
j. sponsorship or funding of grants (including educational grants) or charitable contributions. These Policies and Procedures shall be designed to ensure that Orthofixs funding and/or sponsorship complies with all applicable Federal health care program and FDA requirements;
k. funding of, or participation in, any Third Party Educational Activity as defined in Section II.C.11 above. These Policies and Procedures shall be designed to ensure that Orthofixs funding and/or sponsorship of such programs satisfies all applicable Federal health care program and FDA requirements.
The Policies and Procedures shall require that, with respect to Third Party Educational Activities that Orthofix agrees to fund after the Effective Date: (1) Orthofix disclose its financial support of the Third Party Educational Activity and any financial relationships with faculty, speakers, or organizers at such activity; (2) as a condition of funding, the third party shall agree to disclose Orthofixs financial support of the Third Party Educational Activity and any financial relationships that Orthofix might have with faculty, speakers, or organizers at such activity; (3) any faculty, speakers, or organizers at the Third Party Educational Activity disclose any financial relationship with Orthofix; (4) the Third Party Educational Activity have an educational focus; (5) the content, organization, and operation of the Third Party Educational Activity be independent of Orthofix control; (6) Orthofix support only Third Party Educational Activities that are non-promotional in tone/nature; and (7) Orthofixs support of a Third Party Educational Activity shall be contingent on the providers commitment to provide information at the Educational Activity that is fair, balanced, accurate and not misleading;
l. sponsorship, funding of, and disclosures relating to research and development-related activities (including clinical trials, market research, or authorship of articles or other publications). These Policies and Procedures shall be designed to ensure that Orthofixs funding and/or sponsorship complies with all applicable Federal health care program and FDA requirements;
m. authorship of any articles or other publications about Government Reimbursed Products or about therapeutic areas or disease states that may be treated with Government Reimbursed Products, including, but not limited to, the disclosure of any and all relationships between the author and Orthofix, the identification of all authors or contributors (including professional writers) associated with a given publication, and the scope and breadth of research results made available to each author or contributor;
n. compensation (including salaries and bonuses) for Promotional and Product Services Covered Persons. These Policies and Procedures shall be designed to ensure that financial incentives do not inappropriately motivate such individuals to engage in improper promotion, sales, and marketing of Orthofixs products;
o. the subjects relating to the Code of Conduct identified in Section III.B.1; and
p. disciplinary policies and procedures for violations of Orthofixs Policies and Procedures, including policies relating to Federal health care program and FDA requirements.
To the extent not already accomplished, within 120 days after the Effective Date, the relevant portions of the Policies and Procedures shall be distributed to all Covered Persons whose job functions relate to those Policies and Procedures. Appropriate and knowledgeable staff shall be available to explain the Policies and Procedures.
At least annually (and more frequently, if appropriate), Orthofix shall assess and update, as necessary, the Policies and Procedures. Within 30 days after the effective date of any revisions, the relevant portions of any such revised Policies and Procedures shall be distributed to all Covered Persons whose job functions relate to those Policies and Procedures.
C. Training and Education
1. General Training. Within 120 days after the Effective Date, Orthofix shall provide at least two hours of General Training to each Covered Person. This training, at a minimum, shall explain:
a. Orthofixs CIA requirements;
b. Orthofixs Compliance Program, including the Code of Conduct and the Policies and Procedures as they pertain to general compliance issues; and
c. the possible consequences to both Orthofix and Covered Persons of failure to comply with all FDA and Federal health care program requirements and with Orthofixs own Code of Conduct and Policies and Procedures and the failure to report such noncompliance.
New Covered Persons shall receive the General Training described above within 30 days after becoming a Covered Person or within 120 days after the Effective Date, whichever is later. After receiving the initial General Training described above, each Covered Person shall receive at least one hour of General Training in each subsequent Reporting Period.
2. Specific Training. Within 120 days after the Effective Date, each Arrangements Covered Person and Government Reimbursement Covered Person shall receive at least three hours of Specific Training, as identified below, in addition to the General Training required above, as follows:
a. Arrangements Training for Arrangements Covered Persons shall include a discussion of:
i. Arrangements that potentially implicate the Anti- Kickback Statute or the Stark Law, as well as the regulations and other guidance documents related to these statutes;
ii. Orthofixs policies, procedures, and other requirements relating to Arrangements and Focus Arrangements, including but not limited to the Focus Arrangements Tracking System, the internal review and approval process, and the tracking of remuneration to and from sources of health care business or referrals required by Sections III.D.2 and III.D.3 of the CIA;
iii. examples of violations of the Anti-Kickback Statute and the Stark Law;
iv. the personal obligation of each individual involved in the development, approval, management, or review of Orthofixs Arrangements to know the applicable legal requirements and Orthofixs Policies and Procedures;
v. the legal sanctions under the Anti-Kickback Statute and the Stark Law; and
vi. the possible consequences to both Orthofix and Arrangements Covered Persons of failure to comply with all Federal health care program requirements and with Orthofixs own Code of Conduct and Policies and Procedures and the failure to report such noncompliance.
b. Government Reimbursement Training for Government Reimbursement Covered Persons shall include a discussion of:
i. the Federal health care program requirements regarding the accurate submission of claims;
ii. examples of proper and improper claims submission practices;
iii. policies, procedures, and other requirements applicable to the documentation of medical records;
iv. applicable reimbursement statutes, regulations, and program requirements and directives;
v. the personal obligation of each individual involved in the claims submission process to ensure that such claims are accurate;
vi. the legal sanctions for violations of the Federal health care program requirements; and
vii. the possible consequences to both Orthofix and Government Reimbursement Covered Persons of failure to comply with all Federal health care program requirements and with Orthofixs own Code of Conduct and Policies and Procedures and the failure to report such noncompliance.
Each new Arrangements Covered Person and Government Reimbursement Covered Person shall receive the appropriate training, as identified above, within 30 days after the beginning of their employment or becoming an Arrangements Covered Person or Government Reimbursement Covered Person or within 120 days after the Effective Date, whichever is later.
An Orthofix employee who has completed the Specific Training shall review a new Arrangements Covered Persons or Government Reimbursement Covered Persons work, to the extent that the work relates to an Arrangements Function or a Government Reimbursement Related Function, until such time as the Arrangements Covered Person or Government Reimbursement Covered Person completes his or her Specific Training.
After receiving the initial Specific Training described in this Section, each Arrangements Covered Person or Government Reimbursement Covered Person shall
receive at least two hours of Specific Training, in addition to the General Training, in each subsequent Reporting Period.
3. Board Member Training. Within 120 days after the Effective Date, Orthofix shall provide at least two hours of training to each member of the Orthofix Board of Directors, in addition to the General Training. This training shall address the responsibilities of board members and corporate governance.
New members of the Orthofix Board of Directors shall receive the Board Member Training described above within 30 days after becoming a member or within 120 days after the Effective Date, whichever is later.
4. Certification. Each individual who is required to attend training shall certify, in writing, or in electronic form, if applicable, that he or she has received the required training. The certification shall specify the type of training received and the date received. The Chief Compliance Officer (or designee) shall retain the certifications, along with all course materials.
5. Qualifications of Trainer. Persons providing the training shall be knowledgeable about the subject area.
6. Update of Training. Orthofix shall review the training annually, and, where appropriate, update the training to reflect changes in Federal health care program requirements, any issues discovered during internal audits, the Internal Monitoring Program, the Claims Review, or the Arrangements Review, and any other relevant information.
7. Computer-based Training. Orthofix may provide the training required under this CIA through appropriate computer-based training approaches. If Orthofix chooses to provide computer-based training, it shall make available appropriately qualified and knowledgeable staff or trainers to answer questions or provide additional information to the individuals receiving such training.
D. Review Procedures
1. General Description.
a. Engagement of Independent Review Organization. Within 120 days after the Effective Date, Orthofix shall engage an individual (or individuals) or entity (or entities), such as an accounting, auditing, law, or consulting firm (hereinafter Independent Review Organization or IRO), to perform the reviews listed in Section III.D. The applicable requirements relating to the IRO(s) are outlined below and in Appendix A to this CIA, which is incorporated by reference.
i. Claims Review. An IRO shall perform a review of OFXs billing and claims submission to the Federal health care programs and the reimbursement received (Claims Review) and shall prepare a Claims Review Report, as outlined in Appendix B to this CIA, which is incorporated by reference.
ii. Arrangements Review. An IRO shall perform an Arrangements Review and prepare an Arrangements Review Report as outlined in Appendix C to this CIA, which is incorporated by reference.
b. Retention of Records. The IRO(s) and Orthofix shall retain and make available to OIG, upon request, all work papers, supporting documentation, correspondence, and draft reports (those exchanged between the IRO and Orthofix) related to the reviews.
c. Responsibilities and Liabilities. Nothing in this Section III.D affects Orthofixs responsibilities or liabilities under any criminal, civil, or administrative laws or regulations applicable to any Federal health care program including, but not limited to, the Anti-Kickback Statute and/or the Stark Law.
d. Validation Review(s). In the event OIG has reason to believe that: (a) the Arrangements Review or Claims Review fails to conform to the requirements of this CIA; or (b) the IROs findings or Arrangements Review or Claims Review results are inaccurate, OIG may, at its sole discretion, conduct its own review to determine whether the Arrangements Review or Claims Review complied with the requirements of the CIA and/or the findings or Arrangements Review or Claims Review results are inaccurate (Validation Review(s)). Orthofix shall pay for the reasonable cost of any such review performed by OIG or any of its designated agents. Any Validation Review of IRO Reports submitted as part of Orthofixs final Annual Report shall be initiated no later than one year after Orthofixs final submission (as described in Section II.B) is received by OIG.
