<PAGE>
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-K
CURRENT REPORT
Filed pursuant to Section 13 or 15(d) of
THE SECURITIES EXCHANGE ACT OF 1934
July 26, 1999 (July 19, 1999)
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(Date of Report (Date of earliest event reported))
OLSTEN CORPORATION
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(Exact name of registrant as specified in its charter)
Delaware
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(State or other jurisdiction of incorporation)
1-8279
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(Commission File Number)
13-2610512
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(IRS Employer Identification No.)
175 Broad Hollow Road
Melville, New York 11747-8905
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(Address of principal executive offices)
(516) 844-7800
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(Registrant's telephone number, including area code)
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ITEM 5. OTHER EVENTS
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Registrant released the press release attached hereto as
Exhibit 99.1 on July 19, 1999.
ITEM 7. FINANCIAL STATEMENTS AND EXHIBITS
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(c) Exhibits
Exhibit 99.1 -- Press release dated July 19, 1999.
Exhibit 99.2 -- Settlement Agreement effective July 19, 1999.
Exhibit 99.3 -- Corporate Integrity Agreement effective
July 19, 1999.
Exhibit 99.4 -- Plea Agreement effective July 19, 1999.
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SIGNATURE
Pursuant to the requirements of the Securities Exchange Act of 1934,
the Registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
OLSTEN CORPORATION
(REGISTRANT)
Date: July 26, 1999 By:/s/ Laurin L. Laderoute, Jr.
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Laurin L. Laderoute, Jr.
Vice President
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_______________________________________________________________________________
News
Contact: Nancy Macenko
Olsten Corporation
(516) 844-7034
[email protected]
www.olsten.com
FOR IMMEDIATE RELEASE
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OLSTEN SIGNS SETTLEMENT WITH FEDERAL GOVERNMENT
Melville, NY, July 19, 1999 -- Olsten Corporation (NYSE: OLS) announced today
that it has signed the final civil, administrative and criminal settlement
agreements reached in principle with the Federal government earlier this year.
On March 30, 1999, Olsten announced that it had reached a proposed
agreement in principal with the U.S. Department of Justice and the Office of the
Inspector General of the U.S. Department of Health and Human Services to settle
all civil, administrative and criminal aspects of the investigation into certain
Olsten transactions with Columbia/HCA and the investigation into Olsten's home
office cost reports. The only remaining steps are the formal execution and entry
of pleas in three federal district courts (and the approval by those courts of
the proposed criminal fines and penalties) and the payment by Olsten of the $61
million cash settlement.
In a statement released from the Company's headquarters on Long Island,
Olsten President and CEO Edward A. Blechschmidt called the signing "a welcomed
conclusion of a difficult period in our company's history."
"We have worked very hard to put this matter behind us," Blechschmidt
noted. "Now with today's signing, we are able to focus without distractions on
strengthening the Olsten brand and rebuilding shareholder value."
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175 Broadhollow Road, Melville, New York 11747-8905
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Olsten Corporation, with 1,500 offices on three continents, is a world
leader in staffing services, a significant provider of information technology
services and North America's largest provider of home health care and related
services. The Company operates more than 1,000 staffing offices - providing
staffing solutions and assignment employees to business, industry and government
- - in North America, Latin America and Europe under Olsten Staffing Services and
related brands. Olsten's information technology division, IMI Systems, provides
design, programming and maintenance of computer systems, including focused
solutions for applications management, e- commerce, quality assurance and
enterprise support services to clients in North America and Western Europe.
Olsten Health Services, with more than 400 offices in the United States and
Canada, provides health care Network Services and caregivers for home health
care, home infusion and other therapies, and marketing and distribution
solutions for pharmaceutical, biotechnology and medical device firms.
In 1998, Olsten Corporation achieved revenues of $4.6 billion and
employed approximately 700,000 people serving approximately 600,000
client/patient accounts.
# # #
_______________________________________________________________________________
Information contained in this news release, other than historical information,
should be considered forward-looking, and is subject to various risk factors and
uncertainties. For instance, the Company's strategies and operations involve
risks of competition, changing market conditions, changes in laws and
regulations affecting our industries and numerous other factors discussed in
this release and in the Company's filings with the Securities and Exchange
Commission. Accordingly, actual results may differ materially from those in any
forward-looking statements.
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SETTLEMENT AGREEMENT
I. PARTIES
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This Settlement Agreement ("Agreement") is entered into by and among
the United States of America, acting through the Civil Division of the United
States Department of Justice, the United States Attorneys for the Northern
District of Georgia and the Eastern District of New York, and on behalf of the
Office of Inspector General ("OIG-HHS") of the Department of Health and Human
Services ("HHS") (collectively the "United States"); the Relator, Donald Steven
McLendon ("Relator"); and Olsten Corporation, Olsten Health Services, and
Kimberly Home Health Care ("Kimberly") (collectively "Olsten"), hereafter
referred to as "the Parties", through their authorized representatives.
II. PREAMBLE
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A. Olsten Corporation, a publicly-traded corporation headquartered in
Melville, New York, is in the business of providing homecare services, staffing
services, and homecare management services.
B. The United States contends that Olsten submitted, or caused to be
submitted, claims for payment to the Medicare Program ("Medicare"), Title XVIII
of the Social Security Act, 42 U.S.C. ss.ss. 1395-1395ddd(1997).
C. Relator has filed an action in the Northern District of Georgia
styled United States ex rel. McLendon v. Columbia/HCA Healthcare, et al., No.
1:97-CV-0890-C.F., (the "Qui Tam Action") alleging, among other things, that
Olsten violated the False Claims Act.
D. The United States Attorney for the Eastern District of New York,
in conjunction with OIG-HHS, has initiated an investigation of Olsten that is
independent of the Qui Tam Action and involves issues distinct from those raised
in that action.
E. Based on its investigations, the United States contends that it
has certain civil claims against Olsten under the False Claims Act, 31 U.S.C.
ss.ss. 3729-3733, and other federal statutes and/or common law doctrines, for
engaging in the following conduct (hereafter collectively referred to as
"Covered Conduct"):
(1) Qui Tam Action: The Qui Tam Action alleges that beginning with
negotiations in December of 1993, and continuing through October 31, 1996,
Olsten and Columbia/HCA Healthcare Corporation ("Columbia/HCA") entered into a
series of transactions that enabled Columbia/HCA to acquire ownership of home
health agencies in Georgia, Florida and Alabama, and enabled Olsten to acquire
the right to manage the home health visits arising from those acquisitions.
Olsten offered and paid remuneration indirectly, overtly and covertly, in cash
and in kind, to induce Columbia/HCA to allow it to obtain and manage these home
health visits controlled by Columbia/HCA, in violation of the Medicare
Anti-Kickback Act, 42 U.S.C. ss. 1320a-7b(b). Olsten then colluded with
Columbia/HCA to submit fraudulent claims to the Medicare program seeking
reimbursement for inflated management fees for the years 1994 through and
including 1998, which included the costs associated with these
acquisitions--costs that would not have been reimbursed had their true nature as
a vehicle for reimbursement of Columbia/HCA's acquisition costs been revealed to
the Medicare program.
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The Qui Tam Action further alleges that beginning in 1994 and
continuing through and including 1998, Olsten staffed the Columbia home health
agencies it managed with agency directors who supervised staff personnel,
including those persons nominally performing so-called "community education"
functions. These "community educators" spent a majority of their time carrying
out marketing and advertising functions directed at both physicians and
prospective patients in an effort to obtain referrals to Columbia agencies. The
costs of such patient and physician solicitation services performed by home
health agency personnel, as Olsten and Columbia well knew, were not allowable as
costs subject to reimbursement from the Medicare program. As a result of the
activities described above, Olsten caused the submission of cost reports by
Columbia/HCA to Medicare fiscal intermediaries for the cost report years 1994
through and including 1998 which contained false and fraudulent claims for
expenses associated with community education.
(2) Eastern District of New York: It is alleged that during the period
1992 through 1996, Olsten wrongfully included certain costs in its Medicare home
office cost report submissions, thereby wrongfully claiming reimbursement for
these costs, and mischarging these costs. These costs were:
a) Personal expenses of Olsten executive officers including: personal
credit card charges, country club memberships, health club dues, golf outings,
ski outings and ski equipment, aerobics lessons, cooking lessons, sailing
lessons, skating lessons, spa fees, personal travel;
b) Gift and entertainment expenses including: alcoholic beverages,
box seats and season tickets to sporting events, promotional items, jewelry,
business travel unrelated to Medicare; and
c) Merger costs.
F. HHS contends also that it has certain administrative claims
against Olsten under the provisions for permissive exclusion from the Medicare,
Medicaid and other federal health care programs, 42 U.S.C. ss. 1320a-7(b), and
the provisions for civil monetary penalties, 42 U.S.C. ss. 1320a-7a, for the
Covered Conduct.
G. Kimberly has entered into a plea agreement with the United States
pursuant to which it has agreed to plead guilty in the United States District
Courts for the Southern District of Florida, the Middle District of Florida and
the Northern District of Georgia to offenses involving certain of the conduct
alleged in Paragraph E(1), and has agreed to pay $10.08 million in criminal
fines in connection therewith.
