Exhibit 10.1

CORPORATE INTEGRITY AGREEMENT

BETWEEN THE

OFFICE OF INSPECTOR GENERAL

OF THE

DEPARTMENT OF HEALTH AND HUMAN SERVICES

AND

ROTECH HEALTHCARE INC.

 

I. PREAMBLE

Rotech Healthcare Inc. (Rotech) 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 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). Contemporaneously with this CIA,
Rotech is entering into a Settlement Agreement with the United States.

 

II. TERM AND SCOPE OF THE CIA

A. The period of the compliance obligations assumed by Rotech under this CIA
shall be three years from the effective date of this CIA, unless otherwise
specified. The effective date shall be the date on which the final signatory of
this CIA executes this CIA (Effective Date). 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, IX, X, and XI shall expire no later than 120 days after OIG’s
receipt of: (1) Rotech’s final annual report; or (2) any additional materials
submitted by Rotech pursuant to OIG’s request, whichever is later.

C. The scope of this CIA shall be governed by the following definitions:

1. “Covered Persons” includes:

a. all owners (other than shareholders who: (1) have an ownership interest of
less than 5%; and (2) acquired the ownership through public trading), officers,
directors, and employees of Rotech; and

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b. all contractors, subcontractors, agents, and other persons who provide
patient care items or services or who perform billing or coding functions on
behalf of Rotech.

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.

2. “Relevant Covered Persons” includes all Covered Persons who are:

 

  a. Involved in billing, coding, or claims submission functions on behalf of
Rotech;

 

  b. Involved with preparation or completion of documentation to support claims
submitted to Federal health care programs.

 

III. CORPORATE INTEGRITY OBLIGATIONS

Rotech shall establish and maintain a Compliance Program that includes the
following elements:

A. Compliance Management and Oversight.

1. Compliance Officer. Rotech shall continue to have an individual serve as its
Compliance Officer and shall maintain a Compliance Officer for the term of the
CIA. The 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
requirements. The Compliance Officer shall be a member of senior management of
Rotech, shall make periodic (at least quarterly) reports regarding compliance
matters directly to the Board of Directors of Rotech, and shall be authorized to
report on such matters to the Board of Directors at any time. The Compliance
Officer shall not be or be subordinate to the General Counsel or Chief Financial
Officer. The Compliance Officer shall be responsible for monitoring the
day-to-day compliance activities engaged in by Rotech as well as for any
reporting obligations created under this CIA.

 

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Rotech shall report to OIG, in writing, any changes in the identity or position
description of the Compliance Officer, or any actions or changes that would
affect the Compliance Officer’s ability to perform the duties necessary to meet
the obligations in this CIA, within 30 days after such a change.

2. Compliance Committee. Rotech shall continue to maintain a Compliance
Committee. The Compliance Committee shall, at a minimum, include the 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, clinical, human resources, audit, and operations). The Compliance
Officer shall chair the Compliance Committee and the Committee shall support the
Compliance Officer in fulfilling his/her responsibilities (e.g., shall assist in
the analysis of the organization’s risk areas and shall oversee monitoring of
internal and external audits and investigations).

Rotech 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
Committee’s ability to perform the duties necessary to meet the obligations in
this CIA, within 30 days after such a change.

3. Board of Directors. The Rotech Board of Directors shall be responsible for
the review and oversight of matters related to compliance with Federal health
care program requirements and the obligations of this CIA. The Board of
Directors shall, at a minimum, be responsible for the following:

 

  a. The Board of Directors shall meet at least quarterly and shall review and
oversee Rotech’s compliance program, including but not limited to the
performance of the Compliance Officer, the Compliance Committee, and the
Compliance Department.

 

  b. For each Reporting Period of the CIA, the Board of Directors shall adopt a
resolution, signed by each individual member of the Board, summarizing its
review and oversight of Rotech’s compliance with Federal health care program
requirements and the obligations of the CIA. At a minimum, the resolution shall
include the following language:

“The Board of Directors has made reasonable and due inquiry into the operations
of Rotech’s compliance program, including

 

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the performance of the Compliance Officer, the Compliance Committee, and the
Compliance Department. As a result, the Board has concluded that, to the best of
its knowledge, Rotech has implemented an effective compliance program to meet
Federal health care program requirements and the obligations of this CIA.”

If the Board is unable to provide such a conclusion in the resolution, the Board
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 Rotech.

Rotech shall report to OIG, in writing, any changes in the composition of the
Board, or any actions or changes that would affect the Board’s ability to
perform the duties necessary to meet the obligations in this CIA, within 30 days
after such a change.

B. Written Standards.

1. Code of Conduct. Rotech shall continue to develop, implement, and distribute
a written Code of Conduct to all Covered Persons. Rotech shall 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. Rotech’s commitment to full compliance with all Federal health care program
requirements, including its commitment to prepare and submit accurate claims
consistent with such requirements;

b. Rotech’s requirement that all of its Covered Persons shall be expected to
comply with all Federal health care program requirements and with Rotech’s own
Policies and Procedures as implemented pursuant to Section III.B (including the
requirements of this CIA);

c. the requirement that all of Rotech’s Covered Persons shall be expected to
report to the Compliance Officer, or other appropriate individual designated by
Rotech, suspected violations of any Federal health care program requirements or
of Rotech’s own Policies and Procedures;

 

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d. the possible consequences to both Rotech and Covered Persons of failure to
comply with Federal health care program requirements and with Rotech’s own
Policies and Procedures and the failure to report such noncompliance; and

e. the right of all individuals to use the Disclosure Program described in
Section III.E, and Rotech’s commitment to nonretaliation and to maintain, as
appropriate, confidentiality and anonymity with respect to such disclosures.

