Document:

rmed-ex1019_96.htm

Exhibit 10.19

 

 

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”) and the Defense Health Agency (“DHA”), acting on behalf of the TRICARE Program (collectively, the “United States”), Ra Medical Systems, Inc. (“RMS”), and Robert Gruber (hereafter collectively referred to as “the Parties”), through their authorized representatives.

RECITALS 

A.RMS is a Delaware corporation with its principal place of business in Carlsbad, California. At all relevant times herein, RMS distributed, marketed, and sold medical devices in the United States, including devices marketed under the trade name DABRA Laser System (“DABRA Laser”). During the relevant time period, the DABRA Laser was cleared by the U.S. Food and Drug Administration (“FDA”) only for use in crossing chronic total occlusions in patients with symptomatic infrainguinal lower extremity vascular disease. During the relevant period, RMS sought FDA clearance for the DABRA Laser for use in atherectomy, but the FDA declined the request in May 2017. The DABRA Laser has never had any FDA clearance or approval for use in atherectomy.

B.On July 10, 2019, Robert Gruber (“Relator”) filed a qui tam action in the United States District Court for the Eastern District of Michigan captioned United States, et al., ex rel. Gruber v. Ra Medical Systems, Inc., et al. (E.D. Mich.) pursuant to the qui tam provisions of the False Claims Act, 31 U.S.C. § 3730(b) (the “Civil Action”).

 

 

C.RMS has entered or will be entering into separate settlement agreements, described in Paragraph 1.b., below (hereinafter referred to as the “Medicaid State Settlement Agreements”), with certain states and the District of Columbia in settlement of the Covered Conduct. States with which RMS executes a Medicaid State Settlement Agreement in the form to which RMS and the State Negotiating Team have agreed, or in a form otherwise agreed to by RMS and an individual State, shall be defined as “Medicaid Participating States.”

D.The United States contends that RMS submitted or caused to be submitted claims for payment to: the Medicare Program, Title XVIII of the Social Security Act, 42 U.S.C. §§ 1395-1395111 (“Medicare”), the Medicaid Program, 42 U.S.C. §§ 1396-1396w-5 (“Medicaid”), and the TRICARE Program, 10 U.S.C. §§ 1071-1110b (“TRICARE”).

E.The United States contends that it has certain civil claims against RMS for engaging in the following conduct during the period from May 1, 2017 through October 31, 2019 (hereinafter referred to as the “Covered Conduct”):

(1)RMS knowingly offered and paid illegal remuneration to certain physicians to induce them to use the DABRA Laser in violation of the Federal Anti-Kickback Statute, 42 U.S.C. § 1320a-7b(b). The United States contends that the illegal remuneration consisted of cash payments and fees paid in connection with purported training events and consulting services. The United States further contends that RMS tracked utilization of its high-volume physician customers using an internal document titled “Who Deserve[] Love,” which was used to identify physicians that RMS should target with offers of improper remuneration.

(2)RMS knowingly marketed the DABRA Laser for use in atherectomy procedures, where plaque is mechanically removed from occluded blood vessels in patients suffering 

 

2

 

from peripheral artery disease, an affliction affecting a person’s arteries that is a complication associated with smoking, obesity, and especially diabetes. The DABRA Laser was not approved or cleared by the FDA for use in atherectomy procedures. In addition, RMS knowingly marketed the DABRA Laser despite product performance issues causing frequent calibration and overheating problems, which posed a risk to physicians and patients and prompted a Class 2 recall in August 2019. Some of these uses were not reasonable and necessary for the diagnosis or treatment of an illness or injury under 42 U.S.C. § 1395y(a)(1(A), and thus were not covered by Medicare, Medicaid, or TRICARE.

As a result of the foregoing Covered Conduct, the United States alleges that RMS knowingly submitted or caused the submission of false or fraudulent claims for the DABRA Laser to be submitted to, or caused purchases by, Medicare, Medicaid and TRICARE.

F.This Settlement Agreement is neither an admission of liability by RMS nor a concession by the United States that its claims are not well founded.

G.Relator claims entitlement under 31 U.S.C. § 3730(d) to a share of the proceeds of this Settlement Agreement and to Relator’s 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.RMS shall pay to the United States and the Medicaid Participating States collectively the sum of $2,500,000 (“Settlement Amount”), which constitutes restitution to the United 

 

3

 

States and the Medicaid Participating States. The Settlement Amount shall be paid to the United States and the Medicaid Participating States as follows:

(a)RMS shall pay to the United States the sum of $2,363,483.46 (“Federal Settlement Amount”). The Federal Settlement Amount shall be paid by electronic funds transfer pursuant to written instructions from the United States no later than five (5) business days after this Agreement is fully executed by the Parties and delivered to RMS’ attorneys.

(b)RMS shall pay the Medicaid Participating States the sum of $136,516.54, to be disbursed in accordance with written instructions from the State Negotiating Team and under the terms and conditions of the agreements that RMS will enter into with the Medicaid Participating States.

2.Conditioned upon the United States receiving the Federal Settlement Amount from RMS and as soon as feasible after receipt, the United States agrees to pay Relator the sum of $496,331.53 as Relator’s share of the proceeds pursuant to 31 U.S.C. § 3730(d). Conditioned upon the United States receiving the payments from RMS identified in paragraphs 21 or 22, the United States agrees that it shall pay to Relator by electronic funds transfer 21 percent of each such payment received under the Settlement Agreement as soon as feasible after receipt of the payment. No other Relator payments shall be made by the United States with respect to the matters covered by this Agreement.

3.Subject to the exceptions in Paragraph 7 (concerning excluded claims) below, and conditioned upon RMS’s full payment of the Federal Settlement Amount, and subject to Paragraphs 21 through 23, below (concerning revenues, sales, or bankruptcy proceedings commenced within 91 days of the Effective Date of this Agreement or any payment made under this Agreement), the United States releases RMS 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 

 

4

 

U.S.C. § 1320a-7a; the Program Fraud Civil Remedies Act, 31 U.S.C. §§ 3801-3812; or the common law theories of payment by mistake, unjust enrichment, and fraud.

4.In consideration of the obligations of RMS in this Settlement Agreement, and conditioned upon the payments and non-monetary consideration described in the Settlement Agreement, Relator, for himself and for his heirs, successors, attorneys, agents, and assigns, agrees to release and forever discharge RMS and its present and former parents, subsidiaries, affiliates, agents, servants, employees, attorneys, representatives, partners, employers, insurance carriers, officers, directors, assigns, employee benefit plans, predecessors in interest and successors in interest (collectively the “RMS Released Entities”) of and from any and all claims, actions, damages, liabilities, losses, expenses, compensations, reimbursements, actions, rights, suits, proceedings and causes of action of whatsoever kind or nature, in law or in equity, known or unknown, suspected or unsuspected, contingent or non-contingent, matured or unmatured, whether or not concealed or hidden, and without regard to the subsequent discovery or existence of such different or additional facts, of any kind of nature whatsoever, now existing or arising in the future, based on any act, omission, event, occurrence or nonoccurrence from the beginning of time to the date of execution of this Agreement, including but not limited to, any claims or causes of action arising out of or in any way relating to, or which have been or could have been made in, the Civil Action, except for Relator’s claims against RMS for reasonable expenses, attorneys’ fees and costs under 31 U.S.C. § 3730(d), and for retaliation under 31 U.S.C. § 3730(h), both of which are the subject of separate agreements. Also, this release does not include any of the defendants named in the Civil Action, other than RMS.

5.In consideration of the obligations of RMS in this Agreement and the Corporate Integrity Agreement (CIA), entered into between OIG-HHS and RMS, and conditioned upon RMS’s 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 

 

5

 

health care programs (as defined in 42 U.S.C. § 1320a-7b(f)) against RMS 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 this Paragraph and in Paragraph 7 (concerning excluded claims), below. The OIG-HHS expressly reserves all rights to comply with any statutory obligations to exclude RMS 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 7, below.

6.In consideration of the obligations of RMS set forth in this Agreement, and upon the United States’ receipt of full payment of the Settlement Amount, DHA shall release and refrain from instituting, directing, or maintaining any administrative action seeking exclusion from the TRICARE Program against RMS under 32 C.F.R. § 199.9 for the Covered Conduct, except as reserved in this paragraph and in Paragraph 7 (concerning reserved claims), below. DHA expressly reserves authority to exclude RMS from the TRICARE Program under 32 C.F.R. §§ 199.9 (f)(1)(i)(A), (f)(1)(i)(B), and (f)(1)(iii) (mandatory exclusion), based upon the Covered Conduct. Nothing in this paragraph precludes DHA or the TRICARE Program from taking action against entities or persons, or for conduct and practices, for which claims have been reserved in Paragraph 7, below.

7.Notwithstanding the releases given in Paragraphs 3, 5, and 6 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;

 

6

 

	
 
		

	
 
	
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; and

	
 
	
f.
	
Any liability of individuals;

8.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). Conditioned upon Relator’s 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 arising from the filing of the Civil Action or under 31 U.S.C. § 3730, and from any claims to a share of the proceeds of this Agreement and/or the Civil Action.

9.Relator and RMS have reached separate agreements regarding both Relator’s retaliation claims under 31 U.S.C. § 3730(h), as well as Relator’s claims for reasonable attorneys’ fees, costs, and expenses under 31 U.S.C. § 3730(d). Releases for those claims, which are reserved in this Agreement, will be contained in those separate agreements between Relator and RMS.

10.RMS has provided sworn financial disclosure statements (“Financial Statements”) to the United States, and the United States has relied on the accuracy and completeness of those Financial Statements in reaching this Agreement. RMS warrants that the Financial Statements are complete, accurate, and current. If the United States learns of asset(s) in which RMS had an interest at the time of this Agreement that were not disclosed in the Financial Statements, or if the United States learns 

 

7

 

of any misrepresentation by RMS on, or in connection with, the Financial Statements, and if such nondisclosure or misrepresentation changes the estimated net worth set forth in the Financial Statements by $250,000 or more, the United States may at its option: (a) rescind this Agreement and file suit based on the Covered Conduct, or (b) let the Agreement stand and collect the full Settlement Amount plus one hundred percent (100%) of the value of the net worth in excess of the $250,000 previously undisclosed. RMS agrees not to contest any collection action undertaken by the United States pursuant to this provision, and immediately to pay the United States all reasonable costs incurred in such an action, including attorney’s fees and expenses.

11.In the event that the United States, pursuant to Paragraph 10 (concerning disclosure of assets) above, opts to rescind this Agreement, RMS agrees not to plead, argue, or otherwise raise any defenses under the theories of statute of limitations, laches, estoppel, or similar theories, to any civil or administrative claims that (a) are filed by the United States within 90 calendar days of written notification to RMS that this Agreement has been rescinded, and (b) relate to the Covered Conduct, except to the extent these defenses were available on the Effective Date of the Agreement.

12.RMS waives and shall not assert any defenses RMS 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.

13.RMS fully and finally releases the United States, its agencies, officers, agents, employees, and servants, from any claims (including attorney’s fees, costs, and expenses of every kind and however denominated) that RMS 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.