Prior to initiating a Validation Review, OIG shall notify Orthofix of its intent to do so and provide a written explanation of why OIG believes such a review is necessary. To resolve any concerns raised by OIG, Orthofix may request a meeting with OIG to: (a) discuss the results of any Arrangements Review or Claims Review submissions or findings; (b) present any additional information to clarify the results of the Arrangements Review or Claims Review or to correct the inaccuracy of the Arrangements Review or Claims Review; and/or (c) propose alternatives to the proposed Validation Review(s). Orthofix agrees to provide any additional information as may be requested by OIG under this Section III.D.1.d in an expedited manner. OIG will attempt in good faith to resolve any Arrangements Review or Claims Review issues with Orthofix prior to conducting a Validation Review. However, the final determination as to whether or not to proceed with a Validation Review shall be made at the sole discretion of OIG.
e. Independence and Objectivity Certification. The IRO(s) shall include in its (their) report(s) to Orthofix a certification or sworn affidavit that it has evaluated its professional
independence and objectivity and has concluded that it is, in fact, independent and objective.
2. Compliance with the Anti-Kickback Statute and Stark Law; Focus Arrangements Procedures.
Within 120 days after the Effective Date, Orthofix shall create procedures reasonably designed to ensure that each existing and new or renewed Focus Arrangement does not violate the Anti-Kickback Statute and/or the Stark Law or the regulations, directives, and guidance related to these statutes (Focus Arrangements Procedures). These procedures shall include the following:
a. creating and maintaining a centralized tracking system for all existing and new or renewed Focus Arrangements (Focus Arrangements Tracking System);
b. tracking remuneration to and from all parties to Focus Arrangements;
c. tracking service and activity logs to ensure that parties to the Focus Arrangement are performing the services required under the applicable Focus Arrangement(s) (if applicable);
d. monitoring the use of leased space, medical supplies, medical devices, equipment, or other patient care items to ensure that such use is consistent with the terms of the applicable Focus Arrangement(s) (if applicable);
e. establishing and implementing a written review and approval process for all Focus Arrangements, the purpose of which is to ensure that all new and existing or renewed Focus Arrangements do not violate the Anti-Kickback Statute and Stark Law, and that includes at least the following: (i) a legal review of all Focus Arrangements by counsel with expertise in the Anti-Kickback Statute and Stark Law, (ii) a process for specifying the business need or business rationale for all Focus Arrangements, and (iii) a process for determining and
documenting the fair market value of the remuneration specified in the Focus Arrangement;
f. requiring the Chief Compliance Officer to review the Focus Arrangements Tracking System, internal review and approval process, and other Focus Arrangements Procedures on at least an annual basis and to provide a report on the results of such review to the Compliance Committee; and
g. implementing effective responses when suspected violations of the Anti-Kickback Statute and Stark Law are discovered, including disclosing Reportable Events and quantifying and repaying Overpayments pursuant to Sections III.H and III.I when appropriate.
3. New or Renewed Arrangements. Prior to entering into new Focus Arrangements or renewing existing Focus Arrangements, in addition to complying with the Focus Arrangements Procedures set forth above, Orthofix shall comply with the following requirements (Focus Arrangements Requirements):
a. Ensure that each Focus Arrangement is set forth in writing and signed by Orthofix and the other parties to the Focus Arrangement;
b. Include in the written agreement a requirement that each party to a Focus Arrangement who meets the definition of a Covered Person shall complete the Arrangements Training required by Section III.C.2 of this CIA. Additionally, Orthofix shall provide each party to the Focus Arrangement with a copy of its Code of Conduct and, for any Focus Arrangement that is new or renewed at any time after 120 days after the Effective Date, with a copy of its Stark Law and Anti-Kickback Statute Policies and Procedures;
c. Include in the written agreement a certification by the parties to the Focus Arrangement that the parties shall not violate the Anti-Kickback Statute and the Stark Law with respect to the performance of the Arrangement.
E. Disclosure Program
Prior to the Effective Date, Orthofix established a Disclosure Program. To the extent not already provided for in Orthofixs Disclosure Program, it shall include a mechanism (e.g., a toll-free compliance telephone line) to enable individuals to disclose, to the Chief Compliance Officer or some other person who is not in the disclosing individuals chain of command, any identified issues or questions associated with Orthofixs policies, conduct, practices, or procedures with respect to a Federal health care program or FDA requirement believed by the individual to be a potential violation of criminal, civil, or administrative law. Orthofix shall appropriately publicize the existence of the disclosure mechanism (e.g., via periodic e-mails to employees or by posting the information in prominent common areas).
The Disclosure Program shall emphasize a non-retribution, non-retaliation policy, and shall include a reporting mechanism for anonymous communications for which appropriate confidentiality shall be maintained. Upon receipt of a disclosure, the Chief Compliance Officer (or designee) shall gather all relevant information from the disclosing individual. The Chief Compliance Officer (or designee) shall make a preliminary, good-faith inquiry into the allegations set forth in every disclosure to ensure that he or she has obtained all of the information necessary to determine whether a further review should be conducted. For any disclosure that is sufficiently specific so that it reasonably: (1) permits a determination of the appropriateness of the alleged improper practice; and (2) provides an opportunity for taking corrective action, Orthofix shall conduct an internal review of the allegations set forth in the disclosure and ensure that proper follow-up is conducted.
The Chief Compliance Officer (or designee) shall maintain a disclosure log, which shall include a record and summary of each disclosure received (whether anonymous or not), the status of the respective internal reviews, and any corrective action taken in response to the internal reviews.
F. Ineligible Persons
1. Definitions. For purposes of this CIA:
a. an Ineligible Person shall include an individual or entity who:
i. is currently excluded, debarred, suspended, or otherwise ineligible to participate in the Federal health care programs or in Federal procurement or nonprocurement programs; or
ii. has been convicted of a criminal offense that falls within the scope of 42 U.S.C. § 1320a-7(a), but has not yet been excluded, debarred, suspended, or otherwise declared ineligible.
b. Exclusion Lists include:
i. the HHS/OIG List of Excluded Individuals/Entities (available through the Internet at
http://www.oig.hhs.gov); and
ii. the General Services Administrations List of Parties Excluded from Federal Programs (available through the Internet at http://www.epls.gov).
2. Screening Requirements. Prior to the Effective Date, Orthofix established a process for ensuring that Covered Persons are not Ineligible Persons. To the extent not already accomplished in that process, Orthofix shall ensure that all prospective and current Covered Persons are not Ineligible Persons, by implementing the following screening requirements.
a. Orthofix shall screen all prospective Covered Persons against the Exclusion Lists prior to engaging their services and, as part of the hiring or contracting process, shall require such Covered Persons to disclose whether they are Ineligible Persons.
b. Orthofix shall screen all Covered Persons against the Exclusion Lists within 90 days after the Effective Date and on an annual basis thereafter.
c. Within 120 days after the Effective Date, Orthofix shall implement a policy requiring all Covered Persons to disclose immediately any debarment, exclusion, suspension, or other event that makes that person an Ineligible Person.
Nothing in Section III.F affects Orthofixs responsibility to refrain from (and liability for) billing Federal health care programs for items or services furnished, ordered, or prescribed by an excluded person. Orthofix understands that items or services furnished by excluded persons are not payable by Federal health care programs and that Orthofix may be liable for overpayments and/or criminal, civil, and administrative sanctions for employing or contracting with an excluded person regardless of whether Orthofix meets the requirements of Section III.F.
3. Removal Requirement. If Orthofix has actual notice that a Covered Person has become an Ineligible Person, Orthofix shall remove such Covered Person from responsibility for, or involvement with, Orthofixs business operations related to the Federal health care programs and shall remove such Covered Person from any position for which the Covered Persons compensation or the items or services furnished, ordered, or prescribed by the Covered Person are paid in whole or part, directly or indirectly, by Federal health care programs or otherwise with Federal funds at least until such time as the Covered Person is reinstated into participation in the Federal health care programs.
4. Pending Charges and Proposed Exclusions. If Orthofix has actual notice that a Covered Person is charged with a criminal offense that falls within the scope of 42 U.S.C. §§ 1320a-7(a), 1320a-7(b)(1)-(3), or is proposed for exclusion during the Covered Persons employment or contract term, Orthofix shall take all appropriate actions to ensure that the responsibilities of that Covered Person have not and shall not adversely affect the quality of care rendered to any beneficiary, patient, or resident, or any claims submitted to any Federal health care program.
G. Notification of Government Investigation or Legal Proceedings
Within 30 days after discovery, Orthofix shall notify OIG, in writing, of any ongoing investigation or legal proceeding known to Orthofix conducted or brought by a U.S. governmental entity or its agents involving an allegation that Orthofix has committed a crime or has engaged in fraudulent activities. This notification shall include a description of the allegation, the identity of the investigating or prosecuting agency, and the status of such investigation or legal proceeding. Orthofix shall also provide written
notice to OIG within 30 days after the resolution of the matter, and shall provide OIG with a description of the findings and/or results of the investigation or proceedings, if any.
H. Repayment of Overpayments
1. Definition of Overpayments. For purposes of this CIA, an Overpayment shall mean the amount of money Orthofix has received in excess of the amount due and payable under any Federal health care program requirements.
2. Repayment of Overpayments.
a. If, at any time, Orthofix identifies any Overpayment, Orthofix shall repay the Overpayment to the appropriate payor (e.g., Medicare fiscal intermediary or carrier) within 60 days after identification of the Overpayment and take remedial steps within 60 days after identification (or such additional time as may be agreed to by the payor) to correct the problem, including preventing the underlying problem and the Overpayment from recurring. If not yet quantified, within 60 days after identification, Orthofix shall notify the payor of its efforts to quantify the Overpayment amount along with a schedule of when such work is expected to be completed. Notification and repayment to the payor shall be done in accordance with the payors policies.
b. Notwithstanding the above, notification and repayment of any Overpayment amount that routinely is reconciled or adjusted pursuant to policies and procedures established by the payor should be handled in accordance with such policies and procedures.
I. Reportable Events
1. Definition of Reportable Event. For purposes of this CIA, a Reportable Event means anything that involves:
a. a substantial Overpayment;
b. a matter that a reasonable person would consider a probable violation of criminal, civil, or administrative laws applicable to any Federal health care program or FDA requirement for which penalties or exclusion may be authorized;
c. the employment of or contracting with a Covered Person who is an Ineligible Person as defined by Section III.F.1.a; or
d. the filing of a bankruptcy petition by Orthofix.