Within 90 days after the Effective Date, each Covered Person shall certify, in
writing or electronically, that he or she has received, read, understood, and
shall abide by Rotech’s Code of Conduct. New Covered Persons shall receive the
Code of Conduct and shall complete the required certification within 60 days
after becoming a Covered Person or within 120 days after the Effective Date,
whichever is later.

Rotech 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 in writing or electronically within
60 days after any revisions are finalized. Each Covered Person shall certify, in
writing or electronically, that he or she has received, read, understood, and
shall abide by the revised Code of Conduct within 60 days after the distribution
of the revised Code of Conduct.

If, pursuant to Rotech’s Compliance Program, on or after February 1, 2008,
Rotech distributed the Code of Conduct and obtained certifications from each
Covered Person that he or she received, read, understood and shall abide by
Rotech’s Code of Conduct and the distribution and the certification satisfied
the requirements set forth above in this Section, then the OIG shall credit that
distribution as distribution and certification for purposes of satisfying
Rotech’s obligations under this Section for the first Reporting Period of this
CIA.

 

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2. Policies and Procedures. Rotech shall continue to maintain and implement
written Policies and Procedures regarding the operation of Rotech’s compliance
program and its compliance with Federal health care program requirements. Within
90 days of the Effective Date, Rotech shall review its existing policies and
procedures, and amend them as necessary, to ensure that they, at a minimum,
shall address:

a. the subjects relating to the Code of Conduct identified in Section III.B.1;

b. the applicable Federal health care program requirements governing coverage
and reimbursement of oxygen;

c. the applicable Federal health care program requirements providing for proper
completion of documentation necessary to support the submission and
reimbursement of claims;

d. the expectation that all Covered Persons shall comply with the Code of
Conduct, the Policies and Procedures required under this Section, and this CIA;

e. all risk areas under the Federal health care programs associated with the
provision and reimbursement of home oxygen and other durable medical equipment
and supplies.

Within 60 days after the Effective Date, the relevant portions of the Policies
and Procedures shall be distributed in writing or electronically, which includes
posting the Policies and Procedures to Rotech’s intranet, 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), Rotech shall assess and
update, as necessary, the Policies and Procedures. Within 60 days after the
effective date of any revisions, the relevant portions of any such revised
Policies and Procedures shall be distributed in writing or electronically, which
includes posting the Policies and Procedures to Rotech’s intranet, to all
Covered Persons whose job functions relate to those Policies and Procedures.

 

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C. Training and Education.

1. General Training. Within 90 days after the Effective Date, Rotech shall
provide at least one hour of General Training to each Covered Person. This
training, at a minimum, shall explain Rotech’s:

a. CIA requirements; and

b. Rotech’s Compliance Program (including the Code of Conduct and the Policies
and Procedures as they pertain to general compliance issues).

New Covered Persons shall receive the General Training described above within 60
days after becoming a Covered Person or within 90 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 90 days after the Effective Date, each Relevant
Covered Person shall receive at least two hours of Specific Training in addition
to the General Training required above. This Specific Training shall include a
discussion of:

a. the Federal health care program requirements regarding the accurate coding
and submission of claims;

b. applicable reimbursement statutes, regulations, and program requirements and
directives;

c. the Federal health care program requirements governing coverage and
reimbursement of oxygen;

d. the proper completion of documentation necessary to support the reimbursement
of claims;

e. the personal obligation of each individual involved in the claims submission
process to ensure that such claims are accurate;

f. the legal sanctions for violations of the Federal health care program
requirements; and

 

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g. examples of proper and improper claims submission practices.

New Relevant Covered Persons shall receive this training within 60 days after
the beginning of their employment or becoming Relevant Covered Persons, or
within 90 days after the Effective Date, whichever is later. A Rotech employee
who has completed the Specific Training shall review a new Relevant Covered
Person’s work, to the extent that the work relates to the delivery of patient
care items or services and/or the preparation or submission of claims for
reimbursement from any Federal health care program, until such time as the new
Relevant Covered Person completes his or her Specific Training.

After receiving the initial Specific Training described in this Section, each
Relevant Covered Person shall receive at least two hours of Specific Training in
each subsequent Reporting Period.

3. 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 Compliance Officer (or designee)
shall retain the certifications, along with all course materials. These shall be
made available to OIG, upon request.

4. Qualifications of Trainer. Persons providing the training shall be
knowledgeable about all relevant subject areas.

5. Update of Training. Rotech 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 or the Claims
Review, Unallowable Cost Review, and any other relevant information.

6. Computer-based Training. Rotech may provide the training required under this
CIA through appropriate computer-based training approaches. If Rotech 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.

 

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D. Review Procedures.

1. General Description.

a. Engagement of Independent Review Organization. Within 90 days after the
Effective Date, Rotech shall engage an entity (or entities), such as an
accounting, auditing, or consulting firm (hereinafter “Independent Review
Organization” or “IRO”), to perform reviews to assist Rotech in assessing and
evaluating its billing and coding practices and certain other obligations
pursuant to this CIA and the Settlement Agreement. The applicable requirements
relating to the IRO are outlined in Appendix A to this CIA, which is
incorporated by reference.

The IRO shall evaluate and analyze Rotech’s coding, billing, and claims
submission to the Medicare program and the reimbursement received (Claims
Review), and shall analyze whether Rotech sought payment for certain unallowable
costs (Unallowable Cost Review), if applicable.

b. Frequency of Claims Review. The Claims Review shall be performed annually and
shall cover each of the Reporting Periods. The IRO(s) shall perform all
components of each annual Claims Review.

c. Frequency of Unallowable Cost Review. If applicable, the IRO shall perform
the Unallowable Cost Review for the first Reporting Period.

d. Retention of Records. The IRO and Rotech shall retain and make available to
OIG, upon request, all work papers, supporting documentation, correspondence,
and draft reports (those exchanged between the IRO and Rotech) related to the
reviews.