III. TERMS AND CONDITIONS
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NOW, THEREFORE, in consideration of the mutual promises, covenants,
and obligations set forth below, and for good and valuable consideration as
stated herein, the Parties agree as follows:
1. Within five (5) business days of the time all pleas are accepted
by the respective courts and sentence is imposed as described in Paragraph G,
Olsten agrees to pay to the United States $50.92 million (the "Settlement
Amount") by electronic funds transfer pursuant to written instructions to be
provided by the United States. The Settlement Amount of $50.92 million shall be
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allocated as follows: $10 million for the resolution of the EDNY investigation
and the remaining $40.92 million for the resolution of the investigation related
to the Qui Tam Action. These amounts are in addition to the criminal fines set
forth in Paragraph G herein, and in the event that the criminal fines imposed
are less than $10.08 million and the plea is not withdrawn, Olsten agrees to pay
to the United States the difference between the actual imposed fines and $10.08
million as an additional settlement amount for resolution of the investigation
related to the Qui Tam Action.
2. Subject to the exceptions in Paragraph 5 below, in consideration
of the obligations of Olsten set forth in this Agreement, conditioned upon
Olsten's payment in full of the Settlement Amount, and subject to Paragraph 16
of this Section III, below (concerning bankruptcy proceedings commenced within
91 days of any payment under this Agreement), the United States (on behalf of
itself, its officers, agents, agencies and departments) agrees that it will
neither institute nor join in an action against Olsten for any civil or
administrative monetary claims the United States has or may have for the Covered
Conduct, under the False Claims Act, 31 U.S.C. ss.ss. 3729-3733; the Civil
Monetary Penalties Law, 42 U.S.C. ss. 1320a-7a; the Program Fraud Civil Remedies
Act, 31 U.S.C. ss.ss. 3801-3812, or the common law theories of payment by
mistake, unjust enrichment, breach of contract and fraud, for the Covered
Conduct.
3. In compromise and settlement of the rights of OIG-HHS to exclude
Kimberly pursuant to 42 U.S.C. ss. 1320a-7(a)(1) and (b)(7), Olsten agrees to
the permanent exclusion of Kimberly under these statutory provisions from
participation in Medicare, Medicaid, and all other federal health care programs
as defined in 42 U.S.C. ss. 1320a-7b(f). Such exclusion will have national
effect and will also apply to all other Federal procurement and non-procurement
programs. Olsten agrees on behalf of Kimberly that this exclusion will commence
on the effective date of this Agreement, and Olsten, on behalf of Kimberly,
waives any further notice of Kimberly's exclusion. Olsten agrees not to contest
such exclusion of Kimberly either administratively or in any State or Federal
court. If Kimberly submits or causes the submission of claims on behalf of
Kimberly while excluded, Olsten and Kimberly will be subject to the imposition
of additional civil monetary penalties and assessments. Olsten and Kimberly
further agree to hold the federal programs and all the federal programs'
beneficiaries and/or sponsors harmless from any financial responsibility for
services furnished to such beneficiaries and/or sponsors during Kimberly's
exclusion. Olsten specifically waives its rights as to Kimberly under any
statute or regulation to payment from the Medicare, Medicaid, TRICARE, Veterans
Affairs (VA), or Federal Employees Health Benefits (FEHBP) programs for services
provided by Kimberly during Kimberly's exclusion.
4. In consideration of the obligations set forth in this Agreement,
conditioned upon Olsten's payment in full of the settlement amount, and subject
to the provisions of Paragraph 16 (concerning bankruptcy proceedings commenced
within 91 days of any payment under this agreement), OIG-HHS agrees to release
and refrain from instituting, directing or maintaining any administrative claim
or any action seeking exclusion from the Medicare, Medicaid or other federal
health care programs (as defined in 42 U.S.C. ss. 1320a-7b(f)) against Olsten
under 42 U.S.C. ss. 1320a-7a (Civil Monetary Penalties Law), or 42 U.S.C. ss.
1320a-7(b) (permissive exclusion) , for the Covered Conduct, except as reserved
in Paragraph 5 of this Section III, below, and as reserved in this Paragraph 4.
The OIG-HHS expressly reserves all rights to comply with any statutory
obligations to exclude Olsten or others from federal health care programs under
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42 U.S.C. ss. 1320a-7(a) (mandatory exclusion). Nothing in this Paragraph
precludes the OIG-HHS from taking action against entities or persons, or for
conduct and practices, for which civil claims have been reserved in Paragraph 5
of this Section III, below.
5. Notwithstanding any term of this Agreement, specifically reserved
and excluded from the scope and terms of this Agreement as to any entity or
person (including Olsten) are any and all of the following:
(a) Any civil, criminal or administrative claims arising under Title
26, U.S. Code (Internal Revenue Code);
(b) Any criminal liability;
(c) Except as explicitly stated in this Agreement, any administrative
liability, including mandatory exclusion from Federal health care programs;
(d) Any liability to the United States (or its agencies) for any
conduct other than the Covered Conduct;
(e) Any claims based upon such obligations as are created by this
Agreement;
(f) Any civil or administrative claims of the United States against
individuals, including current or former directors, officers, employees, agents
or shareholders of Olsten who, in connection with the Covered Conduct, receive
notification that they are the target of a criminal investigation (as defined in
the United States Attorneys' Manual), are criminally indicted or charged, or are
convicted, or who enter a criminal plea; and
(g) Any entity or individual determined by the United States in its
sole discretion to be jointly and severally liable with Olsten or its related
entities for the Covered Conduct, including but not limited to Columbia/HCA
Healthcare Corporation, its subsidiaries, affiliates, predecessors, successors,
employees, agents and any and all related individuals and entities.
6. Olsten has entered into a Corporate Integrity Agreement with
OIG-HHS, attached as Exhibit A, which is incorporated into this Agreement by
reference. Olsten will implement its obligations under the Corporate Integrity
Agreement immediately upon execution of this Agreement.
7. Olsten has provided financial information ("Financial
Information") to the United States and the United States has relied on the
accuracy and completeness of this Financial Information in reaching this
Agreement. Olsten warrants that to the best of Olsten's information the
historical Financial Information it has provided is thorough, accurate, and
complete. The forward-looking Financial Information consists of, as of the date
of this Agreement, Olsten's best confidential internal financial projections,
which projections are subject to various risk factors and uncertainties. Olsten
further warrants that it does not own or have an interest in any assets which
have not been disclosed in the Financial Information, and that Olsten has made
no misrepresentations on, or in connection with, the Financial Information or
its financial condition. In the event the United States learns of asset(s) in
which Olsten had an interest at the time of this Agreement that were not
disclosed in the Financial Information, or in the event the United States learns
of a misrepresentation by Olsten on, or in connection with, the Financial
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Information or Olsten's financial condition, and in the event such
non-disclosure or misrepresentation changes the estimated net worth of Olsten
set forth on the Financial Information by Five Million dollars ($5,000,000) or
more, the United States may at its option: (a) rescind this Agreement and file
suit upon the Covered Conduct described in paragraph E; or (b) let the Agreement
stand and collect the full Settlement Amount plus one hundred percent (100%) of
the value of such increased net worth of Olsten that was previously undisclosed
or misrepresented at the time of this Agreement. Olsten agrees not to contest
any collection action undertaken by the United States pursuant to this
provision.
8. In the event that the United States, pursuant to paragraph 7
above, opts to rescind this Agreement, Olsten expressly 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 which (a) are filed by the United States within 180
calendar days of written notification to Olsten that this Agreement has been
rescinded, and (b) relate to the Covered Conduct, except to the extent these
defenses were available on April 4, 1997, the date the Qui Tam Action was filed
under seal.
9. Olsten waives and will not assert any defenses it may have to any
criminal prosecution or administrative action relating to the Covered Conduct,
which defenses may be based in whole or in part on the Double Jeopardy Clause of
the Fifth Amendment of the Constitution, or under the Excessive Fines Clause of
the Eighth Amendment of the Constitution. Olsten agrees that this settlement is
not punitive in purpose or effect. Nothing in this paragraph or any other
provision of this Agreement constitutes an agreement by the United States
concerning the characterization of the Settlement Amount for purposes of the
Internal Revenue Code, Title 26 of the United States Code.
10. Olsten agrees that all costs (as defined in the Federal
Acquisition Regulations ("FAR") ss. 31.205-47 and in Titles XVIII and XIX of the
Social Security Act, 42 U.S.C. ss.ss. 1395-1395ddd (1997) and 1396-1396v (1997),
and the regulations promulgated thereunder) incurred by or on behalf of Olsten,
in connection with: (a) the matters covered by this Agreement, (b) the
Government's audit(s) and civil and any criminal investigation(s) of the matters
covered by this Agreement, (c) Olsten's investigation, defense, and corrective
actions undertaken in response to the Government's audit(s) and civil and any
criminal investigation(s) in connection with the matters covered by this
Agreement (including attorneys' fees) including the obligations undertaken
pursuant to the Corporate Integrity Agreement incorporated in this Agreement,
(d) the negotiation of this Agreement, the Corporate Integrity Agreement, and
any plea agreement and/or deferred prosecution agreement, and (e) the payment
made pursuant to this Agreement, whether for fines or for settlement and
compromise of the civil matters, are unallowable costs on Government contracts
and under the Medicare Program, Medicaid Program, TRICARE Program, Veterans
Affairs Program (VA) and Federal Employee Health Benefits Program (FEHBP)
(hereafter, "unallowable costs"). Olsten agrees that it will separately estimate
and account for these unallowable costs, and it will not charge such unallowable
costs directly or indirectly to any contracts with the United States or any
state Medicaid program, or seek payment for such unallowable costs through any
cost report, cost statement, information statement or payment request submitted
by Olsten or any of its subsidiaries to the Medicare, Medicaid, TRICARE, VA or
FEHBP programs.