 

8

 

14.RMS fully and finally releases Relator, his heirs, personal representatives, legal representatives, successors, attorneys, agents and assigns, from any and all claims, actions, damages, liabilities, losses, expenses, compensations, reimbursements, actions, rights, suits, proceedings and causes of action of whatsoever kind or nature, in law or in equity, known or unknown, suspected or unsuspected, contingent or non-contingent, matured or unmatured, whether or not concealed or hidden, and without regard to the subsequent discovery or existence of such different or additional facts, of any kind of nature whatsoever, now existing or arising in the future, based on any act, omission, event, occurrence or nonoccurrence from the beginning of time to the date of execution of this Agreement, including but not limited to, any claims (including claims for attorneys’ fees, costs, and expenses of every kind and however denominated) that RMS has asserted, could have asserted, or may assert in the future against Relator, himself individually, his heirs, personal representatives, legal representatives, successors, attorneys, agents and assigns, related to the Covered Conduct and Relator’s investigation and prosecution thereof.

15.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 contractor (e.g., Medicare Administrative Contractor, fiscal intermediary, carrier; TRICARE carrier or payer) or any state payer, related to the Covered Conduct; and RMS agrees not to resubmit to any Medicare contractor, TRICARE carrier or payer, or any state payer any previously denied claims related to the Covered Conduct, agrees not to appeal any such denials of claims, and agrees to withdraw any such pending appeals.

16.RMS 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. §§ 1395-1395111-1 and 1396-1396w-5; and the regulations and official program directives promulgated 

 

9

 

thereunder) incurred by or on behalf of RMS, its present or former officers, directors, employees, shareholders, and agents in connection with:

	
 
	
(1)
	
the matters covered by this Agreement;

	
 
	
(2)
	
the United States’ audit(s) and civil and any criminal investigation(s) of the matters covered by this Agreement;

	
 
	
(3)
	
RMS’s 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 attorney’s fees);

	
 
	
(4)
	
the negotiation and performance of this Agreement;

	
 
	
(5)
	
the payment RMS makes to the United States pursuant to this Agreement and any payments that RMS may make to Relator, including costs and attorneys fees; 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, the Medicaid Program, and the TRICARE Program (hereinafter referred to as Unallowable Costs). However, nothing in paragraph 16.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 RMS.

b.Future Treatment of Unallowable Costs: Unallowable Costs shall be separately determined and accounted for by RMS, and RMS shall not charge such Unallowable Costs directly or 

 

10

 

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 RMS or any of its subsidiaries or affiliates to the Medicare, Medicaid, or TRICARE Programs.

c.Treatment of Unallowable Costs Previously Submitted for Payment: RMS 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 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 RMS 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. RMS agrees that the United States, at a minimum, shall be entitled to recoup from RMS 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 RMS or any of its subsidiaries or affiliates on the effect of inclusion of Unallowable Costs (as defined in this Paragraph) on RMS 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 RMS’s books and records to determine that no Unallowable Costs have been claimed in accordance with the provisions of this Paragraph.

 

11

 

17.RMS agrees to cooperate fully and truthfully with the United States’ investigation of individuals and entities not released in this Agreement. Upon reasonable notice, RMS 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. RMS 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.

18.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 provided for in Paragraphs 32 and 33, below.

19.RMS 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.

20.RMS warrants that it has reviewed its financial situation and that it currently is solvent within the meaning of 11 U.S.C. §§ 547(b)(3) and 548(a)(1)(B)(ii)(I), and shall remain solvent following payment to the United States of the Settlement Amount. Further, the Parties warrant that, in evaluating whether to execute this Agreement, they (a) have intended that the mutual promises, covenants, and obligations set forth constitute a contemporaneous exchange for new value given to RMS, within the meaning of 11 U.S.C. § 547(c)(1), and (b) conclude that these mutual promises, covenants, and obligations do, in fact, constitute such a contemporaneous exchange. Further, the Parties warrant that the mutual promises, covenants, and obligations set forth herein are intended to and do, in fact, represent a 

 

12

 

reasonably equivalent exchange of value that is not intended to hinder, delay, or defraud any entity to which RMS was or became indebted to on or after the date of this transfer, within the meaning of 11 U.S.C. § 548(a)(1).

21.If within any of the next four full fiscal years after the effective date of this settlement (2021, 2022, 2023, and 2024) RMS’s fiscal year revenues exceed $10 million, the Company agrees to pay the United States and Medicaid Participating States, per the terms of paragraph 24, an additional: (i) $500,000 for 2021, (ii) $750,000 for 2022, (iii) $1,000,000 for 2023, and (iv) $1,250,000 for 2024, for each corresponding fiscal year where the Company’s revenue exceeds $10 million. Payment will be made within 90 days after the end of the fiscal year. Within 90 days after the end of the fiscal year, RMS will provide a certified statement from a responsible corporate officer to the United States stating RMS’s revenues for the concluded fiscal year and will attach audited financial statements for that year.

22.If a Change in Control Transaction (as defined below) closes on or before the fourth anniversary of the Effective Date of this Agreement, a portion of the value attributed to RMS in that Change in Control Transaction shall be due and payable to the United States and Medicaid Participating States, per the terms of paragraph 24, within 30 calendar days as follows:

a.First, RMS shall pay a total of $5 million;

b.Second, RMS shall pay an additional 4% of the value attributed to RMS in the Change in Control Transaction if the value attributed to RMS is in excess of $100 million. (For example, if RMS were sold for $200 million, the United States and Medicaid Participating States would be paid $5 million pursuant to subsection (a) above and another $8 million ($200 million x 4% = $8 million) for a total of $13 million.)

The total payment by RMS pursuant to this paragraph 22 shall not exceed $28 million.

 

13

 

For purposes of this paragraph 22, Change in Control Transaction shall mean (A) the date of acquisition of legal title of more than 50 percent of RMS’s then issued and outstanding common stock by a person, entity or group (as such terms are defined in Section 13(d)(3) of the Securities Exchange Act of 1934); (B) a merger, reorganization, consolidation, or similar transaction resulting in a business combination where RMS shareholders before the transaction own less than 50 percent of the new entity, or a person, entity, or group own more than 50 percent of the shares of the new entity; or (C) an event (including but not limited to any sale, license agreement, or other conveyance of significant income producing assets, including any intellectual property) which causes RMS to assign, sell, give up, or otherwise transfer more than 50 percent of RMS’s assets.

23.If within 91 days of the Effective Date of this Agreement or of any  payment made under this Agreement, RMS commences, or a third party commences, any case, proceeding, or other action under any law relating to bankruptcy, insolvency, reorganization, or relief of debtors (a) seeking to have any order for relief of RMS’s debts, or seeking to adjudicate RMS as bankrupt or insolvent; or (b) seeking appointment of a receiver, trustee, custodian, or other similar official for RMS or for all or any substantial part of RMS’s assets, RMS agrees as follows:

a.RMS’s obligations under this Agreement may not be avoided pursuant to 11 U.S.C. § 547, and RMS shall not argue or otherwise take the position in any such case, proceeding, or action that: (i) RMS’s obligations under this Agreement may be avoided under 11 U.S.C. § 547; (ii) RMS was insolvent at the time this Agreement was entered into, or became insolvent as a result of the payment made to the United States or the Medicaid Participating States; or (iii) the mutual promises, covenants, and obligations set forth in this Agreement do not constitute a contemporaneous exchange for new value given to RMS.

b.If RMS’s obligations under this Agreement are avoided for any reason, including, but not limited to, through the exercise of a trustee’s avoidance powers under the Bankruptcy 

 

14

 

Code, the United States, at its sole option, may rescind the releases in this Agreement and bring any civil and/or administrative claim, action, or proceeding against RMS for the claims that would otherwise be covered by the releases provided in Paragraphs 3, 5, and 6, above, RMS agrees that (i) any such claims, actions, or proceedings brought by the United States are not subject to an “automatic stay” pursuant to 11 U.S.C. § 362(a) as a result of the action, case, or proceedings described in the first clause of this Paragraph, and RMS shall not argue or otherwise contend that the United States’ claims, actions, or proceedings are subject to an automatic stay; (ii) RMS shall not plead, argue, or otherwise raise any defenses under the theories of statute of limitations, laches, estoppel, or similar theories, to any such civil or administrative claims, actions, or proceeding that are brought by the United States within 90 calendar days of written notification to RMS that the releases have been rescinded pursuant to this Paragraph, except to the extent such defenses were available on July 10, 2019; and (iii) the United States has a valid claim against RMS in the amount of $56,000,000, minus any payments to the United States pursuant to Paragraph 22, and the United States may pursue its claim in the case, action, or proceeding referenced in the first clause of this Paragraph, as well as in any other case, action, or proceeding.

c.RMS acknowledges that its agreements in this Paragraph are provided in exchange for valuable consideration provided in this Agreement.

24.Any payment pursuant to Paragraph 21 or 22 shall be treated as restitution and shall be paid as follows:

a.94.54% percent shall be paid pursuant to wire instructions provided by the United States;

b.5.46% percent shall be paid in accordance with written instructions from the Medicaid Participating States’ Negotiating Team and under the terms and conditions of the agreements that RMS will enter into with the Medicaid Participating States.

 

15

 

25.Upon receipt of the payment described in Paragraph 1, above, the United States and Relator shall promptly sign and file in the Civil Action a Joint Stipulation of Dismissal of RMS with prejudice from the Civil Action pursuant to Rule 41(a)(1).

26.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 as to Relator’s claim for attorneys’ fees, costs, and expenses under 31 U.S.C. § 3730(d), reserved in Paragraph 4.

27.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.

28.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 Eastern District of Michigan. 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.

29.This Agreement constitutes the complete agreement between the Parties. This Agreement may not be amended except by written consent of the Parties.

30.The undersigned counsel represent and warrant that they are fully authorized to execute this Agreement on behalf of the persons and entities indicated below.

31.This Agreement may be executed in counterparts, each of which constitutes an original and all of which constitute one and the same Agreement.

32.This Agreement is binding on RMS’s successors, transferees, heirs, and assigns.

 

16

 

33.This Agreement is binding on Relator’s successors, transferees, heirs, and assigns.

34.All Parties consent to RMS’s and the United States’ disclosure of this Agreement, and information about this Agreement, to the public.

35.This Agreement is effective on the date of signature of the last signatory to the Agreement (“Effective Date of this Agreement”). Facsimiles and electronic transmissions of signatures shall constitute acceptable, binding signatures for purposes of this Agreement.

 

 

17

 

 

THE UNITED STATES OF AMERICA

 

 

	
DATED: December 28, 2020
	
BY:
	
/s/ Jonny Zajac
	
 

	
 
	
 
	
Jonny Zajac

	
 
	
 
	
Assistant United States Attorney

	
 
	
 
	
United States Attorney’s Office

	
 
	
 
	
Eastern District of Michigan

	
 
	
 
	
 

	
DATED: December 28, 2020
	
BY:
	
/s/ Lisa M. Re
	
 

	
 
	
 
	
Lisa M. Re

	
 
	
 
	
Assistant Inspector General for Legal Affairs

	
 
	
 
	
Office of Counsel to the Inspector General

	
 
	
 
	
Office of Inspector General

	
 
	
 
	
United States Department of Health and Human Services

	
 
	
 
	
 

	
DATED: December 28, 2020
	
BY:
	
/s/ Salvatore M. Maida
	
 

	
 
	
 
	
Salvatore M. Maida

	
 
	
 
	
General Counsel

	
 
	
 
	
Defense Health Agency

	
 
	
 
	
United States Department of Defense

 

RMS – DEFENDANT

 

	
DATED: 12/22/2020
	
BY:
	
/s/ Will McGuire
	
 

	
 
	
 
	
Will McGuire

	
 
	
 
	
Chief Executive Officer

	
 
	
 
	
 

	
DATED: December 21, 2020
	
BY:
	
/s/ Michael C. Theis
	
 

	
 
	
 
	
Michael C. Theis

	
 
	
 
	
Hogan Lovells US LLP

	
 
	
 
	
Counsel for Ra Medical Systems, Inc.