2. Claims Review. The Claims Review shall include a Discovery Sample of 50 Paid
Claims selected for review, and, if the Error Rate for the Discovery Sample is
5% or greater, a Full Sample and Systems Review. The applicable definitions,
procedures, and reporting requirements are outlined in Appendix B to this CIA,
which is incorporated by reference.

 

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3. Claims Review Report. The IRO shall prepare a report based upon the Claims
Review performed (Claims Review Report). Information to be included in the
Claims Review Report is described in Appendix B.

4. Repayment of Identified Overpayments. In accordance with Section III.H.1,
Rotech shall repay within 30 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. Rotech shall
make available to OIG all documentation that reflects the refund of the
Overpayment(s) to the payor.

5. Unallowable Cost Review. If applicable, the IRO shall conduct a review of
Rotech’s compliance with the unallowable cost provisions of the Settlement
Agreement. The IRO shall determine whether Rotech has complied with its
obligations not to charge to, or otherwise seek payment from, federal or state
payors for unallowable costs (as defined in the Settlement Agreement) and its
obligation to identify to applicable federal or state payors any unallowable
costs included in payments previously sought from the United States, or any
state Medicaid program. This unallowable cost analysis shall include, but not be
limited to, payments sought in any cost reports, cost statements, information
reports, or payment requests already submitted by Rotech or any affiliates. To
the extent that such cost reports, cost statements, information reports, or
payment requests, even if already settled, have been adjusted to account for the
effect of the inclusion of the unallowable costs, the IRO shall determine if
such adjustments were proper. In making this determination, the IRO may need to
review cost reports and/or financial statements from the year in which the
Settlement Agreement was executed, as well as from previous years.

6. Unallowable Cost Review Report. If applicable, the IRO shall prepare a report
based upon the Unallowable Cost Review performed. The Unallowable Cost Review
Report shall include the IRO’s findings and supporting rationale regarding the
Unallowable Costs Review and whether Rotech has complied with its obligation not
to charge to, or otherwise seek payment from, federal or state payors for
unallowable costs (as defined in the Settlement Agreement) and its obligation to
identify to applicable federal or state payors any unallowable costs included in
payments previously sought from such payor.

7. Validation Review. In the event OIG has reason to believe that: (a) Rotech’s
Claims Review and/or Unallowable Cost Review, if applicable, fails to conform

 

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to the requirements of this CIA; or (b) the IRO’s findings or results of its
Claims Review and/or Unallowable Cost Review are inaccurate, OIG may, at its
sole discretion, conduct its own review to determine whether the Claims Review
and/or Unallowable Cost Review complied with the requirements of the CIA and/or
the findings or results of the Claims Review and/or Unallowable Cost Review are
inaccurate (Validation Review). Rotech shall pay for the reasonable cost of any
such review performed by OIG or any of its designated agents. Any Validation
Review of Reports submitted as part of Rotech’s final Annual Report shall be
initiated no later than one year after Rotech’s final submission (as described
in Section II) is received by OIG.

Prior to initiating a Validation Review, OIG shall notify Rotech 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, Rotech may request a meeting
with OIG to: (a) discuss the results of any Claims Review and/or Unallowable
Cost Review submissions or findings; (b) present any additional information to
clarify the results of the Claims Review and/or Unallowable Cost Review or to
correct the inaccuracy of the Claims Review and/or Unallowable Cost Review;
and/or (c) propose alternatives to the proposed Validation Review. Rotech agrees
to provide any additional information as may be requested by OIG under this
Section III.D.6 in an expedited manner. OIG will attempt in good faith to
resolve any Claims Review and/or Unallowable Cost Review issues with Rotech
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.

8. Independence and Objectivity Certification. The IRO shall include in its
report(s) to Rotech a certification or sworn affidavit that it has evaluated its
professional independence and objectivity, as appropriate to the nature of the
engagement, with regard to the Claims Review and/or Unallowable Cost Review and
that it has concluded that it is, in fact, independent and objective.

E. Disclosure Program.

Rotech shall continue to maintain a Disclosure Program that includes a mechanism
(e.g., a toll-free compliance telephone line) to enable individuals to disclose,
to the Compliance Officer or some other person who is not in the disclosing
individual’s chain of command, any identified issues or questions associated
with Rotech’s policies, conduct, practices, or procedures with respect to a
Federal health care program believed by the individual to be a potential
violation of criminal, civil, or administrative law. Rotech 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).

 

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The Disclosure Program shall emphasize a nonretribution, nonretaliation policy,
and shall include a reporting mechanism for anonymous communications for which
appropriate confidentiality shall be maintained. Upon receipt of a disclosure,
the Compliance Officer (or designee) shall gather all relevant information from
the disclosing individual. The 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, Rotech shall conduct
an internal review of the allegations set forth in the disclosure and ensure
that proper follow-up is conducted.

The 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. The disclosure log
shall be made available to OIG upon request.

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 ambit 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

 

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ii. the General Services Administration’s List of Parties Excluded from Federal
Programs (available through the Internet at http://www.epls.gov).

c. “Screened Persons” include prospective and current owners (other than
shareholders who: (1) have an ownership interest of less than 5%; and
(2) acquired the ownership through public trading), officers, directors,
employees, contractors, and agents of Rotech.

2. Screening Requirements. Rotech shall ensure that all Screened Persons are not
Ineligible Persons, by implementing the following screening requirements.

a. Rotech shall screen all Screened Persons against the Exclusion Lists prior to
engaging their services and, as part of the hiring or contracting process, shall
require such Screened Persons to disclose whether they are Ineligible Persons.

b. Rotech shall screen all Screened Persons against the Exclusion Lists within
90 days after the Effective Date and on an annual basis thereafter.

c. Rotech shall implement a policy requiring all Screened Persons to disclose
immediately any debarment, exclusion, suspension, or other event that makes that
person an Ineligible Person.