A Reportable Event may be the result of an isolated event or a series of occurrences.
2. Reporting of Reportable Events. If Orthofix determines (after a reasonable opportunity to conduct an appropriate review or investigation of the allegations) through any means that there is a Reportable Event, Orthofix shall notify OIG, in writing, within 30 days after making the determination that the Reportable Event exists.
3. Reportable Events under Section III.I.1.a. For Reportable Events under Section III.I.1.a, the report to the OIG shall be made within 30 days of identification of the overpayment, even if not yet quantified. The report shall include:
a. a description of the steps taken by Orthofix to identify and quantify the Overpayment;
b. a complete description of the Reportable Event, including the relevant facts, persons involved, and legal and Federal health care program implicated;
c. a description of Orthofixs actions taken to correct the Reportable Event; and
d. any further steps Orthofix plans to take to address the Reportable Event and prevent it from recurring.
Orthofix shall also submit to OIG a copy of the notification and repayment to the payor required in Section III.H.2 simultaneous with the transmission of such notification and repayment to the payor.
4. Reportable Events under Section III.I.1.b and c. For Reportable Events under Section III.I.1.b and III.I.1.c, the report to OIG shall include:
a. a complete description of the Reportable Event, including the relevant facts, persons involved, and legal and Federal health care program authorities implicated;
b. a description of Orthofixs actions taken to correct the Reportable Event;
c. any further steps Orthofix plans to take to address the Reportable Event and prevent it from recurring; and
d. if the Reportable Event has resulted in an Overpayment, a description of the steps taken by Orthofix to identify and quantify the Overpayment.
5. Reportable Events under Section III.I.1.d. For Reportable Events under Section III.I.1.d, the report to the OIG shall include documentation of the bankruptcy filing and a description of any Federal health care program authorities implicated.
6. Reportable Events Involving the Stark Law. Notwithstanding the reporting requirements outlined above, any Reportable Event that involves only a probable violation of section 1877 of the Social Security Act, 42 U.S.C. §1395nn (the Stark Law) should be submitted by Orthofix to the Centers for Medicare & Medicaid Services (CMS) through the self-referral disclosure protocol (SRDP), with a copy to the OIG. The requirements of Sections III.H.2 and III.I.2 that require repayment to the payor of any identified Overpayment within 60 days shall not apply to any Overpayment that may result from a probable violation of only the Stark Law that is disclosed to CMS pursuant to the SRDP.
J. Internal Monitoring Program
1. Observations.
Within 120 days after the Effective Date, OFX and OSI shall establish an Internal Monitoring Program (IMP) to evaluate and monitor various aspects of OFXs and OSIs interactions with HCPs and HCIs, including interactions between OFX and OSI Promotional and Product Services Covered Persons; HCPs and HCIs; and HCP and HCI staff members.
a. Compliance Review Program. OFX and OSI managers shall conduct direct field observations (Compliance Reviews) of their directly reporting employees and contracted sales agents, including sales management and OFX and OSI Promotional and Product Services Covered Persons, marketing personnel and management, and sales support personnel to assess whether those employees know, understand, and comply with the Policies and Procedures required by the CIA. Each Compliance Review shall consist of a full day ride-along that includes direct observation of meetings between the reviewed employee and HCPs; other representatives of HCIs; and HCP and HCI staff members.
OFX and OSI shall conduct at least 50 Compliance Reviews annually (25 for OFX and 25 for OSI). The compliance reviews shall be scheduled throughout the year. Orthofix compliance personnel shall select the employees to be observed by utilizing a selection method that is randomized but provides for a distribution of Compliance Reviews across the United States in a manner proportionate to the size of each business division, across business divisions.
Orthofix compliance personnel shall accompany managers on at least 26 (13 from OFX and 13 from OSI) Compliance Reviews annually. Orthofix compliance personnel shall select the Compliance Reviews in which they will directly participate by utilizing a selection method that is randomized but provides for a distribution of Compliance Reviews across the United States in a manner proportionate to the size of each business division, across business divisions.
At the completion of each Compliance Review, the reviewing manager and the accompanying compliance personnel, if any, shall each prepare a report which includes:
1) the identity of the reviewed employee;
2) the identity of the manager/reviewer;
3) the date and duration of the Compliance Review;
4) an overall assessment of compliance with and understanding of the Policies and Procedures;
5) the identification of any potential non-compliance with the Policies or Procedures; and
6) such other elements as Orthofixs Compliance Office may require.
b. Reporting and Follow-up. In the event that a compliance issue is identified during any Compliance Review, Orthofix shall investigate the incident consistent with established Policies and Procedures for the handling of investigations. As part of the formal investigation procedures, findings shall be made and all necessary and appropriate responsive action (including disciplinary action) and corrective action shall be taken. The Chief Compliance Officer shall disclose Reportable Events pursuant to Section III.I above, if applicable. The Compliance Office shall maintain records of any compliance issues identified during a Compliance Review and any corrective action.
Orthofix shall include a summary of the IMP and its results as part of each Annual Report. Orthofix shall make the reports for all IMP activities available to the OIG upon request.
2. Consultant Monitoring Activities.
a. Prior to the Effective Date, Orthofix implemented a Needs Assessment program which requires, among other things, a written analysis be performed to justify the retention of or payment to any HCP, the identification of the business need for the consulting services to be provided, and specification of details about the consulting arrangement. To the extent not already implemented, within 120 days after the Effective Date, Orthofix shall establish a Consultant Monitoring Program (CMP) to evaluate and monitor various aspects of Orthofixs interactions with HCPs, as set forth in more detail below.
b. To the extent that Orthofix engages or compensates a HCP to provide services or participate in training about Government Reimbursed Products (e.g., as a member of an advisory board, as an attendee at a product training session, as a trainer, as a speaker, as a participant in data-gathering exercises, or being involved in tutorials, preceptorships, or research-related functions that relate to Government Reimbursed Products (in each case, including market preference evaluations, but excluding FDA-
registered clinical investigations)), such an HCP shall be referred to for purposes of this sub-section as a Consultant. Orthofix shall require all Consultants to enter written agreements describing the scope of work to be performed, the fees to be paid, expenses to be reimbursed, and compliance obligations for the Consultant. Consultants shall be paid and their expenses reimbursed according to a centrally managed, pre-set rate structure that is determined based on a fair market value analysis conducted by Orthofix.
c. Prior to the retention of a Consultant, Orthofix shall conduct a thorough written analysis (Needs Assessment) to justify the retention of or payment to the Consultant. The Needs Assessment shall include an identification of the business need for engagement or compensation of the Consultant and provide specific details about the consulting arrangement (including, for example, information about the numbers and qualifications of the HCPs to be engaged, the agenda for any proposed advisory board meeting, and a description of the proposed work to be done and type of work product to be generated by the Consultant).
d. Within 180 days after the Effective Date, Orthofix shall establish a process to develop an annual Consultant budgeting plan that identifies the business needs for, and the estimated numbers of, various Consultant engagements and activities to occur during the year. The annual Consultant budgeting plan shall also identify the budgeted amounts to be spent on Consultant-related activities. Personnel from Orthofixs legal department shall be involved in the review and approval of such plans, including any subsequent modification of an approved plan.
e. To the extent not already accomplished, within 180 days after the Effective Date, Orthofix shall also establish a process to obtain compliance and legal review of all Needs Assessments associated with the retention of any Consultant prior to the retention of the Consultant. The purpose of this compliance and legal review shall be to ensure that Consultant arrangements and related events are used for legitimate and lawful purposes in accordance with applicable Federal health care program and FDA requirements, and that Consultant arrangements are consistent with the applicable approved Consultant budgeting plan. Any deviations from the Consultant budgeting plans shall be documented in the Needs Assessments (or elsewhere, as appropriate) and shall be considered as part of the compliance and legal review. To the extent not already accomplished, within 120 days after the Effective Date, Orthofix shall amend its policies to require the collection, assessment, and retention of work product (if any) generated by Consultants.
f. Orthofix shall conduct audits (Consultant Program Audits) of the various types of consultant arrangements entered with HCPs. For the first Reporting Period, Orthofix shall identify the 25 Consultants who received the largest amounts of compensation from OFX and OSI during the six months prior to the end of the Reporting Period. Orthofix shall audit all activities provided by the selected Consultants during the six months prior to the end of the Reporting Period. For the second and subsequent Reporting Periods, 90 days prior to the end of the applicable prior Reporting Period Orthofix shall provide information to the OIG about the numbers of each type of consulting arrangement entered by OFX and OSI, the numbers of Consultants retained for each type of arrangement, and the aggregate amounts of funds expended for each type of consulting arrangement during the Reporting Period. The OIG shall then select up to three types of arrangements to be audited and shall identify the number of each type of program to be audited by Orthofix for each applicable Reporting Period. For the second and subsequent Reporting Periods, the Consultant Monitoring Program shall review Consultant arrangements both on a risk-based targeting approach and on a random sampling approach.
g. Personnel conducting the Consultant Program Audits shall review the Needs Assessment, consultant contracts, and materials relating to the arrangement or work of the Consultant (including a verification that the work product resulting from any Consultant-related program or event or otherwise generated by the Consultant is consistent with the stated business need set forth on the business rationale form or elsewhere), in order to assess whether the arrangements were conducted in a manner consistent with Orthofixs Policies and Procedures. Results from the Consultant Program Audits shall be compiled and reported to Orthofix headquarters for review and remediation as appropriate. Potential violations of Orthofixs Policies and Procedures shall be reported to the Compliance Office for appropriate follow-up activity.
3. Reporting and Follow-up. Personnel conducting the Compliance Reviews and Consultant Program Audits shall have access to all relevant records and information of Orthofix necessary to assess Orthofixs interactions with HCPs and HCIs and to identify potential or actual compliance violations. Results from the Compliance Reviews and Consultant Program Audits shall be compiled and reported to the Chief Compliance Officer for review and remediation as appropriate. Potential violations of Federal health care program or FDA requirements shall be reported to the Compliance Office for appropriate follow-up activity.
