CORPORATE INTEGRITY AGREEMENT BETWEEN THE
Exhibit 10.2
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CORPORATE INTEGRITY AGREEMENT BETWEEN THE
OFFICE OF INSPECTOR GENERAL OF THE
DEPARTMENT OF HEALTH AND HUMAN SERVICES AND
MERIT MEDICAL SYSTEMS, INC.
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Merit Medical Systems, Inc. (Merit) 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. Β§ 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, Merit is entering into a Settlement Agreement with the United States.
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Merit represents that it has an established corporate compliance program (Compliance Program) which preceded the execution of this CIA. The Compliance Program includes a Compliance Officer, Compliance Committee, written policies and procedures, education and training programs, and a disclosure program. Merit will continue to operate its Compliance Program throughout the term of this CIA.
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C. | The scope of this CIA is governed by the following definitions: |
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Notwithstanding the above, the term βCovered Personsβ does not include part-time or per diem employees, contractors, subcontractors, agents, or other persons who are not reasonably expected to work more than 160 hours during a Reporting Period, except that any such individuals shall become βCovered Personsβ at the point when they do work more than 160 hours during a Reporting Period.
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a third party and supported by Merit, including but not limited to, continuing medical education (CME), disease awareness, or sponsorship of symposia at medical conferences.
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Merit shall establish and maintain a Compliance Program that includes the following elements:
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a. | developing and implementing policies, procedures, and practices designed to ensure compliance with the requirements set forth in this CIA and with Federal health care program and FDA requirements; |
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b. | making periodic (at least quarterly) reports regarding compliance matters in person to the Audit Committee of the Board of Directors of Merit (Audit Committee) and shall be authorized to report on such matters to the Audit Committee at any time. Written documentation of the Compliance Officerβs reports to the Audit Committee shall be made available to OIG upon request; and |
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c. | monitoring the day-to-day compliance activities engaged in by Merit as well as any reporting obligations created under this CIA. |
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Any noncompliance job responsibilities of the Compliance Officer shall be limited and must not interfere with the Compliance Officerβs ability to perform the duties outlined in this CIA.
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Merit 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 Officerβs ability to perform the duties necessary to meet the obligations in this CIA, within five business days after such a change.
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Merit shall report to OIG, in writing, any actions or changes that would affect the Compliance Committeeβs ability to perform the duties necessary to meet the obligations in this CIA, within 15 business days after such a change.
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The Audit Committee shall, at a minimum, be responsible for the following:
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a. | meeting at least quarterly to review and oversee Meritβs Compliance Program, including but not limited to the performance of the Compliance Officer and Compliance Committee; |
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At minimum, the resolution shall include the following language:
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βThe Audit Committee has made a reasonable inquiry into the operations of Meritβs Compliance Program including the performance of the Compliance Officer and the Compliance Committee. Based on its inquiry and review, the Audit Committee has concluded that, to the best of its knowledge, Merit
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has implemented an effective Compliance Program to meet Federal health care program requirements, FDA requirements, and the obligations of the Corporate Integrity Agreement.β
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If the Audit Committee is unable to provide such a conclusion in the resolution, the Audit Committee shall include in the resolution a written explanation of the reasons why it is unable to provide the conclusion and the steps it is taking to implement an effective Compliance Program at Merit.
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Merit shall report to OIG, in writing, any changes in the composition of the Audit Committee, or any actions or changes that would affect the Audit Committeeβs ability to perform the duties necessary to meet the obligations in this CIA, within 15 business days after such a change.
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βI 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 β β[insert name of the department] with all applicable Federal health care program requirements, FDA requirements, obligations of the Corporate Integrity Agreement, and Merit policies, and I have taken steps to promote such compliance. To the best of my knowledge, the
β β [insert name of department] of Merit is in compliance with all applicable Federal health care program requirements, FDA requirements, and the obligations of the Corporate Integrity Agreement. I understand that this certification is being provided to and relied upon by the United States.β
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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.
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Within 90 days after the Effective Date, Merit 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).