Nothing in this Section affects the responsibility of (or liability for) Rotech
to refrain from billing Federal health care programs for items or services
furnished, ordered, or prescribed by an Ineligible Person. Rotech understands
that items or services furnished by excluded persons are not payable by Federal
health care programs and that Rotech may be liable for overpayments and/or
criminal, civil, and administrative sanctions for employing or contracting with
an excluded person regardless of whether Rotech meets the requirements of
Section III.F.

3. Removal Requirement. If Rotech has actual notice that a Screened Person has
become an Ineligible Person, Rotech shall remove such Screened Person from

 

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responsibility for, or involvement with, Rotech’s business operations related to
the Federal health care programs and shall remove such Screened Person from any
position for which the Screened Person’s compensation or the items or services
furnished, ordered, or prescribed by the Screened 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 Screened Person is reinstated into
participation in the Federal health care programs.

4. Pending Charges and Proposed Exclusions. If Rotech has actual notice that a
Screened Person is charged with a criminal offense that falls within the ambit
of 42 U.S.C. §§ 1320a-7(a), 1320a-7(b)(1)-(3), or is proposed for exclusion
during the Screened Person’s employment or contract term, Rotech shall take all
appropriate actions to ensure that the responsibilities of that Screened 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, Rotech shall notify OIG, in writing, of any
ongoing investigation or legal proceeding known to Rotech conducted or brought
by a governmental entity or its agents involving an allegation that Rotech 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.
Rotech 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. Reporting.

1. Overpayments.

a. Definition of Overpayments. For purposes of this CIA, an “Overpayment” shall
mean the amount of money Rotech has received in excess of the amount due and
payable under any Federal health care program requirements.

b. Reporting of Overpayments. If, at any time, Rotech identifies or learns of
any Overpayment, Rotech shall notify the payor (e.g., Durable Medical Equipment
Medicare Administrative Contractors

 

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(DME MAC), fiscal intermediary or carrier) within 30 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. Also, within 30 days after identification of the Overpayment, Rotech
shall repay the Overpayment to the appropriate payor to the extent such
Overpayment has been quantified. If not yet quantified, within 30 days after
identification, Rotech 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 payor’s policies, and, for Medicare contractors, shall include the
information contained on the Overpayment Refund Form, provided as Appendix C to
this CIA. 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.

2. Reportable Events.

a. Definition of Reportable Event. For purposes of this CIA, a “Reportable
Event” means anything that involves:

i. a substantial Overpayment;

ii. a matter that a reasonable person would consider a probable violation of
criminal, civil, or administrative laws applicable to any Federal health care
program for which penalties or exclusion may be authorized; or

iii. the filing of a bankruptcy petition by Rotech.

A Reportable Event may be the result of an isolated event or a series of
occurrences.

b. Reporting of Reportable Events. If Rotech determines (after a reasonable
opportunity to conduct an appropriate review or

 

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investigation of the allegations) through any means that there is a Reportable
Event, Rotech shall notify OIG, in writing, within 30 days after making the
determination that the Reportable Event exists. The report to OIG shall include
the following information:

i. If the Reportable Event results in an Overpayment, the report to OIG shall be
made at the same time as the notification to the payor required in Section
III.H.1, and shall include all of the information on the Overpayment Refund
Form, as well as:

(A) the payor’s name, address, and contact person to whom the Overpayment was
sent; and

(B) the date of the check and identification number (or electronic transaction
number) by which the Overpayment was repaid/refunded;

ii. a complete description of the Reportable Event, including the relevant
facts, persons involved, and legal and Federal health care program authorities
implicated;

iii. a description of Rotech’s actions taken to correct the Reportable Event;
and

iv. any further steps Rotech plans to take to address the Reportable Event and
prevent it from recurring.

v. If the Reportable Event involves the filing of a bankruptcy petition, the
report to the OIG shall include documentation of the filing and a description of
any Federal health care program authorities implicated.

 

IV. CHANGES TO BUSINESS UNITS OR LOCATIONS

A. Change or Closure of Unit or Location. In the event that, after the Effective
Date, Rotech 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, Rotech 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.

 

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B. Purchase or Establishment of New Unit or Location. In the event that, after
the Effective Date, Rotech 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, Rotech shall notify OIG as soon as possible,
but no later than 15 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, National Provider
Identifier, Medicare Provider number, provider identification number and/or
supplier number, and the name and address of the contractor that issued each
number. 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, Rotech
proposes to sell any or all of its business units or locations that are subject
to this CIA, Rotech shall notify OIG of the proposed sale as soon as possible,
but no later than 15 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 120 days after the Effective Date, Rotech 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 Compliance
Officer required by Section III.A, and a summary of other noncompliance job
responsibilities the Compliance Officer may have;

2. the names and positions of the members of the Compliance Committee required
by Section III.A;

3. the names of the individuals serving on Rotech’s Board of Directors;

 

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4. a copy of Rotech’s Code of Conduct required by Section III.B.1;

5. a copy of all Policies and Procedures required by Section III.B.2;

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 available to OIG, upon
request);

7. 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 available to OIG, upon request.

8. a description of the Disclosure Program required by Section III.E;

9. the following information regarding the IRO(s): (a) identity, address, and
phone number; (b) a copy of the engagement letter; and (c) a summary and
description of any and all current and prior engagements and agreements between
Rotech and the IRO;

10. a certification from the IRO regarding its professional independence and
objectivity with respect to Rotech;

11. a description of the process by which Rotech fulfills the requirements of
Section III.F regarding Ineligible Persons;

12. 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; and the actions
taken to identify, quantify, and repay any overpayments to Federal health care
programs relating to items or services furnished, ordered or prescribed by an
Ineligible Person;

 

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13. a list of all of Rotech’s locations (including locations and mailing
addresses); the corresponding name under which each location is doing business;
the corresponding phone numbers and fax numbers; each location’s National
Provider Identifier, Medicare Provider number(s), provider identification
number(s), and/or supplier number(s); and the name and address of each Medicare
contractor to which Rotech currently submits claims;

14. a description of Rotech’s corporate structure, including identification of
any parent and sister companies, subsidiaries, and their respective lines of
business; and

15. the certifications required by Section V.C.