In the event that a compliance issue is identified through the CMP, Orthofix shall investigate the incident consistent with established Policies and Procedures for the handling of investigations. As part of the formal investigation procedures, findings shall be made and all necessary and appropriate responsive action (including disciplinary action) and corrective action shall be taken, including the disclosure of Reportable Events pursuant to Section III.I above, as applicable.
Orthofix shall include a summary of the CMP and its results as part of each Annual Report. As part of each Annual Report, Orthofix also shall provide the OIG with copies of the Consultant Program Audit reports for any instances in which it was determined that an Orthofix employee engaged in improper conduct and a description of the action(s) that Orthofix took as a result of such determinations. Orthofix shall make the reports for all other CMP activities available to the OIG upon request.
IV. CHANGES TO BUSINESS UNITS OR LOCATIONS
A. Change or Closure of Unit or Location
In the event that, after the Effective Date, Orthofix changes locations or closes a business unit or location related to the furnishing of items or services that may be reimbursed by Federal health care programs, Orthofix shall notify OIG of this fact as soon as possible, but no later than within 30 days after the date of change or closure of the location.
B. Purchase or Establishment of New Unit or Location
In the event that, after the Effective Date, Orthofix purchases or establishes a new business unit or location related to the furnishing of items or services that may be reimbursed by Federal health care programs, Orthofix shall notify OIG at least 30 days prior to such purchase or the operation of the new business unit or location. This notification shall include the address of the new business unit or location, phone number, fax number, the locations Medicare and state Medicaid program provider number and/or supplier number(s), and the name and address of each Medicare and state Medicaid program contractor to which Orthofix currently submits claims. Each new business unit or location and all Covered Persons at each new business unit or location shall be subject to the applicable requirements of this CIA.
C. Sale of Unit or Location
In the event that, after the Effective Date, Orthofix proposes to sell any or all of its business units or locations that are subject to this CIA, Orthofix shall notify OIG of the proposed sale at least 30 days prior to the sale of such business unit or location. This notification shall include a description of the business unit or location to be sold, a brief description of the terms of the sale, and the name and contact information of the prospective purchaser. This CIA shall be binding on the purchaser of such business unit or location, unless otherwise determined and agreed to in writing by the OIG.
V. IMPLEMENTATION AND ANNUAL REPORTS
A. Implementation Report
Within 150 days after the Effective Date, Orthofix shall submit a written report to OIG summarizing the status of its implementation of the requirements of this CIA (Implementation Report). The Implementation Report shall, at a minimum, include:
1. the name, address, phone number, and position description of the Chief Compliance Officer required by Section III.A.1, and a summary of other noncompliance job responsibilities the Chief Compliance Officer may have;
2. the names and positions of the members of the Compliance Committee required by Section III.A.2;
3. the names of the members of the Audit Committee of the Board of Directors referenced in Section III.A.3;
4. the names and positions of the Certifying Employees required by Section III.A.4;
5. a copy of Orthofixs Code of Conduct required by Section III.B.1;
6. the number of individuals required to complete the Code of Conduct certification required by Section III.B.1, the percentage of individuals who have completed such certification, and an explanation of any exceptions (the documentation supporting this information shall be made available to OIG upon request);
7. a summary of all Policies and Procedures required by Section III.B.2 (copies of the Policies and Procedures shall be made available to OIG upon request);
8. the following information regarding each type of training required by Section III.C:
a. a description of such training, including a summary of the topics covered, the length of sessions, and a schedule of training sessions;
b. the number of individuals required to be trained, percentage of individuals actually trained, and an explanation of any exceptions.
A copy of all training materials and the documentation supporting this information shall be made available to OIG upon request.
9. a description of (a) the Focus Arrangements Tracking System required by Section III.D.2.a, (b) the internal review and approval process required by Section III.D.2.e; and (c) the tracking and monitoring procedures and other Focus Arrangements Procedures required by Sections III.D.2 and 3;
10. a description of the Disclosure Program required by Section III.E;
11. a description of the Internal Monitoring Program required by Section III.J;
12. the following information regarding each IRO: (a) identity, address, and phone number; (b) a copy of the engagement letter; (c) information to demonstrate that the IRO has the qualifications outlined in Appendix A to this CIA, (d) a summary and description of any and all current and prior engagements and agreements between Orthofix and the IRO; and (e) a certification from the IRO regarding its professional independence and objectivity with respect to Orthofix;
13. a description of the process by which Orthofix fulfills the requirements of Section III.F regarding Ineligible Persons;
14. the name, title, and responsibilities of any person who is determined to be an Ineligible Person under Section III.F; the actions taken in response to the screening and removal obligations set forth in Section III.F;
15. a list of all of Orthofixs United States locations (including locations and mailing addresses); the corresponding name under which each location is doing business; the corresponding phone numbers and fax numbers; each locations Medicare and state Medicaid program provider number(s) and/or supplier number(s); and the name and address of each Medicare and state Medicaid program contractor to which Orthofix currently submits claims;
16. a description of Orthofixs corporate structure, including identification of any parent and sister companies, subsidiaries, and their respective lines of business; and
17. the certifications required by Section V.C.
B. Annual Reports
Orthofix shall submit to OIG annually a report with respect to the status of, and findings regarding, Orthofixs compliance activities for each of the five Reporting Periods (Annual Report). Each Annual Report shall include, at a minimum:
1. any change in the identity, position description, reporting relationship, or authority of the Chief Compliance Officer or any other noncompliance job responsibilities of the Chief Compliance Officer as well as any change in the membership of the Compliance Committee, the Audit Committee of the Board of Directors, or the group of Certifying Employees described in Section III.A;
2. the Board Audit Committee resolution required by Section III.A.3;
3. a summary of any changes or amendments to Orthofixs Code of Conduct required by Section III.B.1 and the reason for such changes, along with a copy of the revised Code of Conduct;
4. the number of individuals required to complete the Code of Conduct certification required by Section III.B.1, the percentage of individuals who have
completed such certification, and an explanation of any exceptions (the documentation supporting this information shall be made available to OIG upon request);
5. a summary of any significant changes or amendments to the Policies and Procedures required by Section III.B.2 and the reasons for such changes (e.g., change in contractor policy);
6. the following information regarding each type of training required by Section III.C:
a. a description of the initial and annual training, including a summary of the topics covered, the length of sessions, and a schedule of training sessions; and
b. the number of individuals required to complete the initial and annual training, the percentage of individuals who actually completed the initial and annual training, and an explanation of any exceptions.
A copy of all training materials and the documentation to support this information shall be made available to OIG upon request.
7. a description of (a) any changes to the Focus Arrangements Tracking System required by Section III.D.2.a; (b) any changes to the internal review and approval process required by Section III.D.2.e; and (c) any changes to the tracking and monitoring procedures and other Arrangements Procedures required by Sections III.D.2 and 3;
8. a complete copy of all reports prepared pursuant to Section III.D.1, along with a copy of each IROs engagement letter;
9. Orthofixs response to the reports prepared pursuant to Section III.D.1, along with corrective action plan(s) related to any issues raised by the reports;
10. a summary and description of any and all current and prior engagements and agreements between Orthofix and each IRO, if different from what was submitted as part of the Implementation Report;
11. a certification from each IRO regarding its professional independence and objectivity with respect to Orthofix;
12. a summary and description of the Internal Monitoring Programs internal reviews pursuant to Section III.J, along with any corrective action plans undertaken related to any issues raised by the Internal Monitoring Program and/or the Consultant Monitoring Program;
13. a summary of Reportable Events (as defined in Section III.I) identified during the Reporting Period and the status of any corrective action relating to all such Reportable Events;
14. a report of the aggregate Overpayments that have been returned to the Federal health care programs. Overpayment amounts shall be broken down into the following categories: inpatient Medicare (if applicable), outpatient Medicare (Part B), Medicaid (report each applicable state separately, if applicable), and other Federal health care programs. Overpayment amounts that are routinely reconciled or adjusted pursuant to policies and procedures established by the payor or that are disclosed to CMS pursuant to the SRDP and Section III.I.6 do not need to be included in this aggregate Overpayment report;
15. a summary of the disclosures in the disclosure log required by Section III.E that: (a) relate to Federal health care programs; or (b) involve allegations of conduct that may involve illegal remuneration or inappropriate referrals in violation of the Anti-Kickback Statute or Stark Law (the complete disclosure log shall be made available to OIG upon request);
16. any changes to the process by which Orthofix fulfills the requirements of Section III.F regarding Ineligible Persons;
17. a summary describing any ongoing investigation or legal proceeding required to have been reported pursuant to Sections III.G-I. The summary shall include a description of the allegation, the identity of the investigating or prosecuting agency, and the status of such investigation or legal proceeding;
18. a description of all changes to the most recently provided list of Orthofixs United States locations (including addresses) as required by Sections IV and V.A.15; the corresponding name under which each location is doing business; the
corresponding phone numbers and fax numbers; each locations Medicare and state Medicaid program provider number(s) and/or supplier number(s); and the name and address of each affected Medicare and state Medicaid program contractor to which Orthofix currently submits claims; and
19. the certifications required by Sections III.A and V.C.
The first Annual Report shall be received by OIG no later than 90 days after the end of the first Reporting Period. Subsequent Annual Reports shall be received by OIG no later than the anniversary date of the due date of the first Annual Report.
C. Certifications
The Implementation Report and each Annual Report shall include a certification by the Chief Compliance Officer that:
1. to the best of his or her knowledge, except as otherwise described in the applicable report, Orthofix is in compliance with all of the requirements of this CIA;
2. to the best of his or her knowledge, Orthofix has implemented procedures reasonably designed to ensure that all Focus Arrangements do not violate the Anti-Kickback Statute and Stark Law, including the Focus Arrangements Procedures required in Section III.D of the CIA;
3. to the best of his or her knowledge, Orthofix has fulfilled the requirements for New and Renewed Focus Arrangements under Section III.D.2 and III.D.3 of the CIA;
4. he or she has reviewed the Report and has made reasonable inquiry regarding its content and believes that the information in the Report is accurate and truthful; and
5. to the best of his or her knowledge, Orthofix has complied with its obligations under the Settlement Agreements: (a) not to resubmit to any Federal health care program payors any previously denied claims related to the Covered Conduct addressed in the Settlement Agreement, and not to appeal any such denials of claims; (b) not to charge to or otherwise seek payment from federal or state payors for unallowable
costs (as defined in the Settlement Agreement); and (c) if applicable, to identify and adjust any past charges or claims for unallowable costs.