 

 

 

 

18

 

 

ROBERT GRUBER RELATOR

 

 

	
DATED: 12/22/20
	
BY:
	
/s/ Robert Gruber
	
 

	
 
	
 
	
Robert Gruber

	
 
	
 
	
 

	
 
	
 
	
 

	
DATED: 12/22/20
	
BY:
	
/s/ J. Marc Vezina
	
 

	
 
	
 
	
J. Marc Vezina

	
 
	
 
	
Counsel for Robert Gruber

	
 
	
 
	
 

	
DATED: 12/22/20
	
BY:
	
/s/ Ryon McCabe
	
 

	
 
	
 
	
Ryon McCabe

	
 
	
 
	
Counsel for Robert Gruber

 

 

 

19rmed-ex1020_97.htm

Exhibit 10.20 

 

CORPORATE INTEGRITY AGREEMENT
BETWEEN THE 
OFFICE OF INSPECTOR GENERAL
OF THE 
DEPARTMENT OF HEALTH AND HUMAN SERVICES 
AND 
RA MEDICAL SYSTEMS, INC.

	
I.
	
PREAMBLE

Ra Medical Systemcs, Inc. (RMS) 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) and with the statutes, regulations, and written directives of the Food and Drug Administration (FDA requirements). Contemporaneously with this CIA, RMS 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 RMS 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 OIG’s receipt of: (1) RMS’s final Annual Report; or (2) any additional materials submitted by RMS pursuant to OIG’s request, whichever is later.

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

1.For purposes of this CIA, the term “Covered Persons” includes: (a) all owners of RMS who are natural persons (other than shareholders who: (i) have an ownership interest of less than 5% and (ii) acquired the ownership interest through public trading or private placement) and all officers and directors of RMS; (b) all employees of RMS ; and (c) all contractors, subcontractors, agents, and other persons who perform any of the Covered Functions on behalf of RMS, and in that capacity either: (i) interact directly with healthcare professionals (HCPs) and healthcare institutions (HCIs); or (ii) perform activities, provide services, or create materials relating to the Covered Functions and those activities, services, or materials are not reviewed or supervised by a RMS employee who is a Covered Person prior to execution or dissemination.

Nothwistanding the above, the term Covered Person 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. “Government Reimbursed Products” refers to all RMS products that are: (a) marketed or sold by RMS in the United States (or pursuant to contracts with the United States) and (b) reimbursed by Federal health care programs.

3.The term “Covered Functions” includes: (a) the selling, marketing, advertising, promoting, or branding of Government Reimbursed Products; (b) the preparation or external dissemination of promotional materials or information about, or the provision of services relating to, Government Reimbursed Products, including those functions relating to RMS’s review and approval processes for promotional materials and any applicable review committee(s); (c) the preparation or external dissemination of non-promotional materials about Government Reimbursed Products, including those functions relating to RMS’s review and approval process for any non-promotional materials and any applicable review committees; (d) contracting with health care professionals (HCPs) for consulting services (including but not limited to speaker programs, speaker training programs, training and education services, product development activities, presentations, consultant task force meetings, advisory boards, ad hoc advisory activities, research and any research-related activities, and authorship of articles or other publications relating ot Government Reimbursed Products), or other fee-for service arrangements relating to Government Reimbursed Products; (e) reviewing and/or approving requests for grants or charitable contributions.

4.The term “Sponsorships” shall mean support for a program, event, or organization in return for the advertisement, or promotion of RMS products, including healthcare-related conventions and conference sponsorships, promotional booths, exhibit space, advertisements, memberships, signage rights, naming rights, and subscriptions.

5.The term “Third Party Educational Activity” shall mean any scientific, educational, or professional program, meeting, or event for HCPs conducted by a third party and supported by RMS, including but not limited to, continuing medical education (CME), disease awareness, or symposia at medical conferences.

	
III.
	
CORPORATE INTEGRITY OBLIGATIONS

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

A.Compliance Officer and Committee, Board of Directors, and Management Compliance Obligations 

1.Compliance Officer. Within 90 days after the Effective Date, RMS shall appoint a Compliance Officer and shall maintain a Compliance Officer for the term of the CIA. The Compliance Officer shall be an employee and a member of senior management of RMS; shall report directly to the Chief Executive Officer of RMS; and shall not be, or be subordinate to, the General Counsel or Chief Financial Officer or have any responsibilities that involve acting in any capacity as legal counsel or supervising legal counsel functions for RMS. The Compliance Officer shall be responsible for, without limitation:

	
 
	
a.
	
developing and implementing policies, procedures, and practices designed to ensure compliance with the requirements set forth in 

 

-2-

 

	
 
		
this CIA and with Federal health care program and FDA requirements;

	
 
	
b.
	
making periodic (at least quarterly) reports regarding compliance matters in person to the Board of Directors of RMS (Board) and shall be authorized to report on such matters to the Board at any time. Written documentation of the Compliance Officer’s reports to the Board shall be made available to OIG upon request; and

	
 
	
c.
	
monitoring the day-to-day compliance activities engaged in by RMS as well as any reporting obligations created under this CIA.

Any noncompliance job responsibilities of the Compliance Officer shall be limited and must not interfere with the Compliance Officer’s ability to perform the duties outlined in this CIA.

RMS shall report to OIG, in writing, any changes in the identity 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 five business days after such a change.

2.Compliance Committee. Within 90 days after the Effective Date, RMS shall appoint 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 sales, marketing, legal, medical affairs/medical information, regulatory affairs, research and development, human resources, audit, finance, manufacturing, and operations). The Compliance Officer shall chair the Compliance Committee and the Compliance Committee shall support the Compliance Officer in fulfilling his/her responsibilities (e.g., shall assist in the analysis of RMS’s risk areas and shall oversee monitoring of internal and external audits and investigations). The Compliance Committee shall meet at least quarterly. The minutes of the Compliance Committee meetings shall be made available to OIG upon request.

RMS shall report to OIG, in writing, 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 15 business days after such a change.

3.Board Compliance Obligations. The Board (or the Audit Committee of the Board of Directors) of RMS (“Board”) shall be responsible for the review and oversight of matters related to compliance with Federal health care program requirements, FDA requirements, and the obligations of this CIA. The Board must include independent (i.e., non-employee and non-executive) members.

The Board shall, at a minimum, be responsible for the following:

	
 
	
a.
	
meeting at least quarterly to review and oversee RMS’s Compliance Program, including but not limited to the performance of the Compliance Officer and Compliance Committee;

 

-3-

 

	
 
	
b.
	
submitting to OIG a description of the documents and other materials it reviewed, as well as any additional steps taken, such as the engagement of an independent advisor or other third party resources, in its oversight of the compliance program and in support of making the resolution below during each Reporting Period; and

	
 
	
c.
	
for each Reporting Period of the CIA, adopting a resolution, signed by each member of the Board, summarizing its review and oversight of RMS’s 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 Board has made a reasonable inquiry into the operations of RMS’s Compliance Program including the performance of the Compliance Officer and the Compliance Committee. Based on its inquiry and review, the Board has concluded that, to the best of its knowledge, RMS has implemented an effective Compliance Program to meet Federal health care program requirements, FDA requirements, and the obligations of the Corporate Integrity Agreement.”

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 RMS.

RMS 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 15 business days after such a change.

4.Management Certifications. In addition to the responsibilities set forth in this CIA for all Covered Persons, certain RMS employees (Certifying Employees) are specifically expected to monitor and oversee activities within their areas of authority and shall annually certify that the applicable RMS department is in compliance with applicable Federal health care program and FDA requirements and with the obligations of this CIA. These Certifying Employees shall include, at a minimum, the following: Chief Financial Officer; Vice President of Operations; Director of Marketing; Head of Sales for Dermatology. For each Reporting Period, each Certifying Employee shall sign a certification that states:

“I have been trained on and understand the compliance requirements and responsibilities as they relate to [insert name of department], an area under my supervision. My job responsibilities include ensuring compliance with regard to the _____ [insert name of the department] with all applicable Federal health care program requirements, FDA requirements, obligations of the Corporate Integrity Agreement, and RMS policies, and I have taken steps to promote such compliance. To the best of my knowledge, the[insert name of department] of RMS is in compliance with all applicable Federal health care program requirements, FDA requirements, and the obligations of the Corporate Integrity 

 

-4-

 

Agreement. I understand that this certification is being provided to and relied upon by the United States.”

If any Certifying Employee is unable to provide such a certification, the Certifying Employee shall provide a written explanation of the reasons why he or she is unable to provide the certification outlined above.

Within 90 days after the Effective Date, RMS shall develop and implement a written process for Certifying Employees to follow for the purpose of completing the certification required by this section (e.g., reports that must be reviewed, assessments that must be completed, sub-certifications that must be obtained, etc. prior to the Certifying Employee making the required certification).

B.Written Standards

1.Policies and Procedures. Within 90 days after the Effective Date, RMS shall develop and implement written policies and procedures regarding the operation of its compliance program, including the compliance program requirements outlined in this CIA and RMS’s compliance with Federal health care program and FDA requirements (Policies and Procedures). Throughout the term of this CIA, RMS shall enforce its Policies and Procedures and shall make compliance with its Policies and Procedures an element of evaluating the performance of all employees. The Policies and Procedures shall be made available to all Covered Persons. At a minimum, the Policies and Procedures shall address the following:

	
 
	
a.
	
appropriate ways to conduct Covered Functions in compliance with all: (i) applicable Federal healthcare program requirements, including, but not limited to the Federal Anti-Kickback Statute (codified at 42 U.S.C. § 1320a-7b(b)) and the False Claims Act (codified at 31 U.S.C. §§ 3729-3733); and (ii) all applicable FDA requirements;

	
 
	
b.
	
the materials and information that may be distributed by RMS sales representatives (including any contract sales force) about Government Reimbursed Products and the manner in which RMS sales representatives respond to requests for information about non-FDA approved (or “off-label”) uses of Government Reimbursed Products;

	
 
	
c.
	
the materials and information that may be distributed by RMS and the mechanisms through, and manner in which RMS receives and responds to requests for information from an HCP or another individual or entity about off-label uses of Government Reimbursed Products; the form and content of information disseminated by RMS in response to such requests; and the internal review process for the information disseminated;

	
 
	
d.
	
the manner and circumstances under which RMS medical and/ or regulatory personnel interact with or participate in meetings or 

 

-5-

 

	
 
		
events with HCPs, HCIs, or payors (either alone or with RMS sales representatives) and the role of the medical personnel at such meetings or events, as well as how they handle responses to requests for information about off-label uses of Government Reimbursed Products;

	
 
	
e.
	
the materials and information that may be distributed or made available by RMS through social media and/or direct-to-consumer advertising;

	
 
	
f.
	
the development, implementation, and review of call plans for sales representatives (including any contract sales force) and other RMS representatives who promote and sell Government Reimbursed Products;

	
 
	
g.
	
the development, implementation, and review of all plans for the distribution of Government Reimbursed Products for evaluation purposes (Evaluation Products). This shall include a review of the bases upon, and circumstances under, which HCPs and HCIs belonging to specified medical specialties or types of clinical practice may receive Evaluation Products (including, separately, from sales representatives, or through other channels);

	
 
	
h.
	