B. Annual Reports. Rotech shall submit to OIG annually a report with respect to
the status of, and findings regarding, Rotech’s compliance activities for each
of the three Reporting Periods (Annual Report).

Each Annual Report shall include, at a minimum:

1. any change in the identity, position description, or other noncompliance job
responsibilities of the Compliance Officer, any change in the membership of the
Compliance Committee, and any change in the membership of the Board of Directors
described in Section III.A;

2. a copy of the Board of Directors’ resolution pursuant to Section III.A.3;

3. a summary of any significant changes or amendments to the Policies and
Procedures required by Section III.B and the reasons for such changes (e.g.,
change in contractor policy);

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 available to OIG, upon
request);

5. 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;

 

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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 available to OIG, upon request.

6. a complete copy of all reports prepared pursuant to Section III.D, along with
a copy of the IRO’s engagement letter;

7. Rotech’s response and corrective action plan(s) related to any issues raised
by the reports prepared pursuant to Section III.D;

8. a summary and description of any and all current and prior engagements and
agreements between Rotech and the IRO, if different from what was submitted as
part of the Implementation Report;

9. a certification from the IRO regarding its professional independence and
objectivity with respect to Rotech;

10. a summary of Reportable Events (as defined in Section III.H) identified
during the Reporting Period and the status of any corrective and preventative
action relating to all such Reportable Events;

11. 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: Medicare, 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 do not need to be included in this aggregate
Overpayment report;

12. a summary of the disclosures in the disclosure log required by Section III.E
that: (a) relate to Federal health care programs; or (b) allege abuse or neglect
of patients;

13. any changes to the process by which Rotech fulfills the requirements of
Section III.F regarding Ineligible Persons;

 

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14. the name, title, and responsibilities of any person who is determined to be
an Ineligible Person under Section III.F; the actions taken by Rotech in
response to the screening and removal obligations set forth in Section III.F;
and the actions taken to identify, quantify, and repay any overpayments to
Federal health care programs relating to items or services furnished, ordered or
prescribed by an Ineligible Person;

15. a summary describing any ongoing investigation or legal proceeding required
to have been reported pursuant to Section III.G. 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;

16. a description of all changes to the most recently provided list of Rotech’s
locations (including addresses) as required by Section V.A.12; the corresponding
name under which each location is doing business; the corresponding phone
numbers and fax numbers; each location’s National Provider Identifier, Medicare
Provider number(s), provider identification number(s), and/or supplier
number(s); and the name and address of each Medicare contractor to which Rotech
currently submits claims; and

17. the certifications required by Section 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 Annual Reports shall include a
certification by the Compliance Officer that:

1. to the best of his or her knowledge, except as otherwise described in the
applicable report, Rotech is in compliance with all of the requirements of this
CIA;

2. 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

3. to the best of his or her knowledge, Rotech has complied with its obligations
under the Settlement Agreement: (a) not to resubmit to any Federal health care
program payors any previously denied claims related to the Covered Conduct

 

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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) to identify and adjust any past charges or claims for unallowable costs;

D. Designation of Information. Rotech 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. Rotech 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

Rotech:

Robin Menchen

Chief Compliance Officer

Rotech Healthcare Inc.

2600 Technology Drive

Suite 300

Orlando, FL 32804

Phone: 407-822-4600

Fax: 407-297-8569

 

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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, Rotech 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), either instead of or 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 Rotech’s books, records, and other documents and supporting materials
and/or conduct on-site reviews of any of Rotech’s locations for the purpose of
verifying and evaluating: (a) Rotech’s compliance with the terms of this CIA;
and (b) Rotech’s compliance with the requirements of the Federal health care
programs in which it participates. The documentation described above shall be
made available by Rotech 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 Rotech’s employees, contractors, or agents who consent to be
interviewed at the individual’s 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. Rotech shall assist OIG or its duly authorized
representative(s) in contacting and arranging interviews with such individuals
upon OIG’s request. Rotech’s employees may elect to be interviewed with or
without a representative of Rotech present.

 

VIII.  DOCUMENT AND RECORD RETENTION

Rotech shall maintain for inspection all documents and records relating to
reimbursement from the Federal health care programs, or to compliance with this
CIA, for six years (or longer if otherwise required by law) from the Effective
Date.

 

IX. DISCLOSURES

Consistent with HHS’s FOIA procedures, set forth in 45 C.F.R. Part 5, OIG shall
make a reasonable effort to notify Rotech prior to any release by OIG of
information submitted by Rotech pursuant to its obligations under this CIA and
identified upon submission by Rotech as trade secrets, or information that is
commercial or financial and privileged or confidential, under the FOIA rules.
With respect to such releases, Rotech shall have the rights set forth at 45
C.F.R. § 5.65(d).

 

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X. BREACH AND DEFAULT PROVISIONS

Rotech 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, Rotech 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 Rotech fails to establish and
implement any of the following obligations as described in Section III:

a. a Compliance Officer;

b. a Compliance Committee;

c. a written Code of Conduct;

d. written Policies and Procedures;

e. the training of Covered Persons;

f. a Disclosure Program;

g. Ineligible Persons screening and removal requirements; and

h. notification of Government investigations or legal proceedings.

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 Rotech fails to engage an IRO,
as required in Section III.D and Appendix A.

 

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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 Rotech 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 Rotech fails to submit the
annual Claims Review Report in accordance with the requirements of Section III.D
and Appendix B.