D. Designation of Information
Orthofix shall clearly identify any portions of its submissions that it believes are trade secrets, or information that is commercial or financial and privileged or confidential, and therefore potentially exempt from disclosure under the Freedom of Information Act (FOIA), 5 U.S.C. § 552. Orthofix shall refrain from identifying any information as exempt from disclosure if that information does not meet the criteria for exemption from disclosure under FOIA.
VI. NOTIFICATIONS AND SUBMISSION OF REPORTS
Unless otherwise stated in writing after the Effective Date, all notifications and reports required under this CIA shall be submitted to the following entities:
OIG: |
Administrative and Civil Remedies Branch |
|
Office of Counsel to the Inspector General |
|
Office of Inspector General |
|
U.S. Department of Health and Human Services |
|
Cohen Building, Room 5527 |
|
330 Independence Avenue, S.W. |
|
Washington, DC 20201 |
|
Telephone: 202.619.2078 |
|
Facsimile: 202.205.0604 |
|
|
Orthofix: |
Mark S. Boone |
|
Orthofix International, N.V. |
|
Senior Vice President & Chief Compliance Officer |
|
3451 Plano Parkway |
|
Lewisville, TX 75056 |
|
Office: 214.937.2776 |
|
Facsimile: 214.937.3014 |
Unless otherwise specified, all notifications and reports required by this CIA may be made by certified mail, overnight mail, hand delivery, or other means, provided that there is proof that such notification was received. For purposes of this requirement, internal facsimile confirmation sheets do not constitute proof of receipt. Upon request by OIG, Orthofix may be required to provide OIG with an electronic copy of each notification or report required by this CIA in searchable portable document format (pdf), in addition to a paper copy.
VII. OIG INSPECTION, AUDIT, AND REVIEW RIGHTS
In addition to any other rights OIG may have by statute, regulation, or contract, OIG or its duly authorized representative(s) may examine or request copies of Orthofixs books, records, and other documents and supporting materials and/or conduct on-site reviews of any of Orthofixs locations for the purpose of verifying and evaluating: (a) Orthofixs compliance with the terms of this CIA; and (b) Orthofixs compliance with the requirements of the Federal health care programs and FDA requirements. The documentation described above shall be made available by Orthofix to OIG or its duly authorized representative(s) at all reasonable times for inspection, audit, or reproduction. Furthermore, for purposes of this provision, OIG or its duly authorized representative(s) may interview any of Orthofixs employees, contractors, or agents who consent to be interviewed at the individuals place of business during normal business hours or at such other place and time as may be mutually agreed upon between the individual and OIG. Orthofix shall assist OIG or its duly authorized representative(s) in contacting and arranging interviews with such individuals upon OIGs request. Orthofixs employees may elect to be interviewed with or without a representative of Orthofix present.
VIII. DOCUMENT AND RECORD RETENTION
Orthofix shall maintain for inspection all documents and records relating to reimbursement from the Federal health care programs, and to compliance with this CIA, for six years (or longer if otherwise required by law) from the Effective Date.
IX. DISCLOSURES
Consistent with HHSs FOIA procedures, set forth in 45 C.F.R. Part 5, OIG shall make a reasonable effort to notify Orthofix prior to any release by OIG of information submitted by Orthofix pursuant to its obligations under this CIA and identified upon submission by Orthofix as trade secrets, or information that is commercial or financial and privileged or confidential, under the FOIA rules. With respect to such releases, Orthofix shall have the rights set forth at 45 C.F.R. § 5.65(d).
X. BREACH AND DEFAULT PROVISIONS
Orthofix is expected to fully and timely comply with all of its CIA obligations.
A. Stipulated Penalties for Failure to Comply with Certain Obligations
As a contractual remedy, Orthofix and OIG hereby agree that failure to comply with certain obligations as set forth in this CIA may lead to the imposition of the following monetary penalties (hereinafter referred to as Stipulated Penalties) in accordance with the following provisions.
1. A Stipulated Penalty of $2,500 (which shall begin to accrue on the day after the date the obligation became due) for each day Orthofix fails to establish and implement any of the following obligations as described in Section III:
a. a Chief Compliance Officer;
b. a Compliance Committee;
c. the Audit Committee compliance obligations;
d. a written Code of Conduct;
e. written Policies and Procedures;
f. all training requirements pursuant to Section III.C;
g. the Focus Arrangements Procedures and/or Focus Arrangements Requirements described in Sections III.D.2 and III.D.3;
h. a Disclosure Program pursuant to Section III.E;
i. an Internal Monitoring Program and Consultant Monitoring pursuant to Section III.J;
j. Ineligible Persons screening and removal requirements pursuant to Section III.F;
k. notification of Government investigations or legal proceedings pursuant to Section III.G; and
l. reporting of Reportable Events pursuant to Section III.I.
2. A Stipulated Penalty of $2,500 (which shall begin to accrue on the day after the date the obligation became due) for each day Orthofix fails to engage an IRO, as required in Section III.D and Appendices A-C.
3. A Stipulated Penalty of $2,500 (which shall begin to accrue on the day after the date the obligation became due) for each day Orthofix fails to submit the Implementation Report or any Annual Reports to OIG in accordance with the requirements of Section V by the deadlines for submission.
4. A Stipulated Penalty of $2,500 (which shall begin to accrue on the day after the date the obligation became due) for each day Orthofix fails to submit any Claims Review Report or annual Arrangements Review Report in accordance with the requirements of Section III.D.1, Appendix B, and Appendix C.
5. A Stipulated Penalty of $1,500 for each day Orthofix fails to grant access as required in Section VII. (This Stipulated Penalty shall begin to accrue on the date Orthofix fails to grant access.)
6. A Stipulated Penalty of $5,000 for each false certification submitted by or on behalf of Orthofix as part of its Implementation Report, Annual Report, additional documentation to a report (as requested by the OIG), or otherwise required by this CIA.
7. A Stipulated Penalty of $1,000 for each day Orthofix fails to comply fully and adequately with any obligation of this CIA. OIG shall provide notice to Orthofix stating the specific grounds for its determination that Orthofix has failed to comply fully and adequately with the CIA obligation(s) at issue and steps Orthofix shall take to comply with the CIA. (This Stipulated Penalty shall begin to accrue 10 days after Orthofix receives this notice from OIG of the failure to comply.) A Stipulated Penalty as described in this Subsection shall not be demanded for any violation for which OIG has sought a Stipulated Penalty under Subsections 1-6 of this Section.
B. Timely Written Requests for Extensions
Orthofix may, in advance of the due date, submit a timely written request for an extension of time to perform any act or file any notification or report required by this CIA. Notwithstanding any other provision in this Section, if OIG grants the timely written request with respect to an act, notification, or report, Stipulated Penalties for failure to perform the act or file the notification or report shall not begin to accrue until one day after Orthofix fails to meet the revised deadline set by OIG. Notwithstanding any other provision in this Section, if OIG denies such a timely written request, Stipulated Penalties for failure to perform the act or file the notification or report shall not begin to accrue until three business days after Orthofix receives OIGs written denial of such request or the original due date, whichever is later. A timely written request is defined as a request in writing received by OIG at least five business days prior to the date by which any act is due to be performed or any notification or report is due to be filed.
C. Payment of Stipulated Penalties
1. Demand Letter. Upon a finding that Orthofix has failed to comply with any of the obligations described in Section X.A and after determining that Stipulated Penalties are appropriate, OIG shall notify Orthofix of: (a) Orthofixs failure to comply; and (b) OIGs exercise of its contractual right to demand payment of the Stipulated Penalties. (This notification shall be referred to as the Demand Letter.)
2. Response to Demand Letter. Within 10 days after the receipt of the Demand Letter, Orthofix shall either: (a) cure the breach to OIGs satisfaction and pay the applicable Stipulated Penalties or (b) request a hearing before an HHS administrative law judge (ALJ) to dispute OIGs determination of noncompliance, pursuant to the agreed-upon provisions set forth below in Section X.E. In the event Orthofix elects to request an ALJ hearing, the Stipulated Penalties shall continue to accrue until Orthofix cures, to OIGs satisfaction, the alleged breach in dispute. Failure to respond to the Demand Letter in one of these two manners within the allowed time period shall be considered a material breach of this CIA and shall be grounds for exclusion under Section X.D.
3. Form of Payment. Payment of the Stipulated Penalties shall be made by electronic funds transfer to an account specified by OIG in the Demand Letter.
4. Independence from Material Breach Determination. Except as set forth in Section X.D.1.c, these provisions for payment of Stipulated Penalties shall not affect or otherwise set a standard for OIGs decision that Orthofix has materially breached this CIA, which decision shall be made at OIGs discretion and shall be governed by the provisions in Section X.D, below.
D. Exclusion for Material Breach of this CIA
1. Definition of Material Breach. A material breach of this CIA means:
a. a failure by Orthofix to report a Reportable Event, take corrective action, and make the appropriate refunds, as required in Section III.I;
b. a repeated or flagrant violation of the obligations under this CIA, including, but not limited to, the obligations addressed in Section X.A;
c. a failure to respond to a Demand Letter concerning the payment of Stipulated Penalties in accordance with Section X.C; or
d. a failure to engage and use an IRO in accordance with Section III.D.1 and Appendices A-C.
2. Notice of Material Breach and Intent to Exclude. The parties agree that a material breach of this CIA by Orthofix constitutes an independent basis for Orthofixs exclusion from participation in the Federal health care programs. Upon a determination by OIG that Orthofix has materially breached this CIA and that exclusion is the appropriate remedy, OIG shall notify Orthofix or of: (a) Orthofixs material breach; and (b) OIGs intent to exercise its contractual right to impose exclusion. (This notification shall be referred to as the Notice of Material Breach and Intent to Exclude.)