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11. Olsten further agrees that within 60 days of the effective date of
this Agreement it will identify to applicable Medicare and TRICARE fiscal
intermediaries, carriers and/or contractors, and Medicaid, VA and FEHBP fiscal
agents, any unallowable costs (as defined in Paragraph 10) 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 Olsten
or any of its subsidiaries, and will 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. Olsten agrees that the United States will be entitled to
recoup from Olsten any overpayment 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 Olsten or any
of its subsidiaries on the effect of inclusion of unallowable costs (as defined
in this paragraph) on Olsten or any of its subsidiaries' cost reports, cost
statements or information reports. Nothing in this Agreement shall constitute a
waiver of the rights of the United States to examine or reexamine the
unallowable costs described in Paragraph 10 and in this Paragraph.
12. Olsten agrees to cooperate fully and truthfully with the United
States, investigation of individuals and entities not specifically released in
this Agreement, for the Covered Conduct. Upon reasonable notice, Olsten will
make reasonable efforts to facilitate access to, and encourage the cooperation
of, its directors, officers, and employees for interviews and testimony,
consistent with the rights and privileges of such individuals, and will furnish
to the United States, upon reasonable request, all non-privileged documents and
records in its possession, custody or control relating to the Covered Conduct
which have not been previously produced by Olsten to the United States.
13. This Agreement is intended to be for the benefit of the Parties,
only, and by this instrument the Parties do not release any claims against any
other person or entity, except as expressly set forth herein.
14. Olsten agrees that it will not seek payment for any of the health
care billings covered by this Agreement from any health care beneficiaries or
their parents or sponsors. Olsten waives any causes of action against these
beneficiaries or their parents or sponsors based upon the claims for payment
covered by this Agreement.
15. Olsten expressly warrants that it has reviewed its financial
situation and that it currently is solvent within the meaning of 11 U.S.C. ss.
547(b)(3), and will remain solvent following its payment to the United States
hereunder. Further, the Parties expressly warrant that, in evaluating whether to
execute this Agreement, the Parties (a) have intended that the mutual promises,
covenants and obligations set forth herein constitute a contemporaneous exchange
for new value given to Olsten, within the meaning of 11 U.S.C. ss. 547 (c) (1) ,
and (b) have concluded that these mutual promises, covenants and obligations do,
in fact, constitute such a contemporaneous exchange.
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16. In the event Olsten Corporation commences, or a third party
commences, within 91 days of any payment made under this Agreement, any case,
proceeding, or other action (a) under any law relating to bankruptcy,
insolvency, reorganization or relief of debtors, seeking to have any order for
relief of Olsten Corporation's debts, or seeking to adjudicate Olsten
Corporation as bankrupt or insolvent, or (b) seeking appointment of a receiver,
trustee, custodian or other similar official for Olsten Corporation or for all
or any substantial part of Olsten Corporation's assets, Olsten Corporation
agrees as follows:
(a) The Settlement Amount set forth in this Agreement represents a
compromise figure predicated on the financial state of Olsten Corporation at the
time of this Agreement. In the event that Olsten Corporation institutes a
proceeding or other action described in this Paragraph 16, this Settlement
Amount does not constitute a waiver by the United States of its right to seek
the full amount of single damages it deems to be due and owing, which the United
States contends totals at least $189,000,000, plus penalties.
(b) Olsten's obligations under this Agreement may not be avoided
pursuant to 11 U.S.C. Section 547, and Olsten will not argue or otherwise take
the position in any such case, proceeding or action that: (i) Olsten's
obligations under this Agreement may be avoided under 11 U.S.C. Section 547;
(ii) Olsten was insolvent at the time this Agreement was entered into, or became
insolvent as a result of the payment made to the United States hereunder; or
(iii) the mutual promises, covenants and obligations set forth in this Agreement
do not constitute a contemporaneous exchange for new value given to Olsten.
(c) In the event that Olsten's obligations hereunder are avoided for
any reason, including, but not limited to, through the exercise of a trustee's
avoidance powers under the Bankruptcy 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 Olsten for the claims that
would otherwise be covered by the releases provided herein. If the United States
chooses to do so, Olsten agrees that (i) any such claims, actions or proceedings
brought by the United States (including any proceedings to exclude Olsten from
participation in Medicare, Medicaid, or other federal health care programs) are
not subject to an "automatic stay" pursuant to 11 U.S.C. ss. 362(a) as a result
of the action, case or proceeding described in the first clause of this
Paragraph, and that Olsten will not argue or otherwise contend that the United
States' claims, actions or proceedings are subject to an automatic stay; (ii)
Olsten will 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 which are brought by the
United States within one hundred eighty (180) calendar days of written
notification to Olsten that the releases herein have been rescinded pursuant to
this Paragraph, except to the extent such defenses were available on April 4,
1997, the date the Qui Tam Action was filed under seal; and (iii) the United
States may pursue its claim, inter alia, in the cases, actions or proceedings
referenced in the first clause of this Paragraph, as well as in any other case,
action, or proceeding.
(d) Olsten acknowledges that its agreements in this Paragraph are
provided in exchange for valuable consideration provided in this Agreement.
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17. In consideration of the mutual promises and obligations of this
Agreement, Relator hereby releases and discharges Olsten and its subsidiaries
and affiliated corporate entities, and their respective past and present
officers, directors, employees, principals, partners, agents and counsel, and
their respective heirs, executors, administrators, predecessors, successors and
assigns (collectively, the "Olsten Releasees"), from all actions, causes of
action, suits, debts, dues, sums of money, accounts, reckonings, bonds, bills,
specialties, covenants, contracts, controversies, agreements, promises,
variances, trespasses, damages, judgments, extents, executions, claims and
demands whatsoever, in law, admiralty or equity, whether known or unknown, which
Relator and/or his heirs, executors, administrators, successors, and assigns
ever had, now have or hereafter can, shall or may have against the Olsten
Releasees for, upon or by reason of any matter, cause or thing whatsoever from
the beginning of the world to the date of this Agreement, including but not
limited to, any claims asserted or which could have been asserted in connection
with Relator's Qui Tam Action.
18. Notwithstanding the provisions of Paragraph 17 of Section III,
above, it is agreed that neither Relator nor his counsel is releasing any entity
or individual determined by the United States or any court or other governmental
entity, in their respective sole discretions, to be jointly and severally liable
with Olsten or its related entities for the Covered Conduct, including but not
limited to Columbia/HCA Healthcare Corporation, its subsidiaries, affiliates,
predecessors, successors, employees, agents, and any and all related entities
and individuals. It is the express intent of the parties to this Agreement to
release Olsten and its related entities but not any other party who may be
jointly and severally liable with Olsten or its related entities.
19. Relator's counsel, by signing this Agreement, hereby waives any
and all claims he may have against Olsten for professional fees arising out of
his representation of the Relator in the Qui Tam Action.
20. Olsten, on its own behalf and on behalf of its agents, attorneys,
predecessors, successors, and assigns releases Relator and his attorneys from
any and all claims, or causes of action whether known or unknown as of the date
of this Agreement.
21. Relator's Release shall be effective upon receipt by the United
States of the Settlement Amount under this Agreement.
22. Relator agrees that this settlement between the United States and
Olsten in connection with the Qui Tam Action is fair, adequate, and reasonable
pursuant to 31 U.S.C. ss. 3730(c)(2)(B) and that he will not contest the
settlement.
23. Pursuant to 31 U.S.C. ss. 3730, the United States will pay Relator
a share of the Settlement Amount attributable to the conduct set forth in the
Qui Tam Action, in the amount of $9,820,800.00 (Nine Million, Eight Hundred and
Twenty Thousand and Eight Hundred dollars) within a reasonable time after the
United States' receipt of full payment from Defendants. The United States shall
not be obligated to pay Relator unless and until the United States receives full
payment of the settlement amount from Olsten.
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24. In exchange for the United States' promise to pay Relator the
above-noted share of the Settlement Amount, Relator agrees to relinquish any and
all claims he might bring against the United States arising out of or relating
to the Qui Tam Action, including any claim under 31 U.S.C. ss. 3730(c) and (d),
except as may relate to defendants in the Qui Tam Action who are not released by
this Agreement.
25. Each party to this Agreement will bear its own legal and other
costs incurred in connection with this matter, including the preparation and
performance of this Agreement.
26. Olsten represents that it is entering into this Agreement freely
and voluntarily.
27. This Agreement is governed by the laws of the United States. The
Parties agree that the exclusive jurisdiction and venue for any dispute arising
between and among the Parties to this Agreement will be the United States
District Court for the Northern District of Georgia except that jurisdiction and
venue for any dispute arising among the Parties to this Agreement relating to
the Eastern District of New York investigation shall be in the United States
District Court for the Eastern District of New York. Disputes arising under the
Corporate Integrity Agreement shall be resolved exclusively under the dispute
resolution provisions of the Corporate Integrity Agreement.
28. This Agreement and the Corporate Integrity Agreement that is
incorporated herein by reference constitute the complete agreement between the
Parties. This Agreement may not be amended except by signed written consent of
the Parties, except that only Olsten and OIG-HHS need to agree in a signed
writing to any modification of the Corporate Integrity Agreement.
29. This Agreement is specifically conditioned on the acceptance by
the United States District Court for the Southern District of Florida, the
United States District Court for the Middle District of Florida, and United
States District Court for the Northern District of Georgia of Kimberly's pleas
of guilty and the imposition of the sentence referenced in Paragraph G of
Section II above on the terms agreed upon by the Parties.
30. The individual signing this Agreement on behalf of Olsten
represents and warrants that he has been authorized by Olsten's Board of
Directors to execute this Agreement. The United States signatories represent
that they are signing this Agreement in their official capacities and that they
are authorized to execute this Agreement.
31. This Agreement may be executed in counterparts and/or facsimile
form with the same effect as if the parties had executed a single original
Settlement Agreement. Facsimile signatures shall have the same effect as
original signatures in binding the parties hereto.
32. This Agreement is binding on the successors, transferees and
assigns of the Parties.
33. This Agreement is effective on the date of signature of the last
signatory to the Agreement.
<PAGE>
-10-
THE UNITED STATES OF AMERICA
----------------------------
DATED: July 16, 1999 BY:/s/ Michael F. Hertz
------------------------ ---------------------------------
Michael F. Hertz
Director
Commercial Litigation Branch
Civil Division
United States Department
of Justice
DATED: BY:/s/ Loretta E. Lynch
------------------------ ---------------------------------
Loretta E. Lynch
United States Attorney
Eastern District of New York
DATED: July 19 1999 BY:/s/ Richard H. Deane, Jr.
------------------------ ---------------------------------
Richard H. Deane, Jr.
United States Attorney
Northern District of Georgia
DATED: July 16 1999 BY:/s/ Lewis Morris
------------------------ ---------------------------------
LEWIS MORRIS
Assistant Inspector General
Office of Counsel to the
Inspector General
Office of Inspector General
United States Department of
Health and Human Services
<PAGE>
-11-
Olsten and Kimberly Quality Care
--------------------------------
DATED: July 19 1999 BY:/s/ William Costantini
------------------------ ---------------------------------
William Costantini
Executive Vice President and
General Counsel
Olsten Corporation
DATED: July 19 1999 BY:/s/ Stuart Gerson, Esquire
------------------------ ---------------------------------
Stuart Gerson, Esquire
Epstein, Becker & Green
1227 25th Street, N.W.
Washington, D.C. 20037
DATED: July 19 1999 BY:/s/ Mark H. Tuohey III, Esquire
------------------------ ---------------------------------
Mark H. Tuohey III, Esquire
Vinson & Elkins
1455 Pennsylvania Ave., N.W.
Washington, D.C. 20004-1008
<PAGE>
-12-
RELATOR
-------
DATED: July 15 1999 /s/ Donald McLendon, Relator
------------------------ ---------------------------------
Donald McLendon, Relator
DATED: July 15 1999 /s/ Marlan B. Wilbanks, Esquire
------------------------ ---------------------------------
Marlan B. Wilbanks, Esquire
Harmon, Smith, Bridges & Wilbanks, LLP
1795 Peachtree Road
Suite 350
Atlanta, Georgia 30309-2339
<PAGE>
CORPORATE INTEGRITY AGREEMENT
BETWEEN THE
OFFICE OF INSPECTOR GENERAL OF THE DEPARTMENT OF
HEALTH AND HUMAN SERVICES
AND
OLSTEN CORPORATION
I. PREAMBLE
--------
Olsten Corporation, on behalf of itself and its subsidiaries, hereby
agrees to enter into this Corporate Integrity Agreement ("CIA") with the Office
of Inspector General of the United States Department of Health and Human
Services ("OIG") to ensure compliance with the requirements of Medicare,
Medicaid and all other Federal health care programs (as defined in 42 U.S.C. ss.
1320a-7b(f)) (hereinafter collectively referred to as the "Federal health care
programs") by Olsten, its subsidiaries, employees and third parties with whom
Olsten contracts to act as agents for Olsten. For the purposes of this CIA, the
term "Olsten" refers to Olsten Corporation and all of its subsidiaries that
provide any items or services for which payment may be made directly by any
Federal health care program, or which provide management services to Medicare
certified home health agencies. This CIA does not apply to Olsten Corporation's
subsidiaries that do not provide items or services for which payment may be made
by a Federal health care program. In addition, this CIA does not apply to
subsidiaries of Olsten that are subject to the October 19, 1998, Corporate
Integrity Agreement with Olsten Health Services (Quantum), which applies to
Olsten subsidiaries that provide antihemophilia factor products (the October 19,
1998, Corporate Integrity Agreement will hereinafter be referred to as the
"Quantum CIA"). For the purposes of this CIA, a "covered individual" is any of
Olsten's officers, directors, employees, and agents: (1) who have responsibility
for, or involvement with, Olsten's operations related to the provision of or
ordering health care items or services to Federal health care program
beneficiaries, or billing or reporting to Federal health care programs; or (2)
whose salary or compensation is paid in whole or part, directly or indirectly,
by Federal health care programs.
Prior to the execution of this CIA, Olsten voluntarily established a
Corporate Compliance Program which provides for a Chief Compliance Officer, a
compliance committee, a training and educational program, a hotline, a screening
methodology for prospective employees, and for various corporate policies and
procedures which, as represented by Olsten, are aimed at ensuring that its
participation in the Federal health care programs is in conformity with the
statutes, regulations and other legal requirements, including any legal
requirements contained in program directives ("Legal Requirements") applicable
to these programs.
Pursuant to this CIA, Olsten agrees to operate its Compliance Program for
the term of this CIA in a manner that is consistent with the requirements of
this CIA.
<PAGE>
-2-
II. TERM OF THE CORPORATE INTEGRITY OBLIGATIONS
-------------------------------------------
Except as otherwise noted, the period of corporate integrity
obligations assumed by Olsten under this CIA shall be five (5) years and 30 days
from the Effective Date of this CIA. The effective date of this CIA shall be the
date on which the final signatory of this CIA executes this agreement (the
"Effective Date"). Notwithstanding the previous sentence, this CIA and its
provisions shall not become effective until the date of the last signatory on
the related civil Settlement Agreement and the Plea Agreement between the United
States, Olsten Corporation and the Kimberly Home Health Care, Inc.
III. CORPORATE INTEGRITY OBLIGATIONS
-------------------------------
For the duration of the CIA, Olsten shall comply with the following
corporate integrity obligations and ensure that the obligations are fully
incorporated into its Compliance Program.
A. COMPLIANCE OFFICER Olsten represents that it employs a Compliance
Officer as of the Effective Date. Within 90 days after the Effective Date,
Olsten shall ensure that the Compliance Officer's responsibilities meet the
requirements of this CIA. The Compliance Officer's primary responsibility shall
be development and implementation of policies, procedures, and practices
designed to ensure compliance with the requirements set forth in this CIA, and
with the requirements of all Federal health care programs. The Compliance
Officer shall chair the Compliance Committee and shall be responsible for
monitoring the day-to-day activities engaged in by Olsten to further its
compliance objectives as well as any reporting obligations created under this
CIA. The Compliance Officer shall be a member of senior management of Olsten
(i.e., not subordinate to Olsten's general counsel), shall have a reporting
relationship with and be authorized to report directly to Olsten's Board of
Directors, and shall make periodic (at least quarterly) reports regarding
compliance matters directly to the Olsten CEO and/or to the Audit Committee of
the Board of Directors of Olsten. In the event a new Compliance Officer is
appointed during the term of this CIA, Olsten shall notify the OIG, in writing,
within 15 days of such a change.
B. COMPLIANCE COMMITTEE Olsten represents that it has a Compliance
Committee operating as of the Effective Date. As of the Effective Date, the
Compliance Committee, at a minimum, shall include the Compliance Officer (who
shall chair the committee) and senior management individuals representing
Finance, Information and Administrative Services, Central Support Clinical
Management, Human Resources, Field Operations, and the Audit Department. The
Compliance Committee will support the Compliance Officer in fulfilling his/her
responsibilities.
C. COMPLIANCE PROGRAM
1. Existing Program. Olsten has adopted a Compliance Program
reflecting its commitment to ethical conduct in all of its affairs, including
compliance with all statutes, regulations, and Legal Requirements governing the
Federal health care programs. The Compliance Program is embodied in various
policies, standards, and manuals issued by Olsten. The Compliance Program is
described in a document known as the "Program Description."
<PAGE>
-3-
2. Distribution of Program Description.
a. Covered Individuals In General. Within 60 days of the
Effective Date, Olsten will ensure that all current covered
individuals have received a copy of this Program
Description. Within 120 days of the Effective Date, Olsten
shall require all covered individuals to sign a
certification that the individual has received, read, and
understands the Program Description and agrees to abide by
the requirements of the Compliance Program. Thereafter,
Olsten shall require such certifications within 120 days,
except as provided in 2.b below, after an individual first
becomes a covered individual. Olsten shall post in
prominent places accessible to all employees and agents a
notice detailing its commitment to comply with all
applicable statutes, regulations, and Legal Requirements
related to its participation in the Federal health care
programs.
b. Covered Contractors. Notwithstanding the above provision,
for covered individuals who are employed by entities that
contract with Olsten to provide health care related
services, Olsten shall: (1) continue to require in its
contract with the entity that the contractors acknowledge
Olsten's compliance program and code of conduct; (2) ensure
that the Program Description is provided (either by Olsten
or the contracting entity) to all such covered individuals;
(3) require by contract that the contractors obtain and
retain (subject to review by Olsten and/or the OIG) signed
certifications from all of their employees who serve as
agents of Olsten that such individuals have received, read,
and understand the Program Description and agree to abide
by the requirements of Olsten's Compliance Program. Olsten
shall require future contracts with such contractors to
include the above-described provisions. Within 90 days of
the execution of this CIA, Olsten shall attempt in good
faith to amend contracts with its current contractors who
are covered individuals to include a provision pursuant to
which the contractors will provide assurance satisfactory
to Olsten that the certification requirements will be met.