5. A Stipulated Penalty of $1,500 for each day Rotech fails to grant access as
required in Section VII. (This Stipulated Penalty shall begin to accrue on the
date Rotech fails to grant access.)

6. A Stipulated Penalty of $20,000 for each false certification submitted by or
on behalf of Rotech 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 $2,500 for each day Rotech fails to comply with the
Board of Directors resolution obligations as required by Section III.A.3;

8. A Stipulated Penalty of $1,000 for each day Rotech fails to comply fully and
adequately with any obligation of this CIA. OIG shall provide notice to Rotech
stating the specific grounds for its determination that Rotech has failed to
comply fully and adequately with the CIA obligation(s) at issue and steps Rotech
shall take to comply with the CIA. (This Stipulated Penalty shall begin to
accrue 10 days after Rotech 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. Rotech 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 Rotech 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
Rotech

 

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receives OIG’s 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 Rotech 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 Rotech of: (a) Rotech’s failure to
comply; and (b) OIG’s exercise of its contractual right to demand payment of the
Stipulated Penalties (this notification is referred to as the “Demand Letter”).

2. Response to Demand Letter. Within 10 days after the receipt of the Demand
Letter, Rotech shall either: (a) cure the breach to OIG’s satisfaction and pay
the applicable Stipulated Penalties or (b) request a hearing before an HHS
administrative law judge (ALJ) to dispute OIG’s determination of noncompliance,
pursuant to the agreed upon provisions set forth below in Section X.E. In the
event Rotech elects to request an ALJ hearing, the Stipulated Penalties shall
continue to accrue until Rotech cures, to OIG’s 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
certified or cashier’s check, payable to: “Secretary of the Department of Health
and Human Services,” and submitted to OIG at the address set forth in Section
VI.

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 OIG’s decision that Rotech has materially
breached this CIA, which decision shall be made at OIG’s 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 Rotech to report a Reportable Event, take corrective action, and
make the appropriate refunds, as required in Section III.H;

 

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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.

2. Notice of Material Breach and Intent to Exclude. The parties agree that a
material breach of this CIA by Rotech constitutes an independent basis for
Rotech’s exclusion from participation in the Federal health care programs. Upon
a determination by OIG that Rotech has materially breached this CIA and that
exclusion is the appropriate remedy, OIG shall notify Rotech of: (a) Rotech’s
material breach; and (b) OIG’s intent to exercise its contractual right to
impose exclusion (this notification is hereinafter referred to as the “Notice of
Material Breach and Intent to Exclude”).

3. Opportunity to Cure. Rotech shall have 30 days from the date of receipt of
the Notice of Material Breach and Intent to Exclude to demonstrate to OIG’s
satisfaction that:

a. Rotech 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) Rotech has begun to take action to cure the material breach;
(ii) Rotech is pursuing such action with due diligence; and (iii) Rotech has
provided to OIG a reasonable timetable for curing the material breach.

 

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4. Exclusion Letter. If, at the conclusion of the 30-day period, Rotech fails to
satisfy the requirements of Section X.D.3, OIG may exclude Rotech from
participation in the Federal health care programs. OIG shall notify Rotech in
writing of its determination to exclude Rotech (this letter shall be referred to
hereinafter 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 Rotech’s 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, Rotech 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 OIG’s delivery to Rotech 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, Rotech 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, OIG’s 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 Rotech was in full and timely compliance with the obligations of
this CIA for which OIG demands payment; and (b) the period of noncompliance.
Rotech 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 Rotech to pay Stipulated Penalties, such Stipulated Penalties shall
become due and payable 20 days after the ALJ issues such a decision unless
Rotech 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.

 

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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 Rotech 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) Rotech had begun to take action to cure the
material breach within that period; (ii) Rotech has pursued and is pursuing such
action with due diligence; and (iii) Rotech provided to OIG within that period a
reasonable timetable for curing the material breach and Rotech 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 Rotech, only after a DAB
decision in favor of OIG. Rotech’s election of its contractual right to appeal
to the DAB shall not abrogate OIG’s authority to exclude Rotech upon the
issuance of an ALJ’s 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 Rotech 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. Rotech 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 Rotech, Rotech 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 DAB’s decision
(or the ALJ’s decision if not appealed) shall be considered final for all
purposes under this CIA.

 

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XI. EFFECTIVE AND BINDING AGREEMENT

Rotech and OIG agree as follows:

A. This CIA shall be binding on the successors, assigns, and transferees of
Rotech;

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 Rotech’s obligations under the CIA in the
event of Rotech’s cessation of participation in Federal health care programs. If
Rotech withdraws from participation in Federal health care programs and is
relieved of its CIA obligations by OIG, Rotech shall notify OIG at least 30 days
in advance of Rotech’s intent to reapply as a participating provider or supplier
with any Federal health care program. Upon receipt of such notification, OIG
shall evaluate whether the CIA should be reactivated or modified.

E. The undersigned Rotech signatories represent and warrant that they are
authorized to execute this CIA. The undersigned OIG signatory represents that he
is signing this CIA in his official capacity and that he is 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.

 

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ON BEHALF OF ROTECH HEALTHCARE INC.

 

 

     

 

Philip L. Carter       DATE President and Chief Executive Officer     Rotech
Healthcare Inc.    

 

   

 

Robin Menchen     DATE Chief Compliance Officer     Rotech Healthcare Inc.    

 

   

 

Roger Goldman, Esq.     DATE Latham & Watkins LLP     Counsel for Rotech
Healthcare Inc.    

 

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ON BEHALF OF THE OFFICE OF INSPECTOR GENERAL

OF THE DEPARTMENT OF HEALTH AND HUMAN SERVICES

 

 

     

 

Gregory E. Demske       DATE Assistant Inspector General for Legal Affairs    
Office of Inspector General     U. S. Department of Health and Human Services  
 

 

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APPENDIX A

INDEPENDENT REVIEW ORGANIZATION

This Appendix contains the requirements relating to the Independent Review
Organization (IRO) required by Section III.D of the CIA.