3. Opportunity to Cure. Orthofix shall have 30 days from the date of receipt of the Notice of Material Breach and Intent to Exclude to demonstrate to OIGs satisfaction that:
a. Orthofix is in compliance with the obligations of the CIA cited by OIG as being the basis for the material breach;
b. the alleged material breach has been cured; or
c. the alleged material breach cannot be cured within the 30-day period, but that: (i) Orthofix has begun to take action to cure the material breach; (ii) Orthofix is pursuing such action with due diligence; and (iii) Orthofix has provided to OIG a reasonable timetable for curing the material breach.
4. Exclusion Letter. If, at the conclusion of the 30-day period, Orthofix fails to satisfy the requirements of Section X.D.3, OIG may exclude Orthofix from participation in the Federal health care programs. OIG shall notify Orthofix in writing of its determination to exclude Orthofix. (This letter shall be referred to as the Exclusion Letter.) Subject to the Dispute Resolution provisions in Section X.E, below, the exclusion shall go into effect 30 days after the date of Orthofixs receipt of the Exclusion Letter. The exclusion shall have national effect and shall also apply to all other Federal procurement and nonprocurement programs. Reinstatement to program participation is not automatic. After the end of the period of exclusion, Orthofix may apply for reinstatement by submitting a written request for reinstatement in accordance with the provisions at 42 C.F.R. §§ 1001.3001-.3004.
E. Dispute Resolution
1. Review Rights. Upon OIGs delivery to Orthofix of its Demand Letter or of its Exclusion Letter, and as an agreed-upon contractual remedy for the resolution of disputes arising under this CIA, Orthofix shall be afforded certain review rights comparable to the ones that are provided in 42 U.S.C. § 1320a-7(f) and 42 C.F.R. Part 1005 as if they applied to the Stipulated Penalties or exclusion sought pursuant to this CIA. Specifically, OIGs determination to demand payment of Stipulated Penalties or to seek exclusion shall be subject to review by an HHS ALJ and, in the event of an appeal, the HHS Departmental Appeals Board (DAB), in a manner consistent with the provisions in 42 C.F.R. § 1005.2 -1005.21. Notwithstanding the language in 42 C.F.R. § 1005.2(c), the request for a hearing involving Stipulated Penalties shall be made within 10 days after receipt of the Demand Letter and the request for a hearing involving exclusion shall be made within 25 days after receipt of the Exclusion Letter.
2. Stipulated Penalties Review. Notwithstanding any provision of Title 42 of the United States Code or Title 42 of the Code of Federal Regulations, the only issues in a proceeding for Stipulated Penalties under this CIA shall be: (a) whether Orthofix was in full and timely compliance with the obligations of this CIA for which OIG demands payment; and (b) the period of noncompliance. Orthofix shall have the burden of proving its full and timely compliance and the steps taken to cure the noncompliance, if any. OIG shall not have the right to appeal to the DAB an adverse ALJ decision related to Stipulated Penalties. If the ALJ agrees with OIG with regard to a finding of a breach of this CIA and orders Orthofix to pay Stipulated Penalties, such Stipulated Penalties shall become due and payable 20 days after the ALJ issues such a decision unless Orthofix requests review of the ALJ decision by the DAB. If the ALJ decision is properly appealed to the DAB and the DAB upholds the determination of OIG, the Stipulated Penalties shall become due and payable 20 days after the DAB issues its decision.
3. Exclusion Review. Notwithstanding any provision of Title 42 of the United States Code or Title 42 of the Code of Federal Regulations, the only issues in a proceeding for exclusion based on a material breach of this CIA shall be:
a. whether Orthofix was in material breach of this CIA;
b. whether such breach was continuing on the date of the Exclusion Letter; and
c. whether the alleged material breach could not have been cured within the 30-day period, but that: (i) Orthofix had begun to take action to cure the material breach within that period; (ii) Orthofix has pursued and is pursuing such action with due diligence; and (iii) Orthofix provided to OIG within that period a reasonable timetable for curing the material breach and Orthofix has followed the timetable.
For purposes of the exclusion herein, exclusion shall take effect only after an ALJ decision favorable to OIG, or, if the ALJ rules for Orthofix, only after a DAB decision in favor of OIG. Orthofixs election of its contractual right to appeal to the DAB shall not abrogate OIGs authority to exclude Orthofix upon the issuance of an ALJs decision in favor of OIG. If the ALJ sustains the determination of OIG and determines that exclusion is authorized, such exclusion shall take effect 20 days after the ALJ issues such a decision, notwithstanding that Orthofix may request review of the ALJ decision by the DAB. If the DAB finds in favor of OIG after an ALJ decision adverse to OIG, the exclusion shall take effect 20 days after the DAB decision. Orthofix shall waive its right to any notice of such an exclusion if a decision upholding the exclusion is rendered by the ALJ or DAB. If the DAB finds in favor of Orthofix, Orthofix shall be reinstated effective on the date of the original exclusion.
4. Finality of Decision. The review by an ALJ or DAB provided for above shall not be considered to be an appeal right arising under any statutes or regulations. Consequently, the parties to this CIA agree that the DABs decision (or the ALJs decision if not appealed) shall be considered final for all purposes under this CIA.
XI. EFFECTIVE AND BINDING AGREEMENT
Orthofix and OIG agree as follows:
A. This CIA shall be binding on the successors, assigns, and transferees of Orthofix;
B. This CIA shall become final and binding on the date the final signature is obtained on the CIA;
C. This CIA constitutes the complete agreement between the parties and may not be amended except by written consent of the parties to this CIA;
D. OIG may agree to a suspension of Orthofixs obligations under this CIA based on a certification by Orthofix that it is no longer providing health care items or services that will be billed to any Federal health care program and that it does not have any ownership or control interest, as defined in 42 U.S.C. §1320a-3, in any entity that bills any Federal health care program. If Orthofix is relieved of its CIA obligations, Orthofix will be required to notify OIG in writing at least 30 days in advance if Orthofix plans to resume providing health care items or services that are billed to any Federal health care program or to obtain an ownership or control interest in any entity that bills any Federal health care program. At such time, OIG shall evaluate whether the CIA will be reactivated or modified.
E. The undersigned Orthofix signatories represent and warrant that they are authorized to execute this CIA. The undersigned OIG signatories represents that they are signing this CIA in their official capacity and that they are authorized to execute this CIA.
F. This CIA may be executed in counterparts, each of which constitutes an original and all of which constitute one and the same CIA. Facsimiles of signatures shall constitute acceptable, binding signatures for purposes of this CIA.
ON BEHALF OF ORTHOFIX INTERNATIONAL, N.V.
/s/ Robert S. Vaters |
|
5/31/2012 |
ROBERT S. VATERS |
|
DATE |
President and Chief Executive Officer |
|
|
Orthofix International, N.V. |
|
|
|
|
|
|
|
|
/s/ Brien T. OConnor |
|
5/31/2012 |
BRIEN T. OCONNOR |
|
DATE |
KIRSTEN V. MAYER |
|
|
MICHAEL B. LAMPERT |
|
|
Ropes & Gray LLP |
|
|
Prudential Tower, 800 Boylston Street |
|
|
Boston, MA 02199-3600 |
|
|
ON BEHALF OF ORTHOFIX, INC.
/s/ R. Brian McCollum |
|
5/31/12 |
R. BRIAN MCCOLLUM |
|
DATE |
Senior Vice President and Chief Financial Officer |
|
|
Orthofix, Inc |
|
|
|
|
|
|
|
|
/s/ Brien T. OConnor |
|
5/31/2012 |
BRIEN T. OCONNOR |
|
DATE |
KIRSTEN V. MAYER |
|
|
MICHAEL B. LAMPERT |
|
|
Ropes & Gray LLP |
|
|
Prudential Tower, 800 Boylston Street |
|
|
Boston, MA 02199-3600 |
|
|
ON BEHALF OF BLACKSTONE MEDICAL INC.
D/B/A ORTHOFIX SPINAL IMPLANTS
/s/ Jeffrey M. Schumm |
|
5/31/12 |
JEFFREY M. SCHUMM |
|
DATE |
General Counsel and Secretary |
|
|
Blackstone Medical Inc. |
|
|
/s/ Brien T. OConnor |
|
5/31/2012 |
BRIEN T. OCONNOR |
|
DATE |
KIRSTEN V. MAYER |
|
|
MICHAEL B. LAMPERT |
|
|
Ropes & Gray LLP |
|
|
Prudential Tower, 800 Boylston Street |
|
|
Boston, MA 02199-3600 |
|
|
ON BEHALF OF THE OFFICE OF INSPECTOR GENERAL OF THE DEPARTMENT OF HEALTH AND HUMAN SERVICES
/s/ Gregory E. Demske |
|
6/6/12 |
GREGORY E. DEMSKE |
|
DATE |
Chief Counsel to the Inspector General |
|
|
Office of Inspector General |
|
|
U. S. Department of Health and Human Services |
|
|
/s/ Andrea L. Treese Berlin |
|
6/5/12 |
ANDREA L. TREESE BERLIN |
|
DATE |
Senior Counsel |
|
|
Office of Inspector General |
|
|
U. S. Department of Health and Human Services |
|
|
/s/ Brian D. Bewley |
|
June 5, 2012 |
BRIAN D. BEWLEY |
|
DATE |
Senior Counsel |
|
|
Office of Inspector General |
|
|
U.S. Department of Health and Human Services |
|
|
APPENDIX A
INDEPENDENT REVIEW ORGANIZATION
This Appendix contains the requirements relating to the Independent Review Organization(s) (IRO) required by Section III.D of the CIA.
A. IRO Engagement.
1. Orthofix shall engage one or more IROs that possess the qualifications set forth in Paragraph B, below, to perform the responsibilities in Paragraph C, below. The IRO(s) shall conduct the review in a professionally independent and objective fashion, as set forth in Paragraph D. Within 30 days after OIG receives the information identified in Section V.A.12 of the CIA or any additional information submitted by Orthofix in response to a request by OIG, whichever is later, OIG will notify Orthofix if any IRO is unacceptable. Absent notification from OIG that any IRO is unacceptable, Orthofix may continue to engage the IRO.