3. Future Amendments. Olsten shall maintain, examine, and update
the Compliance Program's policies and procedures and the Program Description at
least annually and more frequently, as appropriate in order to ensure future
compliance with the requirements of this CIA and all statutes, regulations, and
Legal Requirements governing the Federal health care programs.
4. Disciplinary System. Olsten shall continue to maintain policies
and procedures reflecting disciplinary guidelines for failure to abide by the
Compliance Program and methods for individuals to make complaints and
notifications about compliance issues to appropriate personnel through the
Confidential Disclosure Program. Olsten shall maintain its structured
disciplinary system for violations of applicable health care statutes,
regulations, and Federal health care program Legal Requirements, as well as the
requirements of this CIA and Olsten's Compliance Program. All levels of
employees and agents shall be subject to consistent and appropriate penalties or
<PAGE>
-4-
discipline for the commission of offenses. Olsten shall maintain for OIG's
inspection adequate documentation of all disciplinary measures taken as a result
of the Compliance Program's disciplinary system, this CIA, or applicable health
care statutes, regulations and Legal Requirements.
5. Management Performance Policy. Adherence to the terms of this
CIA and Olsten's Compliance Program shall be an element of the performance
evaluation of each of Olsten's managers and supervisors.
D. INFORMATION AND EDUCATION Olsten shall meet the following training
requirements. The training requirements are cumulative (not exclusive) so that
one individual may be required to attend training in several substantive areas
in addition to the general training. All training requirements in subsections
1-4 below shall be implemented within 120 days of the Effective Date and
thereafter repeated annually during the term of the CIA.
1. General Training. Olsten shall continue to provide
approximately one and one-half hours of training to all of its covered
individuals regarding Olsten's Compliance Program. The training must be designed
to familiarize covered individuals with their obligations under the Compliance
Program and this CIA, the means for obtaining advice about and reporting
violations of the Compliance Program, the consequences to the individual of
violating the Compliance Program, and the consequences to Olsten that may result
from any violation of law. With regard to covered individuals who are employed
by entities that contract with Olsten to provide health care related services,
Olsten shall make its general training available to such individuals, shall
encourage all care givers to attend, and shall maintain records of which of
these individuals attended the general training. However, such covered
contractors shall not be required to attend such training.
2. Billing Training. Olsten shall implement a training program for
all covered individuals involved in preparing or submitting bills, claims, or
reports, excluding cost reports (either in paper or electronic format), or
supervising such bills/claims/report, excluding cost report, preparation, to any
Federal health care program through Olsten. This program shall provide for no
less than eight hours of formal training on an annual basis regarding: (i) the
submission of correct and accurate bills for services rendered to all Federal
health care program beneficiaries; (ii) the personal obligation of each
individual involved to make reasonable efforts to ensure that the information
provided by the individual (either orally or in writing) relating to the care or
the services rendered to patients of the Federal health care programs, provided
in support of a submission for reimbursement to these programs, or regarding the
condition or circumstances of any patient, is accurate; (iii) applicable
statutes, regulations, and Legal Requirements; (iv) examples of improper billing
practices; and (v) the legal, regulatory, and internal Olsten sanctions for
improper billings.
3. Contract Training. Olsten shall provide at least four hours of
training to all covered individuals with any responsibility for, or oversight
over, contracts or other arrangements entered into by Olsten that relate to the
provision of home health services. This training shall address the statutes,
regulations, and Legal Requirements relevant to such contracts and arrangements.
The topics covered in the training shall include the anti-kickback statute, 42
U.S.C. ss. 1320a-7b(b), the physician self-referral ("Stark") law, 42 U.S.C. ss.
1395nn, the regulations and guidance related to these statutes, and any other
applicable legal requirement, including the regulations and program guidance
<PAGE>
-5-
governing home health coverage, reimbursement principles, related party
transactions, and federal participation requirements.
4. Cost Report Training. Olsten shall provide at least eight hours
of training to all employees and agents who assist in, participate in, or
supervise, the preparation of annual cost reports submitted to any Federal
health care program. This training shall be on the proper calculation and
allocation of costs, relevant Federal health care program coverage policies and
guidance, significant new administrative or judicial decisions (including PRRB
decisions) and the Federal health care program guidance that affects their cost
report duties. This annual cost report training shall also address the
significance of certifications submitted with cost reports and home office cost
statements and the potential violations of law for submitting false
certifications or false information.
5. New Individuals. For the duration of this CIA, whenever a
covered individual first falls within one of the categories of individuals for
whom training must be provided under this CIA, Olsten shall ensure that this
"new individual" receives the required training within 30 days of the individual
being in a position for which the training is required. If a new individual has
substantive responsibilities that trigger training requirements in this CIA
prior to completing the required training, Olsten shall ensure that an employee
who has completed the required training shall review all of that new
individual's work in that substantive area until the required training has been
completed. The training of new individuals obtained as part of an acquisition of
a business unit shall be governed by section XI.
6. Training Record Retention. Olsten shall continue to retain in
an organized and readily accessible manner any material pertaining to the
training required by this CIA. Upon request, Olsten shall make available for
review by OIG a complete description of the training program, a compilation of
the full set of training materials, a list of attendees who have completed
training, and dates of attendance. Each individual who is required to attend
training shall certify, in writing, that he or she has attended the required
training. The certification shall specify the type of training received and the
date received. The Compliance Officer shall ensure that the certifications are
appropriately retained, along with specific course materials. These shall be
made available to OIG upon request.
7. Communication From Management. Olsten's management and
department heads also shall be responsible for appropriately communicating,
documenting and implementing, in conjunction with the Compliance Officer,
new/revised billing regulations and Olsten's policies to all employees.
Departmental directors and managers will sign an annual attestation verifying
that they have appropriately communicated all new and revised information, as
well as reviewed all existing regulatory and business policies to all relevant
employees and contractors. Copies of these attestations will be available, upon
request, for review by OIG.
8. Notification Regarding the CIA. Within 60 days of the Effective
Date, Olsten shall notify covered individuals of the summary of the key terms of
this CIA through a notice placed on Olsten's intranet computer system and the
regularly published employee newsletter.
<PAGE>
-6-
E. PERSONAL EXPENSES Olsten's employees' or agents' personal expenses
that are not allowable as set forth in applicable Federal health care program
statutes, regulations, and Legal Requirements, shall not be included in Olsten's
cost reports submitted to any Federal health care program. Olsten shall use all
reasonable efforts to ensure that unallowable personal expenses are not included
in Olsten's cost reports. Olsten must maintain adequate and accurate
documentation in accordance with the applicable Federal health care program
statutes, regulations and Legal Requirements to support its claims for
reimbursement for its travel and entertainment costs or expenses and to support
its contention that such expenses are allowable. Expense reports shall be
reviewed periodically by the Compliance Officer or qualified designee and the
reports shall be maintained and available for OIG review upon request.
F. PERSONAL SERVICES AND MANAGEMENT CONTRACTS
1. Management of Non-Owned Agencies. As of the Effective Date,
Olsten may provide management services to home health agencies that are not
wholly owned by Olsten only under the following conditions:
a. All Olsten employees who furnish such management related
activities will be considered "covered individuals" for
purposes of this CIA.
b. If Olsten is involved in the preparation of reimbursement
claims or filing of cost reports for non-Olsten home health
agencies, Olsten personnel will be required to act in
accordance with the same standard of conduct applicable to
Olsten's owned home health agencies and will be required to
attend all pertinent training.
c. Olsten shall require in its management services agreements
of home health agencies that are not wholly owned by Olsten
a provision that all Olsten personnel are subject to
Olsten's Compliance Program.
2. Sale of Agency and Subsequent Management Services Contract. In
the event that Olsten either acquires or sells a home health agency in which the
seller subsequently contracts with the buyer to manage the home health agency,
Olsten shall obtain directly or require the other party to obtain (and share
with Olsten) an independent appraisal regarding all of the assets (tangible and
intangible) that are transferred or purchased. This independent appraisal will
be obtained from an unrelated third party with expertise in such valuations.
Olsten shall ensure that the independent appraisal organization is provided with
accurate, timely information regarding all relevant assets and agreements
(including fee schedules, non-compete agreements, provider contracts, etc.).
With regard to all such transactions as specified in this section, Olsten's
Chief Financial Officer shall certify to the best of his or her knowledge that
the independent appraisal organization has been furnished with the complete list
and/or description of the consideration and assets contemplated in the
transaction. Such independent appraisal shall not be required for any existing
agreements in place on the Effective Date.
<PAGE>
-7-
3. Policies. Olsten will continue its policies reasonably designed
to prevent contractual relationships with referral sources and recipients of
referrals that violate the anti-kickback statute or the Stark statute, and will
implement reasonable procedures to evaluate its existing contractual
relationships with physicians, contractors, vendors, and other individuals or
entities. Any arrangement with referral sources that materially or significantly
deviates from the terms of the boilerplate contracts previously approved by
Olsten's legal department shall be reviewed and approved by Olsten's Law
Department in advance of the execution or initiation of such an arrangement and
shall be in writing.