consultant or other fee-for-service arrangements entered into with HCPs or HCIs (including but not limited to speaker programs, speaker training programs, training and education services, product development activities, presentations, consultant task force meetings, advisory boards, ad hoc advisory activities, research and research-related activities, authorship activities and any other financial engagement or arrangement with an HCP or HCI) and all events and expenses relating to such engagements or arrangements;

	
 
	
i.
	
agreements or arrangements with HCPs or HCIs for the purchase or licensing of intellectual property (including but not limited to, patents, patent applications, and the payment of roylaties);

	
 
	
j.
	
programs by HCPs to educate sales representatives, including but not limited to presentations by HCPs at sales meetings, preceptorships, tutorials, and experience-based learning activities;

	
 
	
k.
	
review and approval of, and payment for, travel and related expenses for HCPs including those in connection with HCP participation in educational, research, training, or other RMS-sponsored programs or activities;

	
 
	
l.
	
sponsorship or funding of grants (including educational grants) or charitable contributions;

 

-6-

 

	
 
	
m.
	
funding of, or participation in, any Sponsorships or Third Party Educational Activity as defined in Section II.C.4 and II.C.5 above;

	
 
	
n.
	
review of promotional, reimbursement, and disease state materials and information intended to be disseminated outside RMS by appropriate qualified personnel (such as regulatory, medical, and/or legal personnel) in a manner designed to ensure that legal, regulatory, and medical concerns are properly addressed during RMS’s review and approval process and are elevated when appropriate;

	
 
	
o.
	
compensation (including through salaries, bonuses, or other means) for Covered Persons who are sales representative and their managers;

	
 
	
p.
	
medical device reporting, including the development of medical device reporting procedures and establishing and maintaining medical device reporting event files, as required by 21 CFR Part 803 and other applicable FDA requirements; and

	
 
	
q.
	
disciplinary policies and procedures for violations of RMS’s Policies and Procedures, including policies relating to Federal health care program and FDA requirements.

At least annually (and more frequently, if appropriate), RMS shall assess and update, as necessary, the Policies and Procedures. Any new or revised Policies and Procedures shall be made available to all Covered Persons.

All Policies and Procedures shall be made available to OIG upon request.

C.Training and Education

1.Covered Persons Training. Within 90 days after the Effective Date, RMS shall develop a written plan (Training Plan) that outlines the steps RMS will take to ensure that: (a) all Covered Persons receive at least annual training regarding RMS’s CIA requirements and compliance program, and (b) all Covered Persons who engage in Covered Functions receive at least annual training regarding: (i) all applicable Federal health care program and FDA requirements relating to Covered Functions and (ii) all RMS Policies and Procedures and other requirements applicable to Covered Functions. The Training Plan shall include information regarding the following: training topics, categories of Covered Persons and required to attend each training session, length of the training session(s), schedule for training, and format of the training. RMS shall furnish training to its Covered Persons pursuant to the Training Plan during each Reporting Period.

2.Board Training. In addition to the training described in Section III.C.1, within 90 days after the Effective Date, each member of the Board shall receive training regarding the corporate governance responsibilities of board members, and the responsibilities of board members with respect to review and oversight of the Compliance Program. Specifically, 

 

-7-

 

the training shall address the unique responsibilities of health care Board members, including the risks, oversight areas, and strategic approaches to conducting oversight of a health care entity. This training may be conducted by an outside compliance expert hired by the Board and should include a discussion of OIG’s guidance on Board member responsibilities.

New members of the Board shall receive the Board Training described above within 30 days after becoming a member or within 90 days after the Effective Date, whichever is later.

3.Training Records. RMS shall make available to OIG, upon request, training materials and records verifying that the training described in Sections III.C.1 and III.C.2 has been provided as required.

D.Risk Assessment and Internal Review Process

Within 90 days after the Effective Date, RMS shall develop and implement a centralized annual risk assessment and internal review process to identify and address risks associated with each Government Reimbursed Product, including risks associated with the Covered Functions. The Compliance Committee shall be responsible for implementation and oversight of the risk assessment and internal review process. The risk assessment and internal review process shall be conducted annually and shall require RMS to: (1) identify and prioritize risks, (2) develop work plans related to the identified risk areas, (3) implement the work plans, (4) develop corrective action plans in response to the results of any internal audits performed, and (5) track the implementation of the corrective action plans in order to assess the effectiveness of such plans. RMS shall maintain the risk assessment and internal review process for the term of the CIA.

E.Review Procedures

1.General Description.

	
 
	
a.
	
Engagement of Independent Review Organization. Within 90 days after the Effective Date, RMS shall engage an entity (or entities), such as an accounting, auditing, or consulting firm (hereinafter “Independent Review Organization” or “IRO”), to perform the reviews listed in this Section III.E. The applicable requirements relating to the IRO are outlined in Appendix A to this CIA, which is incorporated by reference.

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

	
 
	
c.
	
Access to Records and Personnel. RMS shall ensure the IRO has access to all records and personnel necessary to complete the reviews listed in this Section III.E., and that all records furnished to the IRO are accurate and complete.

 

-8-

 

2.System, Transaction, and Additional Items Reviews. As set forth more fully in Appendix B, the IRO reviews shall consist of three components: Systems Reviews and Transactions Reviews relating to the Covered Functions and an Additional Items Review.

	
 
	
a.
	
Systems Review. The Systems Reviews shall assess RMS’s systems, processes, policies, and procedures relating to the Covered Functions. If there are no material changes in RMS’s relevant systems, processes, policies, and procedures, the Systems Reviews shall be performed for the first and fourth Reporting Periods. If RMS materially changes its relevant systems, processes, policies, and procedures, the IRO shall perform a 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, as set forth more fully in Appendix B.

	
 
	
b.
	
Transactions Review. The Transactions Reviews shall be performed annually and shall cover each of the five Reporting Periods. The IRO(s) shall perform all components of each annual Transaction Review. As set forth more fully in Appendix B, the Transactions Review shall include several components.

	
 
	
c.
	
Additional Items Review. Each IRO review shall also include a review of up to three additional areas or practices of RMS identified by OIG in its discretion (hereafter “Additional Items”). For purposes of identifying the Additional Items to be included in the IRO review for a particular Reporting Period, OIG will consult with RMS and may consider internal audit and monitoring work conducted by RMS, the Government Reimbursed Product portfolio, the nature and scope of RMS’s promotional and other practices, the nature and scope of RMS’s arrangements with HCPs and HCIs, and other information known to OIG.

3.IRO Review Reports. The IRO shall prepare a report based upon each IRO review performed (IRO Review Report). Information to be included in the IRO Review Report is described in Appendices A-B.

4.Independence and Objectivity Certification. The IRO shall include in its report(s) to RMS a certification that the IRO has: (a) evaluated its professional independence and objectivity with respect to the reviews required under this Section III.E; and (b) concluded that it is, in fact, independent and objective in accordance with the requirements specified in Appendix A to this CIA. The IRO’s certification shall include a summary of current and prior engagements between RMS and IRO.

F.Disclosure Program

Within 90 days after the Effective Date, RMS shall establish a Disclosure Program that includes a mechanism (e.g., a toll free compliance telephone line) to enable individuals to 

 

-9-

 

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 RMS’s policies, conduct, practices, or procedures with respect to a Federal health care program or an FDA requirement believed by the individual to be a potential violation of criminal, civil, or administrative law. RMS shall appropriately publicize the existence of the Disclosure Program and 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 nonretribution, nonretaliation policy and shall include a reporting mechanism for anonymous communications for which appropriate confidentiality shall be maintained. The Disclosure Program also shall include a requirement that all of RMS’s Covered Persons shall be expected to report suspected violations of any Federal health care program or FDA requirements to the Compliance Officer or other appropriate individual designated by RMS. 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, RMS 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 and shall record all disclosures, whether or not related to a potential violation of criminal, civil or administrative law related to Federal health care programs or FDA requirements, in the disclosure log within two business days of receipt of the disclosure. The disclosure log shall include a summary of each disclosure received (whether anonymous or not), the individual or department responsible for reviewing the disclosure, the status of the review, and any corrective action taken in response to the review.

G.Ineligible Persons

1.Definitions. For purposes of this CIA:

	
 
	
a.
	
an “Ineligible Person” shall include an individual or entity who:

	
 
	
i.
	
is currently excluded from participation in the Federal health care 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.

	
 
	
b.
	
 “Exclusion List” means the HHS/OIG List of Excluded Individuals/Entities (LEIE) (available through the Internet at http://www.oig.hhs.gov).

 

-10-

 

2.Screening Requirements. RMS shall ensure that all prospective and current Covered Persons are not Ineligible Persons by implementing the following screening requirements.

	
 
	
a.
	
RMS shall screen all prospective Covered Persons against the Exclusion List 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.
	
RMS shall screen all current Covered Persons against the Exclusion List within 90 days after the Effective Date and on an annual basis thereafter.

	
 
	
c.
	
RMS shall maintain a policy requiring all Covered Persons to disclose immediately if they become an Ineligible Person.

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

3.Removal Requirement. If RMS has actual notice that a Covered Person has become an Ineligible Person, RMS shall remove such Covered Person from responsibility for, or involvement with, RMS’s business operations related to the Federal health care program(s) from which such Covered Person has been excluded and shall remove such Covered Person from any position for which the Covered Person’s compensation is paid in whole or part, directly or indirectly, by any Federal health care program(s) from which the Covered Person has been excluded at least until such time as the Covered Person is reinstated into participation in such Federal health care program(s).

4.Pending Charges and Proposed Exclusions. If RMS 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 Person’s employment or contract term, RMS 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, or the accuracy of any claims submitted to any Federal health care program.

H.Notification of Government Investigation or Legal Proceeding

Within 30 days after discovery, RMS shall notify OIG, in writing, of any ongoing investigation or legal proceeding known to RMS conducted or brought by a governmental entity or its agents involving an allegation that RMS 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. 

 

-11-

 

RMS also shall provide written notice to OIG within 30 days after the resolution of the matter and describe the findings and/or results of the investigation or proceeding, if any.

I.Reportable Events

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

	
 
	
a.
	
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;

	
 
	
b.
	
a matter that a reasonable person would consider a probable violation of FDA requirements relating to the promotion of Government Reimbursed Products, unless otherwise reported to the FDA in accordance with Section III.J below;

	
 
	
c.
	
the employment of or contracting with a Covered Person who is an Ineligible Person as defined by Section III.G.1.a; or

	
 
	
d.
	
the filing of a bankruptcy petition by RMS. A Reportable Event may be the result of an isolated event or a series of occurrences.

2.Reporting of Reportable Events. If RMS determines (after a reasonable opportunity to conduct an appropriate review or investigation of the allegations) through any means that there is a Reportable Event, RMS shall notify OIG, in writing, within 30 days after making the determination that the Reportable Event exists.

3.Reportable Events under Sections III.I.1.a and III.I.1.b. For Reportable Events under Sections III.I.1.a and b, the report to OIG shall include:

	
 
	
a.
	
a complete description of all details relevant to the Reportable Event, including, at a minimum, the types of claims, transactions or other conduct giving rise to the Reportable Event, the period during which the conduct occurred, and the names of individuals and entities believed to be implicated, including an explanation of their roles in the Reportable Event;

	
 
	
b.
	
a statement of the Federal criminal, civil or administrative laws that are probably violated by the Reportable Event, if any;

	
 
	
c.
	
the Federal health care programs affected by the Reportable Event, if any;

	
 
	
d.
	
a statement of the FDA requirements probably violated by the Reportable Event, if any; and

 

-12-

 

	
 
	
e.
	
a description of RMS’s actions taken to correct the Reportable Event and prevent it from recurring.