 

A. IRO Engagement.

Rotech shall engage an IRO that possesses the qualifications set forth in
Paragraph B, below, to perform the responsibilities in Paragraph C, below. The
IRO shall conduct the review in a professionally independent and objective
fashion, as set forth in Paragraph D. Within 30 days after OIG receives written
notice of the identity of the selected IRO, OIG will notify Rotech if the IRO is
unacceptable. Absent notification from OIG that the IRO is unacceptable, Rotech
may continue to engage the IRO.

If Rotech 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, Rotech shall submit
the information identified in Section V.A.8 of the CIA to OIG within 30 days of
engagement of the IRO. Within 30 days after OIG receives written notice of the
identity of the selected IRO, OIG will notify Rotech if the IRO is unacceptable.
Absent notification from OIG that the IRO is unacceptable, Rotech may continue
to engage the IRO.

 

B. IRO Qualifications.

The IRO shall:

1. assign individuals to conduct the Claims Review engagement and, if
applicable, the Unallowable Cost Review engagement, who have expertise in the
applicable laws and regulations relating to billing, coding, reporting and other
requirements governing coverage and reimbursement for oxygen, and in the general
requirements of the Federal health care program(s) from which Rotech 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 coding review portions of the Claims Review
who have a nationally recognized coding certification (e.g., CCA, CCS, CCS-P,
CPC, RRA, etc.) and who have maintained this certification (e.g., completed
applicable continuing education requirements); and

Rotech Healthcare Inc. - CIA Appendix A

 

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4. have sufficient staff and resources to conduct the reviews required by the
CIA on a timely basis.

 

C. IRO Responsibilities.

The IRO shall:

1. perform each Claim 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 Federal
health care program policy or regulation, request clarification from the
appropriate authority (e.g., fiscal intermediary or carrier);

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.

 

D. IRO Independence and Objectivity.

The IRO must perform the Claims Review in a professionally independent and
objective fashion, as appropriate to the nature of the engagement, taking into
account any other business relationships or engagements that may exist between
the IRO and Rotech.

 

E. IRO Removal/Termination.

1. Provider. If Rotech terminates its IRO during the course of the engagement,
Rotech must submit a notice explaining its reasons to OIG no later than 30 days
after termination. Rotech must engage a new IRO in accordance with Paragraph A
of this Appendix.

2. OIG Removal of IRO. In the event OIG has reason to believe that the IRO does
not possess the qualifications described in Paragraph B, is not independent a
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 Rotech to engage a new IRO in accordance with Paragraph A of this
Appendix.

Rotech Healthcare Inc. - CIA Appendix A

 

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Prior to requiring Rotech to engage a new IRO, OIG shall notify Rotech 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, Rotech may request a
meeting with OIG to discuss any aspect of the IRO’s qualifications, independence
or performance of its responsibilities and to present additional information
regarding these matters. Rotech shall provide any additional information as may
be requested by OIG under this Paragraph in an expedited manner. OIG will
attempt in good faith to resolve any differences regarding the IRO with Rotech
prior to requiring Rotech to terminate the IRO. However, the final determination
as to whether or not to require Rotech to engage a new IRO shall be made at the
sole discretion of OIG.

Rotech Healthcare Inc. - CIA Appendix A

 

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APPENDIX B

CLAIMS REVIEW

 

A. Claims Review.

1. Definitions. For the purposes of the Claims Review, the following definitions
shall be used:

a. Overpayment: The amount of money Rotech has received in excess of the amount
due and payable under Medicare.

b. Item: Any discrete unit that can be sampled (e.g., code, line item,
beneficiary, patient encounter, etc.).

c. Paid Claim: A code or line item submitted by Rotech and for which Rotech has
received reimbursement from Medicare.

d. Population: For the first Reporting Period, the Population shall be defined
as all Items for which a code or line item has been submitted by or on behalf of
Rotech and for which Rotech has received reimbursement from Medicare (i.e., Paid
Claim) during the 12-month period covered by the first Claims Review.

For the remaining Reporting Periods, the Population shall be defined as all
Items for which Rotech has received reimbursement from Medicare (i.e., Paid
Claim) during the 12-month period covered by the Claims Review.

To be included in the Population, an Item must have resulted in at least one
Paid Claim.

e. 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 Items in the sample.

2. Discovery Sample. Within 15 days after the end of each Reporting Period,
Rotech will provide the OIG with a list of Rotech Billing Centers, including the
total amount of claims billed to Medicare from those Billing Centers. OIG shall
select 10% of

Rotech Healthcare Inc. - CIA Appendix B

 

1

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Rotech Billing Centers at which the Claims Review shall be conducted. The IRO
shall randomly select and review a sample of 50 Paid Claims submitted by or on
behalf of Rotech (Discovery Sample). The Paid Claims shall be reviewed based on
the supporting documentation available at Rotech’s Billing Centers or under
Rotech’s control, and all applicable billing and coding regulations and guidance
to determine whether the claim was correctly coded, submitted, and reimbursed.

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, Rotech should, as appropriate, further analyze any errors
identified in the Discovery Sample. Rotech recognizes that OIG or other 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
Rotech or under Rotech’s 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 Items sampled as part of the Discovery Sample,
and the corresponding findings for those 50 Items, as part of its Full Sample,
if: (1) statistically appropriate and (2) the IRO selects the Full Sample Items
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 Rotech to the appropriate Federal health care program
payor, including the Medicare contractor (e.g., Durable Medical Equipment
Medicare Administrative Contractors (DME MAC), carrier or fiscal intermediary),
for appropriate follow-up by that payor.