In addition, at a minimum, Olsten shall ensure that all physician
relationships with physicians who refer to or order home health services from
Olsten meet all of the following standards:
a. The arrangement is set out in writing, signed by the
parties, for a term of at least one year (or is otherwise
in compliance with Legal Requirements), and specifies the
services covered by the arrangement;
b. The agreement shall specify all the services to be provided
by the physician;
c. The aggregate services covered under the agreement do not
exceed those that are reasonable and necessary for the
legitimate business purpose of the arrangement;
d. Compensation under the terms of the agreement is set in
advance, not to exceed fair market value (determined by
conducting a fair market value analysis) and is not
determined in a manner that takes into account volume or
value of any referrals or other business generated between
the parties;
e. The services under the arrangement do not involve any
activity that violates any State or Federal law;
f. The arrangement meets such other requirements as the
Secretary may impose by regulation as needed to protect
against program or patient abuse; and
g. The Chief Compliance Officer or his/her designee shall
review and approve any requests for payments to physicians.
Finally, Olsten and its employees shall identify clearly any item or
service provided to a physician, hospital, or other referral source on its
expense reports, even if not claimed as a reimbursable cost.
4. Access to Contracts. Olsten shall provide to the OIG, upon
request, copies of all personal service or management contracts, all
non-privileged communications related to the contracts and the documentation
concerning actual performance of the duties under the contracts, such as time
sheets, service logs, and payment documentation (e.g., Form 1099s, W-2 forms,
and records of checks/wire transfers).
<PAGE>
-8-
5. Review of Contracts. Olsten shall have an experienced attorney
with knowledge of the Federal health care statutes, regulations, and program
requirements review all of the personal service and management contracts entered
into by Olsten to provide management services to Medicare certified home health
agencies to ensure that such agreements have met the requirements established in
this CIA, and such attorney will certify that such review has occurred. Olsten
shall make available for OIG review a summary of the attorney's legal review
that such agreements have met the requirements of this paragraph. Such summary
shall also include, if applicable, a summary of any identified issues and any
corrective action taken. Provision by Olsten to the OIG of such summary will not
be deemed by the parties as, and shall not constitute, a waiver of any
applicable privilege, including but not limited to, attorney-client
communication, attorney work product and the self-critical analysis privilege.
G. MEDICALLY NECESSARY SERVICES Olsten shall continue to maintain
policies and procedures designed to ensure that Olsten only submit claims to
Federal health care programs for services that are medically necessary, comply
with a physician's plan of care and meet the coverage standards of the
applicable Federal health care program. Within 60 days of the Effective Date,
Olsten shall ensure the following:
1. Decision to Treat. Olsten's decision to furnish home health
services to a patient under a Federal health care program will be approved by an
employee of Olsten who is not compensated based on the volume or value of
services performed or patients seen, unless such person's compensation is in
compliance with all applicable statutes, regulations and other requirements for
all Federal health care programs.
2. Plan of Care Appropriateness. All nursing personnel involved in
the preparation of a plan of care will continue to be required to ensure that
the plan of care is authorized by a physician and is appropriate under the
applicable Federal health care program requirements. Validation of this
compliance will occur under section III.G.3.
3. Clinical Review Protocol. Olsten has and will maintain a
clinical review protocol for periodic independent clinical review of the
appropriateness of home health services reimbursed by Federal health care
programs. In addition, an independent clinical review shall be performed when
the appropriateness of care provided to a Federal health care program patient is
questioned by any individual, including employees or third parties. The
independent clinical reviews shall be performed by an individual other than the
individual who prepared the relevant clinical documentation and may consist of
local, regional, and corporate reviews. The reviewers shall be appropriately
trained and qualified and no part of their compensation or job evaluation shall
be based upon the outcome of their review, or home health revenue, income,
number of visits, or similar revenue or volume-based measurements, unless such
person's compensation is in compliance with all applicable statutes, regulations
and other requirements for all Federal health care programs.
4. Charting Accuracy. All clinical employees will continue to be
required to chart accurately and fully the circumstances, condition, status, and
progress of each patient. All clinical employees will continue to be informed of
Olsten's policy prohibiting inaccurate charting techniques, such as the improper
alteration of nursing notes.
<PAGE>
-9-
5. Review of Policies. Olsten will continue to conduct ongoing
reviews of policies and practices regarding the initiation of home health
services under a plan of care, as well as the appropriateness of numbers of
visits, accuracy and completeness of charting, medical necessity of services
provided. In conducting these ongoing reviews, Olsten shall use criteria
conforming to professionally recognized standards of care.
6. On-Site Reviews. Periodically, Olsten shall continue to conduct
on-site clinical reviews of selected patients' care to ensure clinical record
accuracy and conformity to actual patient condition and to confirm that plans of
care are appropriate to each of the patients' actual conditions. Comparisons
will continue to be made of Olsten's patient care practices at randomly selected
specific locations to applicable national and regional statistics for Olsten
trends from year to year. Discrepancies will be investigated to determine their
cause, and, when identified, improper practices will be corrected.
7. Reviews in Annual Reports. Olsten shall include in its Annual
Reports a summary of the reviews conducted regarding Olsten's medical necessity
policies and practices as well as a certification from the Compliance Officer
that, to the best of his or her knowledge, Olsten has followed the requirements
of this section. In addition, Olsten shall include in its Annual Reports any
changes to the clinical review protocol described in this section.
H. CONFIDENTIAL DISCLOSURE PROGRAM
1. Reporting System. Prior to the Effective Date, Olsten has
instituted a Reporting System enabling individuals to disclose any practices or
procedures, alleged by an individual to be inappropriate, to an identified
individual not in the disclosing individual's direct chain of command. Olsten
shall continue to operate such Reporting System or Confidential Disclosure
Program in a manner that allows individuals to make such disclosures through the
means described immediately above. Olsten shall maintain a policy of
non-retaliation and protection of anonymity for disclosures. Olsten shall
maintain its policy of requiring covered individuals to report suspected
wrongdoing.
2. Review of Disclosures. Upon receipt of a disclosure, the
Compliance Officer (or designee) shall gather the information in such a way as
to elicit all relevant information from the disclosing individual. Olsten shall,
in good faith, make a preliminary inquiry for every disclosure to ensure that
Olsten has obtained all of the necessary information that is reasonably required
to determine whether an internal review should be conducted or whether the
disclosure warrants other appropriate action. 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, Olsten shall conduct an internal
review of the allegations set forth in such a disclosure and ensure that proper
follow-up is conducted.
3. Hotline. Olsten shall continue to provide for, and make
publicly known, the toll-free "Hot Line" telephone number maintained by Olsten
and made known and available to all directors, officers, employees, contractors
and patients 24 hours a day, seven days a week, for the purpose of making any
disclosures regarding Olsten's conformity with the Compliance Program, the
obligations in this CIA and Olsten's overall compliance with federal and state
standards. The identity of the individual making the disclosure may be
<PAGE>
-10-
requested, but shall not be required. Anonymity shall not be discouraged. The
Compliance Officer shall maintain a confidential disclosure log, which shall
include a record and summary of each allegation received, the status of the
respective investigations, and any corrective action taken in response to the
investigation.
I. DEALING WITH EXCLUDED OR CONVICTED INDIVIDUALS OR ENTITIES
1. Definition of "Ineligible Person." For purposes of this CIA, an
"Ineligible Person" shall be any individual or entity who: (i) is currently
excluded, suspended, debarred or otherwise ineligible to participate in the
Federal health care programs; or (ii) has been convicted of a criminal offense
related to the provision of health care items or services and has not been
reinstated in the Federal health care programs after a period of exclusion,
suspension, debarment, or ineligibility. For purposes of this CIA, the term
"convicted" shall have the meaning given in 42 U.S.C. ss. 1320a-7(i).
2. Screening Requirements. Olsten shall not hire or engage as
contractors any Ineligible Person. To prevent hiring or contracting with any
Ineligible Person, Olsten shall screen all prospective employees and prospective
contractors prior to engaging their services by (i) requiring applicants to
disclose whether they are Ineligible Persons, and (ii) appropriately reviewing
the General Services Administration's List of Parties Excluded from Federal
Programs (available through the Internet at http://www.arnet.gov/epls) and the
HHS/OIG List of Excluded Individuals/Entities (available through the Internet at
http://www.dhhs.gov/progorg/oig) (these lists will hereinafter be referred to as
the "Exclusion Lists").
3. Review and Removal Requirement. Within 90 days of the Effective
Date of this CIA, Olsten will review and compare its list of current employees
and contractors against the Exclusion Lists. Thereafter, Olsten will review the
list once semi-annually for Ineligible Persons. If Olsten has notice that an
employee, agent, or contractor has become an Ineligible Person, Olsten will
remove such person from responsibility for, or involvement with, Olsten's
business operations related to the Federal health care programs and shall remove
such person from any position for which the person's salary or the items or
services rendered, ordered, or prescribed by the person are paid in whole or
part, directly or indirectly, by Federal health care programs or otherwise with
Federal funds at least until such time as the person is reinstated into
participation in the Federal health care programs.
4. Pending Charges and Proposed Exclusions. If Olsten has notice
that an employee or contractor is charged with a criminal offense related to any
Federal health care program, or is suspended or proposed for exclusion during
his or her employment or contract with Olsten, within 10 days of receiving such
notice Olsten will remove such individual from responsibility for, or
involvement with, Olsten's business operations related to the Federal health
care programs until the resolution of such criminal action, suspension, or
proposed exclusion.
5. Criminal Background Checks. Olsten conducts criminal background
checks of potential employees pursuant to its compliance program. Olsten shall
ensure that it: (1) complies with all federal and state requirements regarding
criminal background checks for covered individuals; and (2) performs and
completes a timely criminal background check on all individuals offered
employment in a position that involves direct care of patients (and the offer of
employment must be conditioned upon the results of the check). For the purposes
<PAGE>
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of this CIA: (a) in states where Olsten uses its usual screening vendor, a
timely criminal background check means a check completed within 7 business days
of the offer of employment to the individual; or (b) in states where Olsten or
its vendor must use a state agency to conduct the criminal background check, a
timely criminal background check means a check conducted and completed as soon
as reasonably possible (including providing the relevant information to the
state agency prior to the offer of employment).
J. ONGOING BILLING AND CLINICAL REVIEWS
Olsten currently performs several types of reviews of its clinical and
billing operations. Olsten shall continue such reviews in substantially the same
form and perform them in the same manner and frequency during the term of this
CIA. These reviews are known as: (1) Pre-billing Release Process; (2) Caregiver
Documentation Practices; (3) Clinical Audit Tool; (4) Regional Clinical Review
(Clinical Operations Specialists); (5) Corporate Clinical Review (Quality
Performance Improvement Team); (6) Quality Assurance Specialists Review; (7) Red
Flag Indicator; and (8) Clinical Reimbursement Review. Olsten shall notify the
OIG within 15 days of any material changes to the form, manner, or frequency of
these reviews.
K. ANNUAL REVIEWS
1. Independent Review Organization. Within 90 days of the
Effective Date, Olsten shall retain an independent review organization ("IRO"),
such as an accounting, auditing, or consulting firm, to perform reviews of
Olsten's billing and compliance practices. The reviews will be conducted
annually and will cover the five consecutive years from August 1, 1999 through
July 31, 2004. The IRO must have expertise in the billing, coding, reporting
(including preparation of cost reports), and other requirements of Federal
health care programs from which Olsten seeks reimbursement. The IRO shall
produce a report for each engagement and the report will address every matter
required by this CIA to be addressed in that engagement.
2. Types of Reviews. The IRO will conduct three separate reviews
annually. One will be an annual review of Olsten's billings and submissions (and
the underlying services provided) to all Federal health care programs to
determine compliance with all applicable statutes, regulations, and policies
(billing engagement). The second will be a review to determine whether Olsten is
in compliance with the terms of this CIA (compliance engagement). The third will
be a review of Olsten's cost report processes and procedures and a review of any
procedures or processes implemented by Olsten to address recommendations by the
Fiscal Intermediary as part of the Fiscal Intermediary's annual review of
Olsten's cost reports.
3. Billing Reviews. The billing engagement shall consist of a
review of a statistically valid sample of claims from 30 distinct Olsten
Medicare certified home health locations that can be projected to the population
of claims, for that distinct home health location, submitted to the Federal
health care programs for the year covered by the engagement. Olsten shall
identify up to 15 of these 30 distinct Medicare certified home health locations,
in cases where Olsten has conducted internal reviews, as long as such internal
reviews cover a 12-month period, were conducted during the respective IRO audit
review period, and were conducted using the statistically valid methodology set
forth below. The IRO shall review Olsten's audit methodology and findings and
present Olsten with findings that the IRO concurs with the statistical validity
<PAGE>
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of the sampling methodologies and the variable appraisal of the sampling results
or 100% claim review conducted at Olsten's sole discretion. The remaining home
health agency locations shall be selected at random with all Olsten home health
locations in the universe of potential locations. Once these remaining home
health locations are identified, the sample size of claims at each of those
locations shall be determined through the use of a probe sample. The probe
sample must contain at least 30 sample units from a representative universe of
claims, for that distinct home health location, and cannot be used as part of
the full sample. The full sample must contain a sufficient number of units so
that when the sample results are projected to the population of claims, for that
distinct home health location, the projection provides a minimum 90% confidence
level and a maximum precision of plus or minus 25% of the point estimate (i.e.,
the upper and lower bounds of the 90% confidence interval shall not exceed 125%
and shall not fall below 75% of the midpoint of the confidence interval,
respectively). Both the probe sample and the full sample must be selected
through random number sampling. To generate the random sample, Olsten shall use
OIG's Office of Audit Services Statistical Sampling Software, also known as
"RAT-STATS," which is available through the Internet at
www.hhs.gov/progorg/oas/ratstat.html." In the event OIG requires extrapolation
of the probe sample within a distinct home health location, then Olsten shall,
at its sole discretion, have the option of extrapolation of the probe sample
within that distinct home health location or conducting a review of 100% of all
claims for that distinct home health location.
Each annual billing engagement and its corresponding report shall
include the following components:
a. Billing Engagement Objective: a clear statement of the
objective intended to be achieved by the billing engagement
and the procedure or combination of procedures that will be
applied to achieve the objective.
b. Billing Engagement Population: the identity of the
population, which is the group about which information is
needed and an explanation of the methodology used to
develop the population and provide the basis for this
determination.
c. Sources of Data: a full description of the source of the
information upon which the billing engagement conclusions
will be based, including the legal or other standards
applied, documents relied upon, payment data, and/or any
contractual obligations.
d. Sampling Unit: a definition of the sampling unit, which is
any of the designated elements that comprise the population
of interest.
e. Sampling Frame: the identity of the sampling frame, which
is the totality of the sampling units from which the sample
will be selected.
<PAGE>
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4. Billing Review Focus. The IRO's annual billing reviews of
Olsten shall provide:
a. findings regarding Olsten's billing operations (including
how the billing systems operate, internal controls, and the
strengths and weaknesses of the systems);
b. findings regarding whether Olsten is submitting accurate
claims for services billed to Federal health care programs.
The analysis will focus on the risk areas identified in
this CIA and in the OIG's Compliance Program Guidance for
Home Health Agencies, 63 Federal Register 42409 (August 7,
1998). For example, the analysis will examine whether
Federal health care patients met coverage criteria (e.g.,
homebound) when they received services from Olsten. The
analysis will use statistically valid methods of
extrapolating billing errors to determine an estimated
overpayment for the universe of claims, of the distinct
Medicare certified home health location reviewed, submitted
to the Federal health care programs;
c. for any time period during which the prospective payment
system for home health services is in effect, findings
regarding Olsten's compliance with the requirements of that
system. Specifically, the reviews shall provide findings
regarding whether Olsten is submitting accurate information
to Federal health care programs regarding home health
patients and whether Olsten is meeting all Legal
Requirements.
d. findings regarding Olsten's procedures to correct
inaccurate billings submitted to Federal health care
programs;
e. findings regarding whether Olsten's program, policies,
operations, and procedures comply with the statutes,
regulations and other Legal Requirements of Federal health
care programs from which Olsten seeks reimbursement;
f. findings regarding the steps Olsten is taking or has taken
to bring its operation into compliance or to correct
problems identified by the audits and whether the problems
have been corrected.
5. Potential Reduction or Increase in Number of Locations
Reviewed. At its sole discretion, subsequent to Olsten's first annual billing
review, and thereafter, the OIG may reduce or increase the number of distinct
Medicare certified home health locations which must be reviewed by the IRO in
the manner described above. The OIG shall consider factors including, but not
limited to, the error rates identified in the prior year(s), the adequacy of the
annual billing review and manner in which presented, and Olsten's overall
compliance with the terms of this CIA. If OIG decides to increase the number of
locations subject to IRO review, OIG will not increase that number to more than
50 distinct Medicare certified home health locations. Olsten agrees that OIG's
decision whether to reduce or increase the number of home health locations on
<PAGE>
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which an IRO must perform an annual billing review shall be final and
non-appealable to any person or adjudicative body.
6. CIA Compliance Review. The CIA compliance review shall provide
an assessment of whether Olsten's program, policies, procedures, and operations
comply with the terms of this Agreement. The IRO that performs the Compliance
Engagement must have expertise in the billing, cost reporting, and other
requirements of Medicare, Medicaid, and other Federal health care programs to
which Olsten seeks reimbursement.
7. Cost Report and Home Office Cost Report Review. The IRO will
review Olsten's policies and procedures pertaining to the preparation and
submission of its provider cost reports and home office cost reports to
determine their adequacy. Included in this review, the IRO will analyze and make
findings regarding Olsten's policies and procedures for (a) cost allocation; (b)
documentation requirements; (c) documentation retention for work papers; (d)
contested or disputed items; (e) data collection for purposes of segregating
allowable and non-allowable costs and (f) data collection procedures for
purposes of identifying the total number of visits and beneficiaries included in
the Provider Statistical Reimbursement Report. The IRO shall review Olsten's
policies and procedures regarding the identification and/or segregation of Part
B service costs on its facility cost reports, if applicable. The IRO shall also
review Olsten's procedures regarding internal control mechanisms for cost report
disputes or questions and related external query mechanisms, such as inquiries
to the Regional Home Health Intermediary or the Health Care Financing
Administration. The IRO shall make findings regarding whether Olsten has
adequate policies and procedures regarding the preparation of accurate cost
reports for services billed to the Federal health care programs. To the extent
that the IRO determines that Olsten's provider cost report policies and
procedures are inadequately designed to ensure compliance with Legal
Requirements, then the IRO shall also make findings regarding the steps Olsten
is taking to correct any such inadequacies, or to address recommendations by the
Regional Home Health Intermediary. Any findings or recommendations of the IRO
with regard to cost report policies and procedures shall be set forth in the
Annual Report referenced in section VI of this CIA. Further, the IRO will review
any changes to Olsten's home office cost report preparation policies and
procedures and shall interview individual(s) involved who prepare the home
office cost reports to confirm that such individual(s) are aware of such
policies and procedures.