4.Reportable Events under Section III.I.1.c. For Reportable Events under Section III.I.1.c, the report to OIG shall include:

	
 
	
a.
	
the identity of the Ineligible Person and the job duties performed by that individual;

	
 
	
b.
	
the dates of the Ineligible Person’s employment or contractual relationship;

	
 
	
c.
	
a description of the Exclusion List screening that RMS completed before and/or during the Ineligible Person’s employment or contract and any flaw or breakdown in the screening process that led to the hiring or contracting with the Ineligible Person;

	
 
	
d.
	
a description of how the Ineligible Person was identified; and

	
 
	
e.
	
a description of any corrective action implemented to prevent future employment or contracting with an Ineligible Person.

5.Reportable Events under Section III.I.1.d. For Reportable Events under Section III.I.1.d, the report to OIG shall include documentation of the bankruptcy filing and a description of any Federal health care program and/or FDA requirements implicated.

J.Notification of Communications with FDA

Within 30 days after the date of any written or electronic report, correspondence, or communication between RMS and the FDA that materially discusses RMS’s or a Covered Person’s actual or potential unlawful or improper promotion of RMS’s products (including any improper dissemination of information about off-label indications) or that involves adverse events required to be reported to the FDA under 21 C.F.R. Part 803, RMS shall provide a copy of the report, correspondence, or communication to OIG. RMS shall also provide written notice to OIG within 30 days after the resolution of any such disclosed improper promotional matter, and shall provide OIG with a description of the findings and/or results of the matter, if any.

K.Field Force Monitoring and Review Efforts

Within 90 days after the Effective Date, RMS shall establish a comprehensive Field Force Monitoring Program (FFMP) to evaluate and monitor its sales personnel’s interactions with HCPs and HCIs. The FFMP shall be a formalized process designed to directly and indirectly observe the appropriateness of sales personnel’s interactions with HCPs and HCIs and to identify potential off-label promotional activities or other improper conduct. As described in more detail below, the FFMP shall include: (1) direct field observations (Observations) of sales personnel and (2) the monitoring and review of other records relating to sales personnel’s interactions with HCPs and HCIs (Records Reviews).

 

-13-

 

1.Observations. As a component of the FFMP, RMS compliance or other appropriately trained RMS personnel who are independent from the functional area being monitored, or third party consultants appropriately trained by and under the supervision of RMS (Monitoring Personnel) shall conduct observations of sales representatives (including any contract sales personnel) to assess whether the messages delivered and materials distributed to HCPs and HCIs are consistent with applicable legal requirements and with RMS’s Policies and Procedures. These observations shall be full day ride-alongs with field sales representatives (Observations), and each Observation shall consist of directly observing all meetings between a sales representative and HCPs and HCIs during the workday. The Observations shall be scheduled throughout the year, judgmentally selected by Monitoring Personnel, include a review of each actively promoted Government Reimbursed Product, and be conducted across the United States.

At the completion of each Observation, Monitoring Personnel shall prepare a report which includes:

	
 
	
1)
	
the identity of the sales representative;

	
 
	
2)
	
the identity of the Monitoring Personnel who conducted the Observation;

	
 
	
3)
	
the date and duration of the Observation;

	
 
	
4)
	
the Government Reimbursed Product(s) promoted during the Observation;

	
 
	
5)
	
an overall assessment of compliance with RMS Policies and Procedures; and

	
 
	
6)
	
the identification of any potential off-label promotional activity or other improper conduct by the field sales representative.

Monitoring Personnel shall conduct at least 3 Observations during each Reporting Period.

Monitoring Personnel shall have access to all relevant records and information necessary to assess sales representatives’ interactions with HCPs and HCIs and to identify potential or actual compliance violations.

2.Records Reviews. As a component of the FFMP, RMS shall also review various types of records to assess sales representatives’ interactions with HCPs and HCIs and to identify potential or actual compliance violations.

	
 
	
a.
	
For each Reporting Period, RMS shall develop and implement a plan for conducting Records Reviews associated with at least 2 Government Reimbursed Products. The Records Reviews shall include a review of records relating to the activities of sales representatives in every separate district and/or region (as applicable) who promoted the products under review.

	
 
	
b.
	
The Records Reviews shall include the monitoring and review of:

 

-14-

 

	
 
		

	
 
	
i.
	
records and systems associated with sales representatives’ interactions with HCPs and HCIs (including records relating to consulting and other fee-for-service arrangements, speaker program activities, , travel and entertainment, expense reports, any payments to HCPs or HCIs, and sales communications from managers);

	
 
	
ii.
	
records relating to requests for medical information about or inquiries relating to, the Government Reimbursed Products under review;

	
 
	
iii.
	
sales representative call notes;

	
 
	
iv.
	
sales representatives’ e-mails and other electronic records; and

	
 
	
v.
	
recorded results of the Observations of sales force representatives, coaching guides, and manager notes.

3.Reporting and Follow-up. Results from the FFMP shall be compiled and reported to the Compliance Officer for review and remediation as appropriate.

L.Requirements Relating to Certain Promotional and Non-Promotional Activities 

RMS shall develop policies, procedures, and systems to implement the requirements outlined below relating ot the following types of activites: (1) arrangements with HCPs to serve as presenters on behalf of RMS or participate in training programs related to such presentations (Speaker Programs), (2) arrangements with HCPs for services other than Speaker Programs, referred to herein as “consulting arrangement activities,” and (3) grant and charitable contribution activities

1.Speaker Programs. To the exent that RMS engages in Speaker Programs, RMS shall establish and implement the following requirements:

	
 
	
a.
	
A process to require all speakers to complete training and enter written agreements that describe the scope of work to be performed, the speaker fees to be paid, and compliance obligations for the speakers (including requirements regarding the use of RMS approved materials and requirements that speakers may not directly or indirectly promote the product for off-label uses).

	
 
	
b.
	
A centralized, electronic system to initiate and track all Speaker Programs that includes controls designed to ensure that Speaker Programs are used for legitimate and lawful purposes in accordance with all applicable Federal health care program and FDA requirements.

 

-15-

 

	
 
	
c.
	
A process to ensure speakers are paid according to a centrally managed, pre-set rate structure determined based on an independent fair-market value analysis.

	
 
	
d.
	
A comprehensive list of Speaker Program attendees through its centralized system. In addition, RMS shall use its centralized system to handle all logistics and spending associated with Speaker Programs, including the tracking and review of the aggregate amount (including speaker fees, travel, and other expenses) paid to each speaker in connection with Speaker Programs.

	
 
	
e.
	
A requirement for certifications by sales representatives or other RMS personnel that a Speaker Program complied with RMS requirements, or in the event of non-compliance, RMS shall require the identification of the policy violation and ensure appropriate follow up activity to address the violation.

2.Consulting Arrangement Activities. To the extent that RMS engages HCPs for services other than for speaker programs (e.g., training and education services, product development activities, presentations, consultant task force meetings, advisory boards, ad hoc advisory activities, research and research-related activities, authorship activities, and any other financial engagement or arrangement with an HCP), such HCPs shall be referred to herein as Consultants. Within 90 days of the Effective Date, RMS shall:

	
 
	
a.
	
Require all Consultants to enter written agreements describing the scope of work to be performed, the consultant fees to be paid, and compliance obligations for the Consultants. Consultants shall be paid according to a centrally managed, pre-set rate structure that is determined based on an independent fair-market value analysis.

	
 
	
b.
	
Establish a process to develop an annual budgeting plan that specifies (i) the business needs for, and the estimated numbers of, the various Consultant engagements and activities to occur during the following year and (ii) the budgeted amounts to be spent on Consultant-related activities. RMS compliance personnel shall be involved in the review and approval of such plans, including any subsequent modification of an approved plan, for the purpose of ensuring 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 RMS Policies and Procedures.

	
 
	
c.
	
Establish a process to ensure that a needs assessment has been completed to justify the retention of a Consultant prior to the retention of the Consultant. The needs assessment shall identify the business need for the retention of the Consultant and provide specific details about the consulting arrangement (e.g., information 

 

-16-

 

	
 
		
about the numbers and qualifications of the HCPs and HCIs to be engaged, the agenda for any proposed meeting, and a description of the proposed work to be done and the type of work product to be generated). Any deviations from the Consultant budgeting plans shall be documented in the needs assessment form and shall be subject to review and approval by RMS compliance personnel.

	
 
	
d.
	
Amend its policies and procedures in a manner designed to ensure that each Consultant performs the work for which the Consultant is engaged and that, as applicable, RMS receives the work product generated by the Consultant.

3.Grant and Charitable Contribution Activities. Within 90 days of the Effective date, RMS shall:

	
 
	
a.
	
Establish a centralized system which shall be the exclusive mechanism through which requestors may request or be awarded amounts for Third Party Educational Activities, other grant activities involving HCPs and HCIs (referred to below as “Grants”), and charitable contributions supported by RMS (referred to below as “Contributions”).

	
 
	
b.
	
Establish a process to review requests for Grants and Contributions according to standardized, objective criteria developed by RMS (such as based upon the qualifications of the requestor, or the quality of the program funded by the Grant or Contribution) and to ensure that Grants or Contributions are provided only pursuant to a written agreement with the funding recipient and that payments to the funding recipient are consistent with the written agreement. RMS’s sales and marketing personnel shall have no involvement in, or influence over, the review and approval of requests for Grants or Contributions.

M.Reporting of Physician Payments

1.Reporting of Payment Information. Within 90 days after the Effective Date, RMS shall post on its website a description of the types of Payments it makes to Covered Recipients and include a link to CMS’s Open Payments Data website (www.openpaymentsdata.cms.gov). RMS also shall include on its website instructions regarding how to utilize the CMS Open Payments Data search tool to search for information regarding Payments provided to Covered Recipients from RMS.

2.Definitions. For purposes of this Section III.M, the terms “Payments” and “Covered Recipient” are defined as specified in 42 U.S.C. § 1320a-7h and the related regulations and guidance (including FAQs) published by CMS.

	
IV.
	
SUCCESSOR LIABILITY

 

-17-

 

		

In the event that, after the Effective Date, RMS proposes to (a) sell any or all of its business, business units or locations (whether through a sale of assets, sale of stock or other type of transaction) that are subject to this CIA; or (b) purchases or establishes a new business, business unit or location related to or engaged in any of the Covered Functions, the CIA shall be binding on the purchaser of any business, business unit or location. Any such new business, business unit or location (and all Covered Persons at each new business, business unit or location) shall be subject to the applicable requirements of this CIA, unless otherwise determined and agreed to in writing by OIG. RMS shall give notice of such sale or purchase to OIG within 30 days following the closing of the transaction.

If, in advance of a proposed sale or a proposed purchase, RMS wishes to obtain a determination by OIG that the proposed purchaser or the proposed acquisition will not be subject to the requirements of the CIA, RMS must notify OIG in writing of the proposed sale or purchase at least 30 days in advance. This notification shall include a description of the business, business unit, or location to be sold or purchased, a brief description of the terms of the transaction and, in the case of a proposed sale, the name and contact information of the prospective purchaser.

	
V.
	