4. Systems Review. If Rotech’s Discovery Sample identifies an Error Rate of 5%
or greater, Rotech’s IRO shall also conduct a Systems Review. Specifically, for
each claim in the Discovery Sample and Full Sample that resulted in an
Overpayment, the IRO shall perform a “walk through” of the system(s) and
process(es), that generated the claim to 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.

Rotech Healthcare Inc. - CIA Appendix B

 

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5. Other Requirements.

a. Paid Claims without Supporting Documentation. For the purpose of appraising
Items included in the Claims Review, any Paid Claim for which Rotech cannot
produce documentation sufficient to support the Paid Claim shall be considered
an error and the total reimbursement received by Rotech for such Paid Claim
shall be deemed an Overpayment. Replacement sampling for Paid Claims with
missing documentation is not permitted.

b. Replacement Sampling. Considering the Population shall consist only of Paid
Claims and that Items with missing documentation cannot be replaced, there is no
need to utilize alternate or replacement sampling units.

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
associated with the Items selected in each first sample (or first sample for
each strata, if applicable) 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).

 

B. Claims Review Report. 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. Sampling Unit. A description of the Item as that term is utilized for the
Claims Review.

b. Claims Review Population. A description of the Population subject to the
Claims Review.

c. Claims Review Objective. A clear statement of the objective intended to be
achieved by the Claims Review.

d. Sampling Frame. A description of the sampling frame, which is the totality of
Items from which the Discovery Sample and, if any, Full Sample has been selected
and an explanation of the methodology used to identify the sampling frame. In
most circumstances, the sampling frame will be identical to the Population.

Rotech Healthcare Inc. - CIA Appendix B

 

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e. 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).

f. Review Protocol. A narrative description of how the Claims Review was
conducted and what was evaluated.

2. Statistical Sampling Documentation.

a. The number of Items appraised in the Discovery Sample and, if applicable, in
the Full Sample.

b. A copy of the printout of the random numbers generated by the “Random
Numbers” function of the statistical sampling software used by the IRO.

c. A copy of the statistical software printout(s) estimating how many Items are
to be included in the Full Sample, if applicable.

d. 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 Rotech’s 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 IRO’s 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).

Rotech Healthcare Inc. - CIA Appendix B

 

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b. Quantitative Results.

i. Total number and percentage of instances in which the IRO determined that the
Paid Claims submitted by Rotech (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 Rotech.

iii. Total dollar amount of all Overpayments in the sample.

iv. Total dollar amount of paid Items 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 appraised: Federal health care program billed,
beneficiary health insurance claim number, date of service, procedure code
submitted, procedure code reimbursed, allowed amount reimbursed by payor,
correct procedure 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. (See Attachment 1 to this Appendix.)

4. Systems Review. Observations, findings, and recommendations on possible
improvements to the system(s) and process(es) that generated the Overpayment(s).

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.

Rotech Healthcare Inc. - CIA Appendix B

 

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Attachment 1

Claim Review Results

 

Federal

Health Care
Program

Billed

  

Bene

HIC

#

  

Date of
Service

  

Procedure
Code
Submitted

  

Procedure
Code

Reimbursed

  

Allowed
Amount
Reimbursed

  

Correct
Procedure
Code (IRO
determined)

  

Correct
Allowed Amt
Reimbursed

(IRO
determined)

  

Dollar Difference
between Amt
Reimbursed and
Correct Allowed Amt

                                                                       

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APPENDIX C

OVERPAYMENT REFUND

TO BE COMPLETED BY MEDICARE CONTRACTOR

Date:                                    

Contractor Deposit Control #                             Date of Deposit:
                                

Contractor Contact Name:                                       
                         Phone #                                        
        

Contractor Address:                                      
                                        
                                                           

Contractor Fax:                                       
                                        
                                                                  

 

 

TO BE COMPLETED BY PROVIDER/PHYSICIAN/SUPPLIER

Please complete and forward to Medicare Contractor. This form, or a similar
document containing the following information, should accompany every voluntary
refund so that receipt of check is properly recorded and applied.

PROVIDER/PHYSICIAN/SUPPLIERNAME                               
                                                                  

ADDRESS                                   
                                        
                                                                              

PROVIDER/PHYSICIAN/SUPPLIER #                            CHECK
NUMBER#                                             

CONTACT PERSON:                                       
                     PHONE #                                        
                       AMOUNT OF CHECK

$                            CHECK DATE                            

REFUND INFORMATION

For each Claim, provide the following:

Patient Name                                       
                                                          HIC
#                                                                 

Medicare Claim Number                                             Claim Amount
Refunded $                                

Reason Code for Claim Adjustment:            (Select reason code from list
below. Use one reason per claim)

(Please list all claim numbers involved. Attach separate sheet, if necessary)

 

Note: If Specific Patient/HIC/Claim #/Claim Amount data not available for all
claims due to Statistical Sampling, please indicate methodology and formula used
to determine amount and reason for
overpayment:                                      
                              

For Institutional Facilities Only:

Cost Report Year(s)                                         

(If multiple cost report years are involved, provide a breakdown by amount and
corresponding cost report year.)

For OIG Reporting Requirements:

Do you have a Corporate Integrity Agreement with OIG?                     Yes
                    No

Reason Codes:

Billing/Clerical Error    MSP/Other Payer Involvement    Miscellaneous 01 -
Corrected Date of Service    08 - MSP Group Health Plan Insurance    13 -
Insufficient Documentation 02 - Duplicate    09 - MSP No Fault Insurance    14 -
Patient Enrolled in an HMO 03 - Corrected CPT Code    10 - MSP Liability
Insurance    15 - Services Not Rendered 04 - Not Our Patient(s)    11 - MSP,
Workers Comp.(Including    16 - Medical Necessity 05 - Modifier Added/Removed   
        Black Lung    17 - Other (Please Specify) 06 - Billed in Error    12 -
Veterans Administration    07 - Corrected CPT Code