8. Billing, Compliance and Cost Report Review Reports. The IRO(s)
will produce written reports for each billing review, each compliance review and
each cost report review. The reports shall include all of the information
required to be provided by this CIA in such reviews. A complete copy of the
IRO's billing review report, CIA compliance review report and cost report review
report will be included in the Annual Reports submitted to the OIG. The billing
review report shall include the methodology used to make each determination, the
review results, and the identification of overpayments.
L. DISCLOSURES
1. Disclosures of Overpayments to Payors. If Olsten learns that
there are any billing, cost reporting, coding, or other policies, procedures
and/or practices that result in an overpayment, Olsten shall notify the payor
(e.g., Medicare fiscal intermediary or carrier) within 30 days of discovering
the overpayment and take remedial steps within 60 days of discovery (or such
<PAGE>
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additional time as may be agreed to by the payor) to correct the problem,
including preventing the deficiency from reoccurring. If the overpayment is
discovered through Olsten's Compliance Program the notice to the payor shall
include: (1) a statement that the refund is being made pursuant to the dictates
of Olsten's Compliance Program and/or CIA; (2) a description of the complete
circumstances surrounding the overpayment; (3) the methodology by which the
overpayment was determined; (4) the amount of the overpayment; (5) any
claim-specific information used to determine the overpayment (e.g. beneficiary
health insurance number, claim number, secondary payor information (if
applicable), service date, and payment date); (6) the cost reporting period;
and, (7) the provider identification number under which the repayment is being
made.
2. Disclosure of Material Deficiencies to OIG. If Olsten
determines that there is a material deficiency, Olsten shall notify the OIG
within thirty (30) days of discovering the material deficiency. If the material
deficiency results in an overpayment, the report to the OIG shall be made at the
same time as the report to the payor and shall include all of the information
required by section III.L.1 plus: (i) the payor's name, address, and contact
person where the overpayment was sent; and (ii) the date of the check and
identification number (or electronic transaction number) on which the
overpayment was repaid. Regardless of whether the material deficiency resulted
in an overpayment, the report to the OIG shall include:
a. a complete description of the material deficiency,
including the relevant facts, persons involved, and legal
and program authorities;
b. Olsten's actions to correct the material deficiency; and
c. any further steps Olsten plans to take to address such
material deficiency and prevent it from recurring.
3. Definition of Material Deficiency. For purposes of this CIA, a
"material deficiency" means anything that involves: (i) a substantial
overpayment or improper payment relating to any Federal health care program;
(ii) a material violation of any Federal health care program statutes,
regulations, or Legal Requirements issued by relevant regulatory agencies, e.g.,
HCFA, or their agents (for example, such a violation would be established by
credible evidence of misconduct from any source that Olsten, after reasonable
inquiry, has reason to believe may violate criminal, civil, or administrative
law related to any Federal health care program); or (iii) the provision of items
or services of a quality that materially fails to meet professionally recognized
standards of health care. A material deficiency may be the result of an isolated
event or a series of occurrences.
4. Definition of Overpayment. For purposes of this CIA, an
"overpayment" shall mean the amount of money the provider has received in excess
of the amount due and payable under the Medicare, Medicaid, or other Federal
health care program's statutes, regulations, and other guidelines.
<PAGE>
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5. Notification of Proceedings. Within 30 days of discovery,
Olsten shall notify OIG, in writing, of any search warrant, subpoena, ongoing
investigation, or legal proceeding conducted or brought by a governmental entity
or its agents where Olsten knows or has reason to know that such investigation
or proceeding involves an allegation that Olsten has committed a crime or has
engaged in fraudulent activities or any other knowing misconduct. 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. Olsten shall also provide written notice to OIG within 30 days
of the resolution of the matter, and shall provide OIG with a description of the
findings and/or results of the proceedings, if any.
IV. COST OF INDEPENDENT AUDIT
-------------------------
In the event that the OIG has reason to believe that any of Olsten's or
the IRO's reviews fail to conform to its obligations under the CIA or indicates
improper billings not otherwise adequately addressed in the audit report, and
thus determines that it is necessary to conduct an independent audit or review
to determine whether or the extent to which Olsten is complying with its
obligations under this CIA, Olsten agrees to pay for the reasonable cost of any
such audit or review by the OIG or any of its designated agents.
V. OIG INSPECTION, AUDIT AND REVIEW RIGHTS
---------------------------------------
In addition to any other right OIG may have by statute, regulation,
contract or pursuant to this CIA, OIG or its duly authorized representative(s)
may, subject to any properly asserted legal privileges, examine Olsten's books,
records, and other company documents and supporting materials for the purpose of
verifying and evaluating Olsten's compliance with the terms of this CIA and with
the requirements of the Federal health care programs. The documentation
described above shall be made available by Olsten at all reasonable times for
inspection, audit and reproduction. Furthermore, for purposes of this provision,
OIG or its authorized representative(s) may interview any of Olsten's employees
who consent to be interviewed at the employee's place of business during normal
business hours or at such other place and time as may be mutually agreed upon
between the employee and OIG. Olsten agrees to assist OIG in contacting and
arranging interviews with such employees upon OIG's request and agrees that the
employees may be interviewed without the presence of an Olsten representative.
VI. IMPLEMENTATION, ANNUAL, AND FINAL REPORTS
-----------------------------------------
A. IMPLEMENTATION REPORT
1. Submission of Implementation Report. Within 150 days after the
Effective Date, Olsten shall submit a written report to the OIG summarizing the
status of implementation of the requirements of this CIA.
2. Contents of Implementation Report. The implementation report
shall include:
a. the names, addresses, phone numbers and position
descriptions of the Compliance Officer and of the members
of the Compliance Committee described in III.A and B;
<PAGE>
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b. a description of the training programs implemented pursuant
to III.D and a summary of the activities undertaken in
furtherance of the training programs, including schedules
and format of the training sessions, and a description of
the targeted audiences;
c. a description of the publication of the summary of key
terms of the CIA pursuant to III.D.;
d. the identity of the independent review organization(s) and
the proposed start and completion date of the first billing
and compliance review assessments;
e. a certification by the Compliance Officer that to the best
of his/her knowledge:
(i) the policies and procedures as contained on Olsten's
Compliance Program, as referenced in section III.C, are
being implemented, and have been distributed or made
available to all pertinent covered individuals, and
have been appropriately amended;
(ii) all covered individuals have signed a certification
that they have read and understood the Program
Description and agree to abide by the requirements of
the Compliance Program as required by section III.C.2;
and (iii) all covered individuals have completed the
training and executed the certification required by
section III.D.6; and
f. a summary of personnel actions taken pursuant to sections
III.C.4 or III.I.
B. ANNUAL REPORTS
1. Submission of Annual Reports. Olsten shall submit to the OIG an
Annual Report with respect to the status and findings of Olsten's compliance
activities for each of the five years from August 1, 1999 through July 31, 2004.
Each Annual Report shall cover a 12-month period and shall be due on the
following October 1. The schedule for Annual Reports shall be as follows:
Reporting Period (Calendar Year) Report Due
----------------------------------- ----------
August 1, 1999 - July 31, 2000 October 1, 2000
August 1, 2000 - July 31, 2001 October 1, 2001
August 1, 2001 - July 31, 2002 October 1, 2002
August 1, 2002 - July 31, 2003 October 1, 2003
August 1, 2003 - July 31, 2004 October 1, 2004
2. Contents of the Annual Reports. Each Annual Report shall
include:
a. any change in the identity or position description of the
Compliance Officer and/or member(s) of the Compliance
Committee described in III.A;
<PAGE>
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b. notification of any changes or amendments to the Program
Description or the Compliance Program described in III.C
and the reasons for the changes (e.g., change in contractor
policy);
c. a certification by the Compliance Officer that, to the best
of his/her knowledge, Olsten has copies of all the signed
statements from covered individuals required by III.C.2;
d. a certification by the Compliance Officer that, to the best
of his/her knowledge, all covered individuals have attended
the appropriate training sessions as required by III.D and
executed the certification required by section III.D.6, and
a summary of when the required training was performed and
the proposed schedule for the next year (the training
materials will be available to the OIG upon request but
need not be submitted in the Annual Report);
e. a complete copy of the IRO's billing review report,
compliance review report, and cost report review report,
including a copy of the methodology used, as required by
section III.K.8;
f. a summary of problems identified in the billing reviews or
compliance reviews and the status of corrective actions
taken to address those problems;
g. a report of the aggregate overpayments that have been
returned to the Federal health care programs that were
discovered as a direct or indirect result of the Compliance
Program or this CIA. Overpayment amounts should be broken
down into the following categories: Medicare, Medicaid
(report each applicable state separately), and other
Federal health care programs. For each identified
overpayment over $50,000, the following information shall
also be included in the Annual Report: the amount of
individual overpayments identified and