IMPLEMENTATION AND ANNUAL REPORTS

A.Implementation Report

Within 120 days after the Effective Date, RMS 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, business address, business phone number, and position description of the Compliance Officer required by Section III.A.1, 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.2;

3.the names of the Board members who are responsible for satisfying the Board compliance obligations described in Section III.A.3;

4.the names and positions of the Certifying Employees required by Section III.A.4 and a copy of the written process for Certifying Employees to follow in order to complete the certification required by Section III.A.4;

5.a list of the Policies and Procedures required by Section III.B.1;

6.the Training Plan required by Section III.C.1 and a description of the Board training required by Section III.C.2 (including a summary of the topics covered, the length of the training and when the training was provided);

7.a description of the risk assessment and internal review process required by Section III.D;

 

-18-

 

8.the following information regarding the IRO(s): (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; and (d) a certification from the IRO regarding its professional independence and objectivity with respect to RMS that includes a summary of all current and prior engagements between RMS and the IRO;

9.a description of the Disclosure Program required by Section III.F;

10.a description of the Ineligible Persons screening and removal process required by Section III.G;

11.a description of the FFMP required by Section III.K;

12.a description of the policies, procedures, and systems implemented pursuant to the Requirements Relating to Certain Promotional and Non-Promotional Activities outlined in Section III.L;

13.a certification from the Compliance Officer that information regarding Payments has been posted on RMS’s website as required by Section III.M;

14.a list of all of RMS’s locations (including locations and mailing addresses); the corresponding name under which each location is doing business; and the locations’ Medicare and state Medicaid provider number and/or supplier number(s) if any;

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

16.the certifications required by Section V.C.

B.Annual Reports

RMS shall submit a written report to OIG on its compliance with the CIA requirements for each of the five Reporting Periods (Annual Report). Each Annual Report shall include, at a minimum, the following information:

1.any change in the identity, position description, or other noncompliance job responsibilities of the Compliance Officer; a current list of the Compliance Committee members; a current list of the Board members who are responsible for satisfying the Board compliance obligations; and a current list of the Certifying Employees, along with the identification of any changes made during the Reporting Period to the Compliance Committee, Board, and Certifying Employees;

2.a description of any changes to the written process for Certifying Employees to follow in order to complete the certification required by Section III.A.4;

3.the dates of each report made by the Compliance Officer to the Board (written documentation of such reports shall be made available to OIG upon request);

 

-19-

 

4.the Board resolution required by Section III.A.3, a description of the documents and other materials reviewed by the Board, as well as any additional steps taken, in its oversight of the compliance program and in support of making the resolution, and the Compliance Expert report as required in Section III.A.3.d.;

5.a list of any new or revised Policies and Procedures required by Section III.B.1 developed during the Reporting Period;

6.a description of any changes to RMS’s Training Plan developed pursuant to Section III.C and a summary of any Board training provided during the Reporting Period;

7.a description of any changes to the risk assessment and internal review process required by Section III.D, including the reasons for such changes;

8.a summary of the following components of the risk assessment and internal review process during the Reporting Period: (a) work plans developed; (b) any internal audits performed; (c) corrective action plans developed in response to any internal audits; and (d) steps taken to track the implementation of the corrective action plans. Copies of any work plans, internal audit reports, and corrective action plans shall be made available to OIG upon request;

9.a complete copy of all reports prepared pursuant to Section III.E and RMS’s response to the reports, along with corrective action plan(s) related to any issues raised by the reports;

10.a certification from the IRO regarding its professional independence and objectivity with respect to RMS, including a summary of all current and prior engagements between RMS and the IRO;

11.a summary of the disclosures in the disclosure log required by Section III.F that relate to Federal health care programs, FDA requirements, or Government Reimbursed Products, including at least the following information: (a) a description of the disclosure, (b) the date the disclosure was received, (c) the resolution of the disclosure, and (d) the date the disclosure was resolved (if applicable). The complete disclosure log shall be made available to OIG upon request;

12.a description of any changes to the Ineligible Persons screening and removal process required by Section III.G, including the reasons for such changes;

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

14.a summary of Reportable Events (as defined in Section III.I) identified during the Reporting Period;

 

-20-

 

15.a summary describing any written communication with the FDA required to have been reported pursuant to Section III.J. This summary shall include a description of each matter and the status of each matter;

16.a summary of any changes the FFMP and the results of the FFMP required by Section III.K, including copies of the Observations for any instances in which it was determined that improper conduct occurred and a description of the action(s) that RMS took as a result of such determinations;

17.a summary of the any changes to the policies, procedures, and systems relating to the Requirements for Certain Promotional and Non-Promotional Activities described in Section III.L, including the reasons for such changes;;

18.a certification from the Compliance Officer that information regarding Payments has been posted on RMS’s website as required by Section III.M;

19.a description of all changes to the most recently provided list of RMS’s locations (including addresses) as required by Section V.A.14;

20.a description of any changes to RMS’s corporate structure, including any parent and sister companies, subsidiaries, and their respective lines of business; and

21.the certifications required by Section V.C.

The first Annual Report shall be received by OIG no later than 60 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 

1.Certifying Employees. In each Annual Report, RMS shall include the certifications of Certifying Employees as required by Section III.A.4;

2.Compliance Officer and Chief Executive Officer. The Implementation Report and each Annual Report shall include a certification by the Compliance Officer and Chief Executive Officer that:

	
 
	
a.
	
to the best of his or her knowledge, except as otherwise described in the report, RMS has implemented and is in compliance with all requirements of this CIA;

	
 
	
b.
	
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

	
 
	
c.
	
he or she understands that the certification is being provided to and relied upon by the United States.

 

-21-

 

D.Designation of Information

RMS 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. RMS 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

A.330 Independence Avenue, S.W.

Washington, DC 20201

Telephone: 202.619.2078

Facsimile: 202.205.0604

RMS:

Will McGuire

 Chief Executive Officer 

Ra Medical Systems, Inc. 

B.2070 Las Palmas Drive 

Carlsbad, CA 92011 

Phone: (760) 804-1648 

Fax: (760) 804-1657 

wmcguire@ramed.com 

Unless otherwise specified, all notifications and reports required by this CIA may be made by electronic mail, overnight mail, hand delivery, or other means, provided that there is proof that such notification was received. Upon request by OIG, RMS may be required to provide OIG with an additional copy of each notification or report required by this CIA in OIG’s requested format (electronic or paper).

	
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 conduct interviews, examine and/or request copies of or 

 

-22-

 

copy RMS’s books, records, and other documents and supporting materials and/or conduct on-site reviews of any of RMS’s locations for the purpose of verifying and evaluating: (a) RMS’s compliance with the terms of this CIA and (b) RMS’s compliance with Federal health care program requirements and with all applicable FDA requirements. The documentation described above shall be made available by RMS to OIG or its duly authorized representative(s) at all reasonable times for inspection, audit, and/or reproduction. Furthermore, for purposes of this provision, OIG or its duly authorized representative(s) may interview any of RMS’s owners (who are Covered Persons), employees, contractors and directors 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. RMS shall assist OIG or its duly authorized representative(s) in contacting and arranging interviews with such individuals upon OIG’s request. RMS’s owners, employees, contractors and directors may elect to be interviewed with or without a representative of RMS present.

	
VIII.
	
DOCUMENT AND RECORD RETENTION

RMS 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 HHS’s FOIA procedures, set forth in 45 C.F.R. Part 5, OIG shall make a reasonable effort to notify RMS prior to any release by OIG of information submitted by RMS pursuant to its obligations under this CIA and identified upon submission by RMS as trade secrets, or information that is commercial or financial and privileged or confidential, under the FOIA rules. With respect to such releases, RMS shall have the rights set forth at 45 C.F.R. § 5.42 (a).

	
X.
	
BREACH AND DEFAULT PROVISIONS 

RMS 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, RMS 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) per obligation for each day RMS fails to establish, implement or comply with any of the following obligations as described in Section III:

	
 
	
a.
	
Compliance Officer;

	
 
	
b.
	
Compliance Committee;

 

-23-

 

	
 
		

	
 
	
c.
	
the Board compliance obligations;

	
 
	
d.
	
the management certification obligations and the development and implementation of a written process for Certifying Employees, as required by Section III.A.4;

	
 
	
e.
	
written Policies and Procedures;

	
 
	
f.
	
the development of a written training plan and the training and education of Covered Persons and Board members;

	
 
	
g.
	
a risk assessment and internal review process;

	
 
	
h.
	
a Disclosure Program;

	
 
	
i.
	
Ineligible Persons screening and removal requirements;

	
 
	
j.
	
notification of Government investigations or legal proceedings;

	
 
	
k.
	
reporting of Reportable Events;

	
 
	
l.
	
notification of written communications with FDA;

	
 
	
m.
	
the FFMP;

	
 
	
n.
	
the Requirements Relating to Certain Promotional and Non-Promotional Activities; and

	
 
	
o.
	
posting of any Payment-related information.

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 RMS fails to engage and use an IRO as required by Section III.E and Appendix B.

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 RMS fails to timely submit (a) a complete Implementation Report or Annual Report, (b) a certification to OIG in accordance with the requirements of Section V, or (c) a complete response to any request for information from OIG.

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 RMS fails to submit any IRO Review report in accordance with the requirements of Section III.E and Appendix B.

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

 

-24-

 

6.A Stipulated Penalty of $50,000 for each false certification submitted by or on behalf of RMS as part of its Implementation Report, any Annual Report, additional documentation to a report (as requested by OIG), or otherwise required by this CIA.

7.A Stipulated Penalty of $2,500 for each day RMS fails to grant the IRO access to all records and personnel necessary to complete the reviews required by Section III.E and for each day RMS fails to furnish accurate and complete records to the IRO, as required by Section III.E and Appendix B; and

8.A Stipulated Penalty of $1,000 for each day RMS fails to comply fully and adequately with any obligation of this CIA. OIG shall provide notice to RMS stating the specific grounds for its determination that RMS has failed to comply fully and adequately with the CIA obligation(s) at issue and steps RMS shall take to comply with the CIA. (This Stipulated Penalty shall begin to accrue 10 business days after the date RMS 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 1-7 of this Section.

B.Timely Written Requests for Extensions

RMS 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 RMS 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 RMS 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 RMS 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 RMS of: (a) RMS’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 business days after the receipt of the Demand Letter, RMS 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 RMS elects to request an ALJ hearing, the Stipulated Penalties shall continue to accrue until RMS 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 

 

-25-

 

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.d, these provisions for payment of Stipulated Penalties shall not affect or otherwise set a standard for OIG’s decision that RMS 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.
	
repeated violations or a flagrant violation of any of the obligations under this CIA, including, but not limited to, the obligations addressed in Section X.A;

	
 
	
b.
	
a failure by RMS to report a Reportable Event and take corrective action as required in Section III.I;

	
 
	
c.
	
a failure to engage and use an IRO in accordance with Section III.E and Appendix B; or

	
 
	
d.
	
a failure to respond to a Demand Letter concerning the payment of Stipulated Penalties in accordance with Section X.C.

2.Notice of Material Breach and Intent to Exclude. The parties agree that a material breach of this CIA by RMS constitutes an independent basis for RMS’s exclusion from participation in the Federal health care programs. The length of the exclusion shall be in OIG’s discretion, but not more than five years per material breach. Upon a determination by OIG that RMS has materially breached this CIA and that exclusion is the appropriate remedy, OIG shall notify RMS of: (a) RMS’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. RMS 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.
	
the alleged material breach has been cured; or

	
 
	
b.
	
the alleged material breach cannot be cured within the 30 day period, but that: (i) RMS has begun to take action to cure the material breach; (ii) RMS is pursuing such action with due diligence; and (iii) RMS has provided to OIG a reasonable timetable for curing the material breach.