2. If Orthofix engages a new IRO during the term of the CIA, this IRO shall also meet the requirements of this Appendix. If a new IRO is engaged, Orthofix shall submit the information identified in Section V.A.12 of the CIA to OIG within 30 days of engagement of the IRO. Within 30 days after OIG receives this information or any additional information submitted by Orthofix at the request of OIG, whichever is later, OIG will notify Orthofix if the IRO is unacceptable. Absent notification from OIG that the IRO is unacceptable, Orthofix may continue to engage the IRO.
B. IRO Qualifications.
With regard to the Claims Review, the IRO shall:
1. assign individuals to conduct the Claims Review who have expertise in the billing, coding, reporting, and other requirements of device manufacturers and in the general requirements of the Federal health care program(s) from which Orthofix seeks reimbursement;
2. assign individuals to design and select the Claims Review sample who are knowledgeable about the appropriate statistical sampling techniques;
3. assign individuals to conduct the billing and coding review portions of the Claims Review who have appropriate expertise; and
Corporate Integrity Agreement - Appendix A
Orthofix
4. have sufficient staff and resources to conduct the reviews required by the CIA on a timely basis.
With regard to the Arrangements Review, the IRO shall:
1. assign individuals to conduct the Arrangements Review who are knowledgeable in the requirements of the Anti-Kickback Statute and the Stark Law and the regulations and other guidance documents related to these statutes; and
2. have sufficient staff and resources to conduct the reviews required by the CIA on a timely basis.
C. IRO Responsibilities.
With regard to the Claims Review, the IRO shall:
1. perform each Claims Review in accordance with the specific requirements of the CIA;
2. follow all applicable Medicare, Medicaid, or other Federal health care program rules and reimbursement guidelines in making assessments in the Claims Review;
3. if in doubt of the application of a particular Medicare, Medicaid, or other Federal health care program policy or regulation, request clarification from the appropriate authority (e.g., fiscal intermediary, carrier, or Durable Medical Equipment Medicare Administrative Contractor, as appropriate);
4. respond to all OIG inquires in a prompt, objective, and factual manner; and
5. prepare timely, clear, well-written reports that include all the information required by Appendix B to the CIA.
With regard to the Arrangements Review, the IRO shall:
1. perform each Arrangements Review in accordance with the specific requirements of the CIA;
2. respond to all OIG inquires in a prompt, objective, and factual manner; and
3. prepare timely, clear, well-written reports that include all the information required by Appendix C to the CIA.
D. IRO Independence and Objectivity.
The IRO(s) must perform the reviews hereunder in a professionally independent and objective fashion, as defined in the most recent Government Auditing Standards issued by the United States Government Accountability Office.
E. IRO Removal/Termination.
1. Provider and IRO. If Orthofix terminates its IRO or if any IRO withdraws from the engagement during the term of the CIA, Orthofix must submit a notice explaining its reasons for termination or the reason for withdrawal to OIG no later than 30 days after termination or withdrawal. Orthofix must engage a new IRO in accordance with Paragraph A of this Appendix and within 60 days of termination or withdrawal of the IRO.
2. OIG Removal of IRO. In the event OIG has reason to believe any IRO does not possess the qualifications described in Paragraph B, is not independent and objective as set forth in Paragraph D, or has failed to carry out its responsibilities as described in Paragraph C, OIG may, at its sole discretion, require Orthofix to engage a new IRO in accordance with Paragraph A of this Appendix. Orthofix must engage a new IRO within 60 days of termination of the IRO.
Prior to requiring Orthofix to engage a new IRO, OIG shall notify Orthofix of its intent to do so and provide a written explanation of why OIG believes such a step is necessary. To resolve any concerns raised by OIG, Orthofix may present additional information regarding the IROs qualifications, independence or performance of its responsibilities. OIG will attempt in good faith to resolve any differences regarding the IRO with Orthofix prior to requiring Orthofix to terminate the IRO. However, the final determination as to whether or not to require Orthofix to engage a new IRO shall be made at the sole discretion of OIG.
APPENDIX B
CLAIMS REVIEW
A. Claims Review. The IRO shall perform the Claims Review annually to cover each of the five Reporting Periods. The IRO shall perform all components of each Claims Review.
1. Definitions. For the purposes of the Claims Review, the following definitions shall be used:
a. Overpayment: The amount of money OFX has received in excess of the amount due and payable under any Federal health care program requirements.
b. Paid Claim: A claim submitted by OFX, and for which OFX has received reimbursement from the Medicare, Medicaid, and/or other Federal health care program.
c. Population: The Population shall be defined as all Paid Claims during the 12-month period covered by the Claims Review.
d. Error Rate: The Error Rate shall be the percentage of net Overpayments identified in the sample. The net Overpayments shall be calculated by subtracting all underpayments identified in the sample from all gross Overpayments identified in the sample. (Note: Any potential cost settlements or other supplemental payments should not be included in the net Overpayment calculation. Rather, only underpayments identified as part of the Discovery Sample shall be included as part of the net Overpayment calculation.)
The Error Rate is calculated by dividing the net Overpayment identified in the sample by the total dollar amount associated with the Paid Claims in the sample.
2. Discovery Sample. The IRO shall randomly select and review a sample of 50 Paid Claims (Discovery Sample). The Paid Claims shall be reviewed based on the supporting documentation available at OFXs office or under their control and applicable billing and coding regulations and guidance to determine whether the claim was correctly coded, submitted, and reimbursed.
Corporate Integrity Agreement - Appendix B
Orthofix
If the Error Rate (as defined above) for the Discovery Sample is less than 5%, no additional sampling is required, nor is the Systems Review required. (Note: The guidelines listed above do not imply that this is an acceptable error rate. Accordingly, OFX should, as appropriate, further analyze any errors identified in the Discovery Sample. OFX recognizes that OIG or another HHS component, in its discretion and as authorized by statute, regulation, or other appropriate authority may also analyze or review Paid Claims included, or errors identified, in the Discovery Sample or any other segment of the universe.)
3. Full Sample. If the Discovery Sample indicates that the Error Rate is 5% or greater, the IRO shall select an additional sample of Paid Claims (Full Sample) using commonly accepted sampling methods. The Full Sample shall be designed to: (1) estimate the actual Overpayment in the population with a 90% confidence level and with a maximum relative precision of 25% of the point estimate; and (2) conform with the Centers for Medicare and Medicaid Services statistical sampling for overpayment estimation guidelines. The Paid Claims selected for the Full Sample shall be reviewed based on supporting documentation available at OFX or under its control and applicable billing and coding regulations and guidance to determine whether the claim was correctly coded, submitted, and reimbursed. For purposes of calculating the size of the Full Sample, the Discovery Sample may serve as the probe sample, if statistically appropriate. Additionally, the IRO may use the Paid Claims sampled as part of the Discovery Sample, and the corresponding findings for those Paid Claims, as part of its Full Sample, if: (1) statistically appropriate and (2) the IRO selects the Full Sample Paid Claims using the seed number generated by the Discovery Sample. OIG, in its sole discretion, may refer the findings of the Full Sample (and any related workpapers) received from OFX to the appropriate Federal health care program payor, including the Medicare contractor (e.g., carrier, fiscal intermediary, or Durable Medical Equipment Medicare Administrative Contractor, as applicable), for appropriate follow-up by that payor.
4. Systems Review. If the Discovery Sample identifies an Error Rate of 5% or greater, Orthofixs IRO shall also conduct a Systems Review. The Systems Review shall consist of the following:
a. a review of OFXs billing and coding systems and processes relating to claims submitted to Federal health care programs (including, but not limited to, the operation of the billing system, the process by which claims are coded, safeguards to ensure proper coding, claims submission and billing; and procedures to identify and correct inaccurate coding and billing);
b. for each claim in the Discovery Sample and Full Sample that resulted in an Overpayment, the IRO shall review the
system(s) and process(es) that generated the claim and identify any problems or weaknesses that may have resulted in the identified Overpayments. The IRO shall provide its observations and recommendations on suggested improvements to the system(s) and the process(es) that generated the claim.
5. Other Requirements.
a. Supplemental Materials. The IRO shall request all documentation and materials required for its review of the Paid Claims selected as part of the Discovery Sample or Full Sample (if applicable), and OFX shall furnish such documentation and materials to the IRO prior to the IRO initiating its review of the Discovery Sample or Full Sample (if applicable). If the IRO accepts any supplemental documentation or materials from OFX after the IRO has completed its initial review of the Discovery Sample or Full Sample (if applicable) (Supplemental Materials), the IRO shall identify in the Claims Review Report the Supplemental Materials, the date the Supplemental Materials were accepted, and the relative weight the IRO gave to the Supplemental Materials in its review. In addition, the IRO shall include a narrative in the Claims Review Report describing the process by which the Supplemental Materials were accepted and the IROs reasons for accepting the Supplemental Materials.
b. Paid Claims without Supporting Documentation. Any Paid Claim for which OFX cannot produce documentation sufficient to support the Paid Claim shall be considered an error and the total reimbursement received by OFX for such Paid Claim shall be deemed an Overpayment. Replacement sampling for Paid Claims with missing documentation is not permitted.
c. Use of First Samples Drawn. For the purposes of all samples (Discovery Sample(s) and Full Sample(s)) discussed in this Appendix, the Paid Claims selected in each first sample shall be used (i.e., it is not permissible to generate more than one list of random samples and then select one for use with the Discovery Sample or Full Sample).
6. Repayment of Identified Overpayments. Orthofix shall repay within 60 days any Overpayment(s) identified in the Discovery Sample or the Full Sample (if applicable), regardless of the Error Rate, to the appropriate payor and in accordance with payor refund policies. Orthofix shall make available to OIG all documentation that reflects the refund of the Overpayment(s) to the payor.
B. Claims Review Report. The IRO shall prepare a Claims Review Report as described in this Appendix for each Claims Review performed. The following information shall be included in the Claims Review Report for each Discovery Sample and Full Sample (if applicable).