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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. Β§ 1320a-7b(b)) and the False Claims Act (codified at 31 U.S.C. |
§§ 3729-3733); and (ii) all applicable FDA requirements;
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b. | the development, implementation, and compliant use of promotional materials used by sales representatives (including any contract sales force) and other Merit representatives who promote and sell Government Reimbursed Products; |
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c. | the development, implementation, and review of policies for 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 |
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from Merit (including, separately, from sales representatives, or through other channels);
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e. | 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 royalties); |
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f. | 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; |
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g. | 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 Merit- sponsored programs or activities; |
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h. | sponsorship or funding of grants (including educational grants) or charitable contributions involving HCPs and HCIs; |
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i. | funding of, or participation in, any Sponsorships, Third Party Educational Activity, or Co-Marketing Activity as defined in Sections II.C.4, II.C.5, and II.C.6 above; |
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At least annually (and more frequently, if appropriate), Merit 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.
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All Policies and Procedures shall be made available to OIG upon request.
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New members of the Board of Directors shall receive the Board Training described above within 30 days after becoming a member or within 120 days after the Effective Date, whichever is later.
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III.C.2 has been provided as required.
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Within 120 days after the Effective Date, Merit 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 Merit to: (1) identify and prioritize risks, (2) develop internal audit work plans related to the identified risk areas, (3) implement the internal audit 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. Merit shall maintain the risk assessment and internal review process for the term of the CIA.
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a. | Engagement of Independent Review Organization. Within 90 days after the Effective Date, Merit shall engage an entity (or entities), such as an accounting, auditing, or consulting firm (hereinafter βIndependent Review Organizationβ or βIROβ), 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. |
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b. | Retention of Records. The IRO and Merit shall retain and make available to OIG, upon request, all work papers, supporting documentation, correspondence, and draft reports |
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(those exchanged between the IRO and Merit) related to the reviews.
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c. | Access to Records and Personnel. Merit 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. |
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a. | Systems Review. The Systems Reviews shall assess Meritβs systems, processes, policies, and procedures relating to the Covered Functions. If there are no material changes in Meritβs relevant systems, processes, policies, and procedures, the Systems Reviews shall be performed for the first and fourth Reporting Periods. If Merit 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. |
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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. |
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the requirements specified in Appendix A to this CIA. The IROβs certification shall include a summary of current and prior engagements between Merit and IRO.
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Within 90 days after the Effective Date, Merit shall establish a Disclosure Program that includes a mechanism (e.g., a toll free compliance telephone line) to enable individuals to disclose, to the Compliance Officer or some other person who is not in the disclosing individualβs chain of command, any identified issues or questions associated with Meritβs 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. Merit 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 Meritβs 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 Merit. 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, Merit shall conduct an internal review of the allegations set forth in the disclosure and ensure that proper follow-up is conducted.
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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.
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G. | Ineligible Persons |
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1. | Definitions. For purposes of this CIA: |
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a. | an βIneligible Personβ shall include an individual or entity who: |
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i. | is currently excluded from participation in the Federal health care programs; or |
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ii. | has been convicted of a criminal offense that falls within the scope of 42 U.S.C. Β§ 1320a-7(a), but has not yet been excluded. |
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a. | Merit 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. |
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b. | Merit shall screen all current Covered Persons against the Exclusion List within 90 days after the Effective Date and on a monthly basis thereafter. |
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c. | Merit shall maintain a policy requiring all Covered Persons to disclose immediately if they become an Ineligible Person. |
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Nothing in this Section III.G affects Meritβs responsibility to refrain from (and liability for) billing Federal health care programs for items or services furnished, ordered, or prescribed by an excluded person. Merit understands that items or services furnished, ordered, or prescribed by excluded persons are not payable by Federal health care
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programs and that Merit may be liable for overpayments and/or criminal, civil, and administrative sanctions for employing or contracting with an excluded person regardless of whether Merit meets the requirements of Section III.G.
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Within 30 days after discovery, Merit shall notify OIG, in writing, of any ongoing investigation or legal proceeding known to Merit conducted or brought by a governmental entity or its agents involving an allegation that Merit 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. Merit 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.
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to any Federal health care program for which penalties or exclusion may be authorized;
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d. | the filing of a bankruptcy petition by Merit. |
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A Reportable Event may be the result of an isolated event or a series of occurrences.
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b. | a statement of the Federal criminal, civil or administrative laws that are probably violated by the Reportable Event, if any; |
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c. | the Federal health care programs affected by the Reportable Event, if any; |
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e. | a description of any corrective action implemented to prevent future employment or contracting with an Ineligible Person. |
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J. | Notification of Communications with FDA |
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Within 30 days after the date of any written report, correspondence, or communication between Merit and the FDA that materially discusses Meritβs or a Covered Personβs actual or potential unlawful or improper promotion of Meritβs products (including any improper dissemination of information about off-label indications), Merit shall provide a copy of the report, correspondence, or communication to OIG. Merit shall also provide written notice to OIG within 30 days after the resolution of any such
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disclosed improper promotional matter, and shall provide OIG with a description of the findings and/or results of the matter, if any.
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Within 120 days following the Effective Date, Merit shall establish and implement the following requirements relating to: (1) arrangements with HCPs to serve as presenters on behalf of Merit or participate in training programs related to the safe and effective use of Government Reimbursed Products (Speaker Programs); and (2) arrangements for marketing or other promotional activity that Merit performs with or on behalf of one or more HCPs or HCIs involving a Government Reimbursed Product (Co-Marketing).
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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 Merit approved materials). |
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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. |
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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. |
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d. | A comprehensive list of speaker program attendees through its centralized system. In addition, Merit 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. |
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e. | A requirement for certifications by sales representatives or |
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other Merit personnel that a speaker program complied with Merit requirements, or in the event of non-compliance, Merit shall require the identification of the policy violation and ensure appropriate follow up activity to address the violation.
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2. | Co-Marketing Activities. Merit shall establish and implement: |
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a. | A process to ensure that a needs assessment has been complete for any Co-Marketing Activity. The needs assessment shall identify the business need for performing the Co-Marketing Activity and provide details about the Co- Marketing Activity (i.e., information about the type of Co- Marketing Activity and the role and contribution of each HCP or HCI involved in the Co-Marketing Activity); |
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b. | A centralized, electronic system to track all Co-Marketing Activities; |
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c. | A process to evaluate the fair market value of any Co- Marketing Activity; |
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d. | A process to ensure that all arrangements to engage in Co- Marketing Activities are set forth in a written agreement that describes the scope of work to be performed by all parties to the arrangement, the fees to be paid, and any work product that will be produced. |
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Within 120 days after the Effective Date, Merit shall establish a comprehensive Field Force Monitoring Program (FFMP) to evaluate and monitor its sales personnelβs interactions with HCPs and HCIs. The FFMP shall be a formalized process designed to directly and indirectly observe the appropriateness of sales personnelβs interactions with HCPs and HCIs and to identify potential 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 personnelβs interactions with HCPs and HCIs (Records Reviews).
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At the completion of each Observation, Monitoring Personnel shall prepare a report which includes:
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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 product(s) promoted during the Observation; |
5) | an overall assessment of compliance with Merit Policies and Procedures; and |
6) | the identification of any potential improper conduct by the field sales representative. |
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Monitoring Personnel shall conduct at least 5 Observations during each Reporting Period. Monitoring Personnel shall have access to all relevant records and information necessary to assess sales representativesβ interactions with HCPs and HCIs and to identify potential or actual compliance violations.
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a. | For each Reporting Period, Merit shall develop and implement a plan for conducting Records Reviews associated with at least five 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. |
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b. | The Records Reviews shall include the monitoring and review of: |
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(i) | records and systems associated with sales representativesβ interactions with HCPs and HCIs (including records relating to Co-Marketing activities, 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); |
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(ii) | records relating to requests for medical information about or inquiries relating to, the Government Reimbursed Products under review; |
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(iii) | sales representative call notes; |
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(iv) | sales representativesβ e-mails and other electronic records; and |
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(v) | recorded results of the Observations of sales force representatives, coaching guides, and manager notes. |
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M. | Requirements Relating to Certain Non-Promotional Activities |
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Within 120 days after the Effective Date, Merit shall develop policies, procedures, and systems to implement the requirements outlined below relating to the following types of activities: (1) consultant arrangement activities; and (2) grant and charitable contribution activities involving HCPs and HCIs.
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shall be referred to herein as Consultants. Within 90 days of the Effective date, Merit shall:
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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. |
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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. Merit 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 Merit Policies and Procedures. |
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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 about the numbers and qualifications of the HCPs and HCIs to be engaged, the agenda for the 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 Merit compliance personnel. |
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d. | Amend its policies and procedures in a manner designed to ensure that each Consultant performs the work for which the |
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Consultant is engaged and that, as applicable, Merit receives the work product generated by the Consultant.
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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 βGrantsβ), and charitable contributions involving HCPs or HCIs (referred to below as βContributionsβ). |
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N. | Reporting of Physician Payments |
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In the event that, after the Effective Date, Merit 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. Merit shall give notice of such sale or purchase to OIG within 30 days following the closing of the transaction.
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If, in advance of a proposed sale or a proposed purchase, Merit 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, Merit 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.
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Within 150 days after the Effective Date, Merit 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:
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5. | a list of the Policies and Procedures required by Section III.B.1; |
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9. | a description of the Disclosure Program required by Section III.F; |
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12. | a description of the FFMP required by Section III.L; |
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17. | the certifications required by Section V.C. |
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Merit 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:
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14. | a summary of Reportable Events (as defined in Section III.I) |
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identified during the Reporting Period;
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21. | the certifications required by Section V.C. |
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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.
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C. | Certifications |
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a. | to the best of his or her knowledge, except as otherwise described in the report, Merit has implemented and is in compliance with all requirements of this CIA; |
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c. | he or she understands that the certification is being provided to and relied upon by the United States. |
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D. | Designation of Information |
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Merit 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. Β§ 552. Merit shall refrain from identifying any information as exempt from disclosure if that information does not meet the criteria for exemption from disclosure under FOIA.
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Unless otherwise stated in writing after the Effective Date, all notifications and reports required under this CIA shall be submitted to the following entities:
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Administrative and Civil Remedies Branch Office of Counsel to the Inspector General Office of Inspector General
U.S. Department of Health and Human Services Xxxxx Building, Room 5527
000 Xxxxxxxxxxxx Xxxxxx, X.X. Xxxxxxxxxx, XX 00000
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Facsimile: 202.205.0604 Merit:
Xxxxx Xxxxx
0000 Xxxx Xxxxx Xxxxxxx Xxxxx Xxxxxx, XX 00000 Telephone: (000) 000-0000
Email Address: Xxxxx.Xxxxx@xxxxx.xxx
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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, Merit may be required to provide OIG with an additional copy of each notification or report required by this CIA in OIGβs requested format (electronic or paper).
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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 copy Meritβs books, records, and other documents and supporting materials and/or conduct on-site reviews of any of Meritβs locations for the purpose of verifying and evaluating: (a) Meritβs compliance with the terms of this CIA and (b) Meritβs compliance with Federal health care program requirements and with all applicable FDA requirements. The documentation described above shall be made available by Merit 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 Meritβs owners, employees, contractors and directors who consent to be interviewed at the individualβs 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. Merit shall assist OIG or its duly authorized representative(s) in contacting and arranging interviews with such individuals upon OIGβs request. Meritβs owners, employees, contractors and directors may elect to be interviewed with or without a representative of Merit present.
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VIII. | DOCUMENT AND RECORD RETENTION |
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Merit 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.
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IX. | DISCLOSURES |
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Consistent with HHSβs FOIA procedures, set forth in 45 C.F.R. Part 5, OIG shall make a reasonable effort to notify Merit prior to any release by OIG of information submitted by Merit pursuant to its obligations under this CIA and identified upon submission by Merit as trade secrets, or information that is commercial or financial and privileged or confidential, under the FOIA rules. With respect to such releases, Merit shall have the rights set forth at 45 C.F.R. Β§ 5.42 (a).
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Merit is expected to fully and timely comply with all of its CIA obligations.
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As a contractual remedy, Merit 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 βStipulated Penaltiesβ) in accordance with the following provisions.
β
β
a. | a Compliance Officer; |
β
b. | a Compliance Committee; |
β
c. | the Board compliance obligations and the engagement of a Compliance Expert, the performance of a Compliance Program Review, and the preparation of a Compliance Program Review Report, as required by Section III.A.3; |
β
Merit Medical Systems, Inc. CIA
30
β
β
β
β
β
β
f. | the development of a written training plan and the training and education of Covered Persons and Board members; |
β
g. | a risk assessment and internal review process; |
β
h. | a Disclosure Program; |
β
i. | Ineligible Persons screening and removal requirements; |
β
j. | notification of Government investigations or legal proceedings; |
β
k. | reporting of Reportable Events; |
β
l. | notification of written communications with FDA; |
β
m. | the Requirements Relating to Certain Promotional Activities; |
β
n. | the FFMP; |
β
n. | the Requirements Relating to Certain Non-Promotional Activities; and, |
β
o. | posting of any Payment-related information. |
β
β
β
Merit Medical Systems, Inc. CIA
31
β
β
accordance with the requirements of Section V, or (c) a complete response to any request for information from OIG.
β
β
β
β
β
β
β
Merit 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 Merit 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
β
Merit Medical Systems, Inc. CIA
32
β
β
Penalties for failure to perform the act or file the notification or report shall not begin to accrue until three business days after Merit receives OIGβs written denial of such request or the original due date, whichever is later. A βtimely written requestβ 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.
β
β
(b) OIGβs exercise of its contractual right to demand payment of the Stipulated Penalties (this notification is referred to as the βDemand Letterβ).
β
β
β
β
β
means:
β
β
β
Merit Medical Systems, Inc. CIA
33
β
β
β
β
c. | a failure to engage and use an IRO in accordance with Section |
III.E and Appendix B; or
β
β
β
β
a. | the alleged material breach has been cured; or |
β
b. | the alleged material breach cannot be cured within the 30 day period, but that: (i) Merit has begun to take action to cure the material breach; (ii) Merit is pursuing such action with due diligence; and (iii) Merit has provided to OIG a reasonable timetable for curing the material breach. |
β
β
Merit Medical Systems, Inc. CIA
34
β
β
determination to exclude Merit (this letter shall be referred to hereinafter as the βExclusion Letterβ). Subject to the Dispute Resolution provisions in Section X.E, below, the exclusion shall go into effect 30 days after the date of Meritβs 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, Merit may apply for reinstatement by submitting a written request for reinstatement in accordance with the provisions at 42 C.F.R. §§ 1001.3001-.3004.
β
β
C.F.R. Β§ 1005.2-1005.21. Notwithstanding the language in 42 C.F.R. Β§ 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 xxxx://xxx.xxx.xxx/xxx/xxxxxxxxx/xxxxx/xxxxxxxxxx/xxxxxxxxxxxxxxxxxx.xxxx.
β
β
β
Merit Medical Systems, Inc. CIA
35
β
β
β
a. | Merit cured such breach within 30 days of its receipt of the Notice of Material Breach; or |
β
b. | the alleged material breach could not have been cured within the 30 day period, but that, during the 30 day period following Meritβs receipt of the Notice of Material Breach: (i) Merit had begun to take action to cure the material breach within that period; (ii) Merit pursued such action with due diligence; and (iii) Merit provided to OIG within that period a reasonable timetable for curing the material breach. |
β
For purposes of the exclusion herein, exclusion shall take effect only after an ALJ decision favorable to OIG, or, if the ALJ rules for Merit, only after a DAB decision in favor of OIG. Meritβs election of its contractual right to appeal to the DAB shall not abrogate OIGβs authority to exclude Merit upon the issuance of an ALJβs 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 Merit 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. Merit 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 Merit, Merit shall be reinstated effective on the date of the original exclusion.
β
β
β
Merit and OIG agree as follows:
β
β
β
Merit Medical Systems, Inc. CIA
36
β
β
β
β
β
β
β
β
β
β
β
β
β
β
β
β
β
β
β
β
β
β
β
β
β
β
β
β
β
β
β
β
Merit Medical Systems, Inc. CIA
37
β
β
ON BEHALF OF MERIT MEDICAL SYSTEMS, INC.
β
β
β
β
β
/s/ Xxxx LampropoulosOctober 13, 2020β β
XXXX LAMPROPOULOSDATE
Chief Executive Officer Merit Medical Systems, Inc.
β
β
/s/ Xxxx Xxxxx
/s/ Xxxxxxx PauzeOctober 13, 2020β β
SETH LUNDYDATE
Counsel for Merit Medical Systems, Inc. King & Spalding LLP
β
β
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β
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Merit Medical Systems, Inc. CIA
38
β
ON BEHALF OF THE OFFICE OF INSPECTOR GENERAL OF THE DEPARTMENT OF HEALTH AND HUMAN SERVICES
β
β
β
β
β
β
β
β
β
β
β
/s/ Xxxx X. Re β βOctober 13, 2020 β β
XXXX X. REDATE
Assistant Inspector General for Legal Affairs Office of Inspector General
U.S. Department of Health and Human Services
β
β
β
β
β
/s/ Xxxxxxxx X. Xxxxxxβ βOctober 13, 2020 β β
XXXXXXXX X. BAINERDATE
Senior Counsel
Administrative and Civil Remedies Branch Office of Counsel to the Inspector General
U.S. Department of Health and Human Services
β
β
β
β
39
β
APPENDIX A
INDEPENDENT REVIEW ORGANIZATION
β
This Appendix contains the requirements relating to the Independent Review Organization (IRO) required by Section III.E of the CIA.
β
β
β
β
β
The IRO shall:
β
β
β
1
Merit Medical Systems, Inc.
Appendix A
β
β
The IRO shall:
β
β
β
3. | respond to all OIG inquires in a prompt, objective, and factual manner; and |
β
β
β
Merit shall ensure that the IRO has access to all records and personnel necessary to complete the reviews listed in III.E of this CIA and that all records furnished to the IRO are accurate and complete.
β
β
The IRO must perform each component of the IRO Reviews in a professionally independent and objective fashion, as defined in the most recent Government Auditing Standards issued by the U.S. Government Accountability Office.
β
β
β
2
Merit Medical Systems, Inc.
Appendix A
β
qualifications, independence or performance of its responsibilities in order to resolve the concerns identified by OIG. If, following OIGβs review of any information provided by Merit regarding the IRO, OIG determines that the IRO has not met the requirements of this Appendix, OIG shall notify Merit in writing that Merit shall be required to engage a new IRO in accordance with Paragraph A of this Appendix. Merit must engage a new IRO within 60 days of its receipt of OIGβs written notice. The final determination as to whether or not to require Merit to engage a new IRO shall be made at the sole discretion of OIG.
β
β
β
β
β
β
β
β
β
β
β
β
3
Merit Medical Systems, Inc.
Appendix A
β
β
APPENDIX B
IRO REVIEWS
β
β
As specified more fully below, Merit shall retain an IRO to perform engagements to assist Merit in assessing and evaluating certain of its systems, processes, policies, and procedures related to Meritβs Covered Functions (IRO Review). The IRO Review shall consist of two componentsβa systems review (Systems Review) and a transactions review (Transactions Review) as described more fully below. Merit 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.
β
If there are no material changes in Merit'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 Merit 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.
β
β
The Systems Review shall be a review of Merit'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 Merit's systems, processes, policies, and procedures associated with the following (hereafter βReviewed Policies and Proceduresβ):
β
β
1
Merit Medical Systems, Inc.
Appendix B
β
belonging to specified medical specialties or types of clinical practice may receive Evaluation Product from Merit (including, separately, from sales representatives, or through other channels);
β
β
β
β
β
β
β
β
β
2
Merit Medical Systems, Inc.
Appendix B
β
β
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:
β
β
β
β
β
β
β
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 Co-Marketing Activity agreements, (3) a sample of medical education grants and charitable contributions, and (4) a sample of Payments. The IRO shall report on all aspects of its reviews in the Transactions Review Report.
β
a. | For the first Reporting Period, the IRO shall select and review a sample of 10 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 10 Consulting Activities which shall include a review of specified numbers of each type of Consulting Activities as determined by OIG. Prior to the determination of the number of each type of Consulting Activity to be reviewed during the second and subsequent Reporting Periods, Merit shall provide to OIG the information specified below in the next paragraph within 60 days prior to the end of the applicable preceding Reporting Period. |
β
β
c. | For each Consulting Activity reviewed, the IRO shall determine whether: |
β
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; |
β
ii. | the compensation to be paid for the Consulting Activity was determined in accordance with a centrally managed, pre-set rate structure established by Merit; |
β
iii. | the rate structure was established based on an independent FMV analysis; |
β
iv. | the Consulting Activity was identified in the annual Consultant budgeting plan developed by Merit; |
β
v. | a needs assessment that identifies the business need for the Consulting Activity and provides details about the Consulting |
4
Merit Medical Systems, Inc.
Appendix B
β
Activity was completed prior to the initiation of the Consulting Activity;
β
β
β
β
β
a. | How Merit determined the business need for performing Co-Marketing Activities with the HCP(s) and HCI(s); |
β
b. | How the targets or audience of each Co-Marketing Activity were selected and by whom; |
β
c. | The contributions of each party to each Co-Marketing Activity, and the financial value of those contributions; |
β
d. | How Merit determined that each party was contributing to and receiving fair market value from the Co-Marketing Activities; |
β
e. | Whether Merit reviewed and approved the Co-Marketing Activity agreement in accordance with Meritβs Policies and Procedures; and |
β
f. | Whether Merit collected and retained records of the activities of each party to the Co-Marketing Activity agreement. |
β
5
Merit Medical Systems, Inc.
Appendix B
β
charitable contributions involving HCPs or HCIs provided by Merit. For each Reporting Period, the IRO shall review a sample of the greater of 10% or 5 Grants and Contributions to HCPs or HCIs.
β
a. | The IRO shall select its sample of Grants and Contributions for review in consultation with OIG after the provision of information about each to OIG. Merit shall provide the following information to OIG: (1) a description of each type of Grant and Contribution provided during the Reporting Period and a description of the purpose of, and activity to be undertaken in connection with, each type of Grant and Contribution; (2) the number of each type of Grant and Contribution provided during the Reporting Period; and (3) the budgeted amount to be spent on each type of Grant and Contribution during the Reporting Period. |
β
b. | The IROβs review shall include, but not be limited to: proposal documents (including Grant and Contribution requests), approval documents, contracts, payments and materials relating to the centralized systemβs review of the requests, and documents and materials relating to the Grants and Contributions and any events or activities funded through the Grants and Contributions. |
β
c. | For each Grant and Contribution reviewed, the IRO shall determine whether: |
β
i. | The request for the Grant or Contribution was submitted through Meritβs centralized system and processed in accordance with standardized objective criteria; |
β
ii. | The terms of the Grant or Contribution are reflected in a written agreement between Merit and the recipient of the grant or contribution; |
β
iii. | The Grant or Contribution was reviewed and approved in accordance with Merit policies and procedures; |
β
iv. | Merit records identify the purpose or use for which the Grant or Contribution was requested; and |
β
v. | Applicable documents or other records verify that the purpose of use for which the Grant or Contribution was requested occurred or was satisfied (e.g., if the Grant or Contribution |
6
Merit Medical Systems, Inc.
Appendix B
β
was provided to sponsor an event, the IRO shall assess whether the event, in fact, occurred.)
β
β
a. | For each Reporting Period, the OIG shall have the discretion to identify up to 15 Covered Recipients who received Payments from Merit 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 15 Covered Recipients to be included in the review. |
β
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: |
β
β
β
β
7
Merit Medical Systems, Inc.
Appendix B
β
required written approvals for the activity were obtained in accordance with Merit's policies.)
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1. | Relating to the Review of Consulting Activities |
β
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; |
β
b. | for each Consulting Activity reviewed, the IRO's findings and supporting rationale as to whether: |
β
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; |
β
ii. | the compensation to be paid for the Consulting Activity was determined in accordance with a centrally managed, pre-set rate structure set by Merit; |
8
Merit Medical Systems, Inc.
Appendix B
β
β
β
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β
β
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c. | any weaknesses in Merit's systems, processes, policies, procedures and/or practices relating to Consulting Activities identified by the IRO; and |
β
d. | any recommendations for improvements to Merit's systems, processes, policies, procedures and/or practices relating to Consulting Activities. |
β
β
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 |
β
b. | For each Co-Marketing Activity reviewed, the IROβs findings and supporting rationale as to: |
9
Merit Medical Systems, Inc.
Appendix B
β
β
β
β
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v. | whether the Co-Marketing Activity was reviewed and approved in accordance with Meritβs Policies and Procedures; |
β
vi. | whether Merit collected and retained records of the activities of each party to the Co-Marketing Activities; |
β
vii. | any weaknesses in Meritβs systems, processes, policies, procedures and/or practices relating to Co-Marketing Activities; and |
β
viii. | any recommendations for improvements to Meritβs systems, processes, policies, procedures and/or practices relating to Co-Marketing Activities. |
β
β
a. | a description of each type of Grant or Contribution reviewed, including the number of each type of Grant or Contribution reviewed and an identification of the types of documents and information reviewed for each Grant or Contribution reviewed; |
β
b. | for each Grant or Contribution reviewed, the IROβs findings and supporting rationale as to whether: |
10
Merit Medical Systems, Inc.
Appendix B
β
β
β
β
β
β
β
β
4. | Relating to the Review of Payments |
β
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 |
β
b. | for each sampled Payment, findings and supporting rationale as to whether: |
β
i. | all required Control Documents exist; |
β
ii. | each Control Document was completed in accordance with all of the requirements set forth in the applicable Merit policy; |
11
Merit Medical Systems, Inc.
Appendix B
β
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; |
β
β
v. | any corrective action or disciplinary action was undertaken in those instances in which Merit policies were not followed. |
12
Merit Medical Systems, Inc.
Appendix B