 

-26-

 

4.Exclusion Letter. If, at the conclusion of the 30 day period, RMS fails to satisfy the requirements of Section X.D.3, OIG may exclude RMS from participation in the Federal health care programs. OIG shall notify RMS in writing of its determination to exclude RMS (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 RMS’s receipt of the Exclusion Letter. The exclusion shall have national effect. Reinstatement to program participation is not automatic. At the end of the period of exclusion, RMS 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 RMS 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, RMS 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. The procedures relating to the filing of a request for a hearing can be found at http://www.hhs.gov/dab/divisions/civil/procedures/divisionprocedures.html. 

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 RMS was in full and timely compliance with the obligations of this CIA for which OIG demands payment; and (b) the period of noncompliance. RMS 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 RMS to pay Stipulated Penalties, such Stipulated Penalties shall become due and payable 20 days after the ALJ issues such a decision unless RMS 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 whether RMS was in material breach of this CIA and, if so, whether:

	
 
	
a.
	
RMS cured such breach within 30 days of its receipt of the Notice of Material Breach; or

 

-27-

 

	
 
	
b.
	
the alleged material breach could not have been cured within the 30 day period, but that, during the 30 day period following RMS’s receipt of the Notice of Material Breach: (i) RMS had begun to take action to cure the material breach within that period; (ii) RMS pursued such action with due diligence; and (iii) RMS provided to OIG within that period a reasonable timetable for curing the material breach.

For purposes of the exclusion herein, exclusion shall take effect only after an ALJ decision favorable to OIG, or, if the ALJ rules for RMS, only after a DAB decision in favor of OIG. RMS’s election of its contractual right to appeal to the DAB shall not abrogate OIG’s authority to exclude RMS 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 RMS 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. RMS 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 RMS, RMS 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.

	
XI.
	
EFFECTIVE AND BINDING AGREEMENT 

RMS and OIG agree as follows:

A.This CIA shall become final and binding on the date the final signature is obtained on the CIA.

B.This CIA constitutes the complete agreement between the parties and may not be amended except by written consent of the parties to this CIA.

C.All requirements and remedies set forth in this CIA are in addition to and do not affect (1) RMS’s responsibility to follow all applicable Federal health care program and FDA requirements or (2) the government’s right to impose appropriate remedies for failure to follow applicable Federal health care program or FDA requirements.

D.The undersigned RMS signatories represent and warrant that they are authorized to execute this CIA. The undersigned OIG signatories represent that they are signing this CIA in their official capacity and that they are authorized to execute this CIA.

E.This CIA may be executed in counterparts, each of which constitutes an original and all of which constitute one and the same CIA. Electronically-transmitted signatures shall constitute acceptable, binding signatures for purposes of this CIA.

 

 

-28-

 

 

ON BEHALF OF RMS

 

	
/s/ Will McGuire
	
 
	
12/21/2020

	
 
	
 
	
 

	
WILL MCGUIRE
	
 
	
DATE

	
Chief Executive Officer
	
 
	
 

	
Ra Medical Systems, Inc.
	
 
	
 

	
 
	
 
	
 

 

 

 

	
/s/ Michael C. Theis
	
 
	
12/21/2020

	
 
	
 
	
 

	
MICHAEL C. THEIS
	
 
	
DATE

	
Hogan Lovells US LLP
	
 
	
 

 

 

 

 

 

 

 

ON BEHALF OF THE OFFICE OF INSPECTOR GENERAL
OF THE DEPARTMENT OF HEALTH AND HUMAN SERVICES

	
/s/ Gregory Demske
	
 
	
12/28/2020

	
LISA M. RE
	
 
	
DATE

	
Assistant Inspector General for Legal Affairs
	
 
	
 

	
Office of Inspector General
	
 
	
 

	
U.S. Department of Health and Human Services
	
 
	
 

 

 

 

	
/s/ Dennis Pangindian
	
 
	
12/28/2020

	
DENNIS A. PANGINDIAN
	
 
	
DATE

	
Associate Counsel
	
 
	
 

	
Office of Counsel to the 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 (IRO) required by Section III.E of the CIA.

A.IRO Engagement

1.RMS 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 the information identified in Section V.A.8 of the CIA or any additional information submitted by RMS in response to a request by OIG, whichever is later, OIG will notify RMS if the IRO is unacceptable. Absent notification from OIG that the IRO is unacceptable, RMS may continue to engage the IRO.

2.If RMS 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, RMS 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 this information or any additional information submitted by RMS at the request of OIG, whichever is later, OIG will notify RMS if the IRO is unacceptable. Absent notification from OIG that the IRO is unacceptable, RMS may continue to engage the IRO.

B.IRO Qualifications 

The IRO shall:

1.assign individuals to conduct the IRO Reviews who have expertise in the medical device industry and have expertise in all applicable Federal health care program and FDA requirements relating to Covered Functions, including but not limited to expertise relating to marketing and promotional activities associated with medical devices and the Federal Anti-Kickback Statute and False Claims Act;

2.assign individuals to design and select the samples for the Transactions Reviews who are knowledgeable about the appropriate statistical sampling techniques; and

3.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 IRO Review in accordance with the specific requirements of the CIA;

 

 

2.follow all applicable Federal health care program and FDA requirements in making assessments in each IRO Review;

3.respond to all OIG inquires in a prompt, objective, and factual manner; and

4.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 each IRO Review 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.RMS and IRO. If RMS terminates its IRO or if the IRO withdraws from the engagement during the term of the CIA, RMS 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. RMS 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 the 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 shall notify RMS in writing regarding OIG's basis for determining that the IRO has not met the requirements of this Appendix. RMS shall have 30 days from the date of OIG's written notice to provide information regarding the IRO's qualifications, independence or performance of its responsibilities in order to resolve the concerns identified by OIG. If, following OIG' s review of any information provided by RMS regarding the IRO, OIG determines that the IRO has not met the requirements of this Appendix, OIG shall notify RMS in writing that RMS shall be required to engage a new IRO in accordance with Paragraph A of this Appendix. RMS must engage a new IRO within 60 days of its receipt of OIG’s written notice. The final determination as to whether or not to require RMS to engage a new IRO shall be made at the sole discretion of OIG.

 

 

-2-

 

 

APPENDIX B 

IRO REVIEWS

A.IRO Engagement, General Description

As specified more fully below, RMS shall retain an IRO to perform engagements to assist RMS in assessing and evaluating certain of its systems, processes, policies, and procedures related to RMS’s Covered Functions (IRO Review). The IRO Review shall consist of two components - a systems review (Systems Review) and a transactions review (Transactions Review) as described more fully below. RMS may engage, at its discretion, a single entity to perform both components of the IRO Reviews, provided that the entity has the necessary expertise and capabilities to perform both.

If there are no material changes in RMS's systems, processes, policies, and procedures relating to Covered Functions, the IRO shall perform the Systems Review of certain systems, processes, policies and procedures relating to Covered Functions (as set forth below) for the first and fourth Reporting Periods. If RMS materially changes its systems, processes, policies, and procedures relating to Covered Functions, the IRO shall perform a Systems Review for the Reporting Period(s) in which such changes were made in addition to conducting the Review as set forth above. The additional Systems Review(s) shall consist of: (1) an identification of the material changes, and (2) a review of the systems, processes, policies, and procedures that materially changed. The IRO shall conduct the Transactions Review for each Reporting Period of the CIA.

B.IRO Systems Review

The Systems Review shall be a review of RMS's systems, processes, policies, and procedures (including the controls on those systems, processes, policies, and procedures) relating to Covered Functions. More specifically, the IRO shall review RMS's systems, processes, policies, and procedures associated with the following (hereafter “Reviewed Policies and Procedures):

1.RMS’s systems, policies, processes, and procedures relating to the materials and information that may be distributed by RMS sales representatives (including any contract sales force) about Government Reimbursed Products and the manner in which RMS sales representatives respond to requests for information about non-FDA approved (or “off-label”) uses of Government Reimbursed Products;

2.RMS’s systems, policies, processes, and procedures relating to the materials and information that may be distributed and the mechanisms through, and manner in which, RMS receives and responds to requests for information from an HCP or another individual or entity about off-label uses of Government Reimbursed Products; the form and content of information disseminated by RMS in response to such requests; and the internal review process for the information disseminated;

3.RMS’s systems, policies, processes, and procedures relating to the manner and circumstances under which RMS medical personnel interact with or participate in meetings or 

 

 

events with HCPs, HCIs, or payors (either alone or with RMS sales representatives) and the role of RMS medical personnel at such meetings or events, as well as how they handle responses to requests for information about off-label uses of Government Reimbursed Products;

4.RMS’s systems, policies, processes, and procedures relating to the materials and information that may be distributed or made available by RMS through social media and/or direct-to-consumer advertising;

5.RMS’s systems, policies, processes, and procedures relating to the development, implementation, and review of policies relating to the distribution of Government Reimbursed Products for evaluation purposes (Evaluation Product). This shall include a review of the bases upon, and circumstances under, which HCPs and HCIs belonging to specified medical specialties or types of clinical practice may receive Evaluation Product from RMS (including, separately, from sales representatives, or through other channels);

6.RMS’s systems, policies, processes, and procedures relating to consultant or other fee-for-service arrangements entered into with HCPs or HCIs (including but not limited to speaker programs, speaker training programs, training and education services, product development activities, presentations, consultant task force meetings, advisory boards, ad hoc advisory activities, research and research-related activities, authorship activities, and any other financial engagement or arrangement with an HCP or HCI) and all events and expenses relating to such engagements or arrangements;

7.RMS’s systems, policies, processes, and procedures relating to agreements or arrangements with HCPs or HCIs for the purchase or licensing of intellectual property (including, but not limited to, patents, patent applications, and payment of royalties);

8.RMS’s systems, policies, processes, and procedures relating to programs by HCPs to educate sales representatives, including but not limited to presentations by HCPs at sales meetings, preceptorships, tutorials, and experience-based learning activities;

9.RMS’s systems, policies, processes, and procedures relating to the review and approval of, and payment for, travel and related expenses for HCPs including those in connection with an HCP’s participation in educational, research, training, or other RMS-sponsored programs or activities;

10.RMS’s systems, policies, processes, and procedures relating to the sponsorship or funding of grants (including educational grants) or charitable contributions;

11.RMS’s systems, policies, processes, and procedures relating to funding of, or participation in, any Sponsorships or Third Party Educational Activity as defined in Section II.E.4 and II.E.5 of the CIA;

12.RMS’s systems, policies, processes, and procedures relating to the review of promotional, reimbursement-related, and disease state materials and information intended to be disseminated outside RMS by appropriate qualified personnel (such as regulatory, medical, and/or legal personnel) in a manner designed to ensure that legal, regulatory, and medical 

 

-2-

 

concerns are properly addressed during RMS’s review and approval process and are elevated when appropriate;

13.RMS’s systems, policies, processes, and procedures relating to compensation (including through salaries, bonuses, or other means) for Covered Persons who are sales representatives and their managers;

14.RMS’s systems, policies, processes, and procedures relating to medical device reporting, including the development of medical device reporting procedures and establishing and maintaining medical device reporting event files, as required by 21 CFR Part 803 and other applicable FDA requirements; and

15.RMS’s systems, policies, processes, and procedures relating to disciplinary policies and procedures for violations of RMS’s Policies and Procedures, including policies relating to Federal health care program and FDA requirements.