1. Claims Review Methodology.
a. Claims Review Population. A description of the Population subject to the Claims Review.
b. Claims Review Objective. A clear statement of the objective intended to be achieved by the Claims Review.
c. Source of Data. A description of the specific documentation relied upon by the IRO when performing the Claims Review (e.g., medical records, physician orders, certificates of medical necessity, requisition forms, local medical review policies (including title and policy number), CMS program memoranda (including title and issuance number), Medicare carrier or intermediary manual or bulletins (including issue and date), other policies, regulations, or directives).
d. Review Protocol. A narrative description of how the Claims Review was conducted and what was evaluated.
e. Supplemental Materials. A description of any Supplemental Materials as required by A.5.a., above.
2. Statistical Sampling Documentation.
a. A copy of the printout of the random numbers generated by the Random Numbers function of the statistical sampling software used by the IRO.
b. A copy of the statistical software printout(s) estimating how many Paid Claims are to be included in the Full Sample, if applicable.
c. A description or identification of the statistical sampling software package used to select the sample and determine the Full Sample size, if applicable.
3. Claims Review Findings.
a. Narrative Results.
i. A description of OFXs billing and coding system(s), including the identification, by position description, of the personnel involved in coding and billing.
ii. A narrative explanation of the IROs findings and supporting rationale (including reasons for errors, patterns noted, etc.) regarding the Claims Review, including the results of the Discovery Sample, and the results of the Full Sample (if any).
b. Quantitative Results.
i. Total number and percentage of instances in which the IRO determined that the Paid Claims submitted by OFX (Claim Submitted) differed from what should have been the correct claim (Correct Claim), regardless of the effect on the payment.
ii. Total number and percentage of instances in which the Claim Submitted differed from the Correct Claim and in which such difference resulted in an Overpayment to Orthofix.
iii. Total dollar amount of all Overpayments in the sample.
iv. Total dollar amount of Paid Claims included in the sample and the net Overpayment associated with the sample.
v. Error Rate in the sample.
vi. A spreadsheet of the Claims Review results that includes the following information for each Paid Claim: Federal health care program billed, beneficiary health
insurance claim number, date of service, code submitted (e.g., DRG, CPT code, etc.), code reimbursed, allowed amount reimbursed by payor, correct code (as determined by the IRO), correct allowed amount (as determined by the IRO), dollar difference between allowed amount reimbursed by payor and the correct allowed amount.
c. Recommendations. The IROs report shall include any recommendations for improvements to OFXs billing and coding system based on the findings of the Claims Review.
4. Systems Review Findings. The IRO shall prepare a Systems Review Report based on the Systems Review performed (if applicable) that shall include the IROs observations, findings, and recommendations regarding:
a. the strengths and weaknesses in OFXs billing systems and processes;
b. the strengths and weaknesses in OFXs coding systems and processes; and
c. possible improvements to OFXs billing and coding systems and processes to address the specific problems or weaknesses that resulted in the identified Overpayments.
5. Credentials. The names and credentials of the individuals who: (1) designed the statistical sampling procedures and the review methodology utilized for the Claims Review and (2) performed the Claims Review.
APPENDIX C
ARRANGEMENTS REVIEW
The Arrangements Review shall consist of two components: a systems review and a transactions review. The IRO shall perform all components of each Arrangements Review. If there are no material changes to OFXs or OSIs systems, processes, policies, and procedures relating to Arrangements, the Arrangements Systems Review shall be performed for the first and fourth Reporting Periods. If Orthofix materially changes the Arrangements systems, processes, policies and procedures, the IRO shall perform an Arrangements Systems Review for the Reporting Period in which such changes were made in addition to conducting the systems review for the first and fourth Reporting Periods. The Arrangements Transactions Review shall be performed annually and shall cover each of the five Reporting Periods.
A. Arrangements Systems Review. The Arrangements Systems Review shall be a review of OFXs and OSIs systems, processes, policies, and procedures relating to the initiation, review, approval, and tracking of Arrangements. Specifically, the IRO shall review the following:
1. OFXs and OSIs systems, policies, processes, and procedures with respect to creating and maintaining a centralized tracking system for all existing and new and renewed Focus Arrangements (Focus Arrangements Tracking System), including a detailed description of the information captured in the Focus Arrangements Tracking System;
2. OFXs and OSIs systems, policies, processes, and procedures for tracking remuneration to and from all parties to Focus Arrangements;
3. OFXs and OSIs systems, policies, processes, and procedures for tracking service and activity logs to ensure that parties to the Focus Arrangement are performing the services required under the applicable Focus Arrangement(s) (if applicable);
4. OFXs and OSIs systems, policies, processes, and procedures for monitoring the use of leased space, medical supplies, medical devices, equipment, or other patient care items to ensure that such use is consistent with the terms of the applicable Focus Arrangement(s) (if applicable);
Corporate Integrity Agreement Appendix C |
|
Orthofix |
|
5. OFXs and OSIs systems, policies, processes, and procedures for initiating Focus Arrangements, including those policies that identify the individuals with authority to initiate a Focus Arrangement and that specify the business need or business rationale required to initiate a Focus Arrangement;
6. OFXs and OSIs systems, policies, processes, and procedures for the internal review and approval of all Focus Arrangements, including those policies that identify the individuals required to approve each type or category of Focus Arrangement entered into by OFX or OSI, the internal controls designed to ensure that all required approvals are obtained, and the processes for ensuring that all Focus Arrangements are subject to a legal review by counsel with expertise in the Anti-Kickback Statute and Stark Law;
7. the Compliance Officers annual review of and reporting to the Compliance Committee on the Focus Arrangements Tracking System, Orthofixs internal review and approval process, and other Arrangements systems, process, policies, and procedures;
8. OFXs and OSIs systems, policies, processes, and procedures for implementing effective responses when suspected violations of the Anti-Kickback Statute and Stark Law are discovered, including disclosing Reportable Events and quantifying and repaying Overpayments when appropriate; and
9. OFXs and OSIs systems, policies, processes, and procedures for ensuring that all new and renewed Focus Arrangements comply with the Focus Arrangements Requirements set forth in Sections III.D.2 and 3 of the CIA.
B. Arrangements Systems Review Report. The IRO shall prepare a report based upon each Arrangements Systems Review performed. The Arrangements Systems Review Report shall include the following information:
1. a description of the documentation (including policies) reviewed and personnel interviewed;
2. a detailed description of OFXs and OSIs systems, policies, processes, and procedures relating to the items identified in Section A.1-9 above;
3. findings and supporting rationale regarding weaknesses in OFXs or OSIs systems, processes, policies, and procedures relating to Arrangements described in Section A.1-9 above; and
4. recommendations to improve OFXs and OSIs systems, policies, processes, or procedures relating to Arrangements described in Section A.1-9 above.
The IRO may prepare a single report with respect to both OFX and OSI, and may review OFX and OSI jointly.
C. Arrangements Transactions Review. The Arrangements Transactions Review shall consist of a review by the IRO of 75 randomly selected Focus Arrangements that were entered into or renewed by OFX or OSI during the Reporting Period.
The 75 Focus Arrangements shall be divided into two strata. The first stratum shall consist of 40 Arrangements between OFX or OSI and physicians. The second stratum shall consist of 35 Arrangements between OFX or OSI and any other source of federal health care program referrals.
The IRO shall assess whether Orthofix has complied with the Focus Arrangements Procedures and the Focus Arrangements Requirements described in Sections III.D.2 and 3 of the CIA, with respect to the selected Focus Arrangements.
The IROs assessment with respect to each Focus Arrangement that is subject to review shall include:
1. verifying that the Focus Arrangement is maintained in Orthofixs centralized tracking system in a manner that permits the IRO to identify the parties to the Focus Arrangement and the relevant terms of the Focus Arrangement (i.e., the items/services/equipment/space to be provided, the amount of compensation, the effective date, the expiration date, etc.)
2. verifying that the Focus Arrangement was subject to the internal review and approval process (including both a legal and business review) and obtained the necessary approvals and that such review and approval is appropriately documented;
3 verifying that the remuneration related to the Focus Arrangement is properly tracked;
4 verifying that the service and activity logs are properly completed and reviewed (if applicable);
5. verifying that leased space, medical supplies, medical devices, and equipment, and other patient care items are properly monitored (if applicable); and
6. verifying that the Focus Arrangement satisfies the Focus Arrangements Requirements of Section III.D.2 and 3 of the CIA.
D. Arrangements Transaction Review Report. The IRO shall prepare a report based on each Arrangements Transactions Review performed. The Arrangements Transaction Review Report shall include the following information:
1. Review Methodology.
a. Review Protocol. A detailed narrative description of the procedures performed and a description of the sampling unit and universe utilized in performing the procedures for the sample reviewed.
b. Sources of Data. A full description of the documentation and other information, if applicable, relied upon by the IRO in performing the Arrangements Transaction Review.
c. Supplemental Materials. The IRO shall request all documentation and materials required for its review of the Focus Arrangements selected as part of the Arrangements Transaction Review and Orthofix shall furnish such documentation and materials to the IRO, prior to the IRO initiating its review of the Focus Arrangements. If the IRO accepts any supplemental documentation or materials from Orthofix after the IRO has completed its initial review of the Focus Arrangements (Supplemental Materials), the IRO shall identify in the Arrangements Transaction Review Report the Supplemental Materials, the date the Supplemental Materials were accepted, and the relative weight the IRO gave to the Supplemental Materials in its review. In addition, the IRO shall include a narrative in the Arrangements Transaction Review Report describing the process by which the Supplemental Materials were accepted and the IROs reasons for accepting the Supplemental Materials.
2. Review Findings. The IROs findings shall state whether Orthofix has complied with the Focus Arrangements Procedures and Focus Arrangements Requirements with respect to each of the randomly selected Focus Arrangements reviewed by the IRO. In addition, the Arrangements Transactions Review Report shall include observations, findings and recommendations on possible improvements to Orthofixs policies, procedures, and systems in place to ensure that all Focus Arrangements comply with the Focus Arrangements Procedures and Focus Arrangements Requirements.
3. Report. The IRO may prepare a single report with respect to both OFX and OSI, and may review OFX and OSI jointly.