C.IRO Systems Review Report

The IRO shall prepare a report based upon each Systems Review performed. For each of the Reviewed Policies and Procedures identified in Section B above, the report shall include the following items:

1.a description of the documentation (including policies) reviewed and any personnel interviewed;

2.a detailed description of RMS's systems, policies, processes, and procedures relating to the items identified in Sections B.1-15 above, including a general description of RMS's control and accountability systems (e.g., documentation and approval requirements, and tracking mechanisms) and written policies regarding the Reviewed Policies and Procedures;

3.a description of the manner in which the control and accountability systems and the written policies relating to the items identified in Sections B.1-14 above are made known or disseminated within RMS;

4.findings and supporting rationale regarding any weaknesses in RMS's systems, processes, policies, and procedures relating to the Reviewed Policies and Procedures, if any; and

5.recommendations to improve any of the systems, policies, processes, or procedures relating to the Reviewed Policies and Procedures, if any.

D.IRO Transactions Review

The Transactions Review shall include a review of: (1) a sample of consultant or other fee-for-service arrangements entered into with HCPs (including all events and expenses related to such engagements or arrangements), (2) a sample of Payments, and (3) up to three additional items identified by the OIG in accordance with Section III.E.2.c of the CIA (hereafter “Additional Items”). The IRO shall report on all aspects of its reviews in the Transactions Review Report.

 

-3-

 

1.Review of Consulting Activities. For purposes of this Appendix B , the term “Consulting Activities” shall include all consulting and other fee for service arrangements entered with HCPs (including but not limited to speaker programs, speaker training programs, training and education services, product development activities, presentations, consultant task force meetings, advisory boards, ad hoc advisory activities, research and research-related activities, authorship and authorship-related activities, and any other financial engagement or arrangement with an HCP or HCI) and all events and expenses relating to such engagements or arrangements.

	
 
	
a.
	
For the first Reporting Period, the IRO shall select and review a sample of 3 Consulting Activities entered into with HCPs and all related expenses. For the second and subsequent Reporting Periods, the IRO shall review a total of at least 3 Consulting Activities which shall include a review of specified numbers of each type of Consulting Activities as determined by the OIG. Prior to the determination of the number of each type of Consulting Activity to be reviewed during the second and subsequent Reporting Periods, RMS shall provide to the OIG the information specified below in the next paragraph within 60 days prior to the end of the applicable preceding Reporting Period.

	
 
	
b.
	
The IRO shall select its sample of Consulting Activities for review in consultation with OIG after the provision of information about the Consulting Activities to the OIG. RMS shall provide the following information to the OIG: 1) a description of each type of Consulting Activity undertaken during the Reporting Period and a description of the services to be provided under each Consulting Activity; 2) the number of each type of RMS Consulting Activity undertaken during the Reporting Period; and 3) the overall budgeted amount to be spent in connection with each type of Consulting Activity during the Reporting Period.

	
 
	
c.
	
For each Consulting Activity reviewed the IRO shall determine whether:

i.a written agreement was in place for each Consulting Activity that describes the scope of work to be performed, the fees and related expenses to be paid for the Consulting Activity, and the compliance obligations for the Consultant;

ii.the compensation to be paid for the Consulting Activity was determined in accordance with a centrally managed, pre-set rate structure established by RMS;

iii.the rate structure was established based on an independent FMV analysis;

iv.the Consulting Activity was identified in the annual Consultant budgeting plan developed by RMS;

 

-4-

 

v.a needs assessment that identifies the business need for the Consulting Activity and provides details about the Consulting Activity was completed prior to the initiation of the Consulting Activity; 

vi.the Consulting Activity was reviewed and approved in accordance with RMS Policies and Procedures;

vii.RMS collected and retained a record of the specific activity performed by the HCP and, if applicable, a copy of the work product generated by the HCP in connection with the Consulting Activity; and

viii.the activity undertaken by the Consultant and/or the work product generated by the HCP was used by RMS in a manner consistent with the needs assessment that was completed prior to the initiation of the Consulting Activity.

2.Review of Payments. For purposes of this Appendix B, the term “Control Documents” shall include all material documents or electronic records associated with each RMS Payment reflected in the Open Payments database for that calendar year. For example, the term “Control Documents” includes, but is not limited to, documents relating to the nature, purpose, and amount of the Payment; contracts relating to the Payment; documents relating to the occurrence of Payment; documents reflecting any work product generated in connection with the Payment; documents submitted by sales representatives or headquarters personnel to request approval for the Payment; and business rationale or justification forms relating to the Payment.

a.For each Reporting Period, the OIG shall have the discretion to identify up to 30 Covered Recipients who received Payments from RMS during the prior calendar year and will be subject to the IRO review described below. If the OIG elects to exercise this discretion, it shall notify the IRO of the Covered Recipients subject to the IRO Review. If the OIG elects not to exercise its discretion, the IRO shall randomly select 30 Covered Recipients to be included in the review.

b.For each selected Covered Recipient, the IRO shall review the Control Documents associated with the Payments to the Covered Recipient for all categories reflected in the Open Payments Data website except for the Food/Beverage and Travel/Lodging categories of Payments. Specifically, for each Covered Recipient selected as part of the sample, the IRO shall review the Control Documents identified by the IRO as necessary and sufficient to validate each Payment reported to CMS to evaluate the following:

i.whether Control Documents are available relating to each Payment;

ii.whether the Control Documents were completed and archived in accordance with the requirements set forth in RMS's policies;

iii.whether the aggregate value of the Payment as reflected in the Open Payments Database is consistent with the value of the Payment reflected in the Control Documents; and

 

-5-

 

iv.whether the Control Documents reflect that RMS's policies were followed in connection with the Payment e.g., all required written approvals for the activity were obtained in accordance with RMS's policies.)

3.Review of Additional Items. As set forth in Section III.E.2.c of the CIA, for each Reporting Period, the OIG at its discretion may identify up to three additional items for the IRO to review (hereafter “Additional Items”). No later than 120 days prior to the end of the applicable Reporting Period, the OIG shall notify RMS of the nature and scope of the IRO review to be conducted for each of the Additional Items. Prior to undertaking the review of the Additional Items, the IRO and/or RMS shall submit an audit work plan to the OIG for approval and the IRO shall conduct the review of the Additional Items based on a work plan approved by the OIG. The IRO shall include information about its review of each Additional Item in the Transactions Review Report (including a description of the review conducted for each Additional Item; the IRO's findings based on its review for each Additional Item; and the IRO's recommendations for any changes in RMS's systems, processes, policies, and procedures based on its review of each Additional Item).

	
 
	
a.
	
RMS may propose to OIG that its internal audit(s), reviews, or monitoring activities, including those conducted as part of the Field Force Monitoring Program described in Section III. K and/or other reviews conducted by outside entities at RMS’s request be substituted, subject to the Verification Review requirements set forth below, for one or more of the Additional Items that would otherwise be reviewed by the IRO for the applicable Reporting Period. The OIG retains sole discretion over whether, and in what manner, to allow RMS’s internal audit work to be substituted for a portion of the Additional Items review conducted by the IRO.

	
 
	
b.
	
In making its decision, the OIG agrees to consider, among other factors, the nature and scope of RMS’s planned internal audit work or compliance monitoring or audit activities, the results of the Transactions Review(s) during prior Reporting Period(s), and RMS’s demonstrated audit capabilities to perform the proposed audit work internally. If the OIG denies RMS’s request to permit its internal audit work or compliance monitoring or audit activities to be substituted for a portion of the IRO’s review of Additional Items in a given Reporting Period, RMS shall engage the IRO to perform the Review as outlined in this Section III. E.

	
 
	
c.
	
If the OIG agrees to permit certain of RMS’s internal audit work or compliance monitoring or audit activities for a given Reporting Period to be substituted for a portion of Additional Items review, such internal work would be subject to verification by the IRO (Verification Review). In such an instance, the OIG would provide additional details about the scope of the Verification Review to be conducted by the IRO.

E.Transactions Review Report

 

-6-

 

A.General Elements to be Included in the Report. For each Reporting Period, the IRO shall prepare a report based on its Transactions Review. The report shall include the following:

1.Review Objectives: A clear statement of the objectives intended to be achieved by each part of the review;

2.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 each sample reviewed; and

3.Sources of Data: A full description of documentation and other information, if applicable, relied upon by the IRO in performing the Transactions Review.

B.Results to be Included in Report. The following results shall be included in each Transactions Review Report:

1.Relating to the Review of Consulting Activities

	
 
	
a.
	
a description of each type of Consulting Activity reviewed, including the number of each type of Consulting Activity reviewed and an identification of the types of documents and information reviewed for each Consulting Activity;

	
 
	
b.
	
for each Consulting Activity reviewed, the IRO's findings and supporting rationale as to whether:

i.a written agreement was in place for each Consulting Activity that describes the scope of work to be performed, the fees and expenses to be paid for each Consulting Activity, and the compliance obligations for the Consultant;

ii.the compensation to be paid for the Consulting Activity was determined in accordance with a centrally managed, pre-set rate structure set by RMS;

iii.the rate structure was established based on an independent FMV analysis;

iv.the Consulting Activity was identified in the annual Consulting budgeting plan developed by RMS;

v.a needs assessment that identifies the business need for the Consulting Activity and provides detail about the activity was prepared prior to the initiation of the Consulting Activity;

vi.the Consulting Activity was reviewed and approved in accordance with RMS Policies and Procedures,

 

-7-

 

vii.RMS collected and retained a record of the specific activity performed by the HCP and, if applicable, a copy of the work product generated in connection with the Consulting Activity; and

viii.the activity undertaken by the Consultant and/or the work product generated was used by RMS in a manner consistent with the needs assessment that was completed prior to the initiation of the Consulting Activity;

	
 
	
c.
	
any weaknesses in RMS’s systems, processes, policies, procedures and/or practices relating to Consulting Activities identified by the IRO; and

	
 
	
d.
	
any recommendations for improvements to RMS's systems, processes, policies, procedures and/or practices relating to Consulting Activities.

2.Relating to the Review of Payments

	
 
	
a.
	
a description of the entry in the Open Payments Database for each Payment sampled and a description of Control Documents reviewed in connection with each sampled Payment; and

	
 
	
b.
	
for each sampled Payment, findings and supporting rationale as to whether:

i.all required Control Documents exist;

ii.each Control Document was completed in accordance with all of the requirements set forth in the applicable RMS policy;

iii.the aggregate value of the Payment as reflected in the Open Payments Database is consistent with the value of the Payment reflected in the Control Documents;

iv.each Control Document reflects that RMS’s policies were followed in connection with the underlying activity reflected in the document (all required approvals were obtained); and

v.any corrective action or disciplinary action was undertaken in those instances in which RMS policies were not followed.

3.Relating to the Review of Additional Items. For each Additional Item reviewed:

	
 
	
a.
	
a description of the review conducted;

	
 
	
b.
	
the IRO’s findings based on its review;

 

-8-

 

	
 
		

	
 
	
c.
	
the findings and supporting rationale regarding any weaknesses in RMS’s systems, processes, policies, procedures, and practices relating to the Additional Item, if any; and

	
 
	
d.
	
recommendations, if any, for changes in RMS’s systems, processes, policies, and procedures that would correct or address any weaknesses or deficiencies uncovered during the review.

 

-9-

Source: [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00324-of-00352.parquet"}, [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00324-of-00352.parquet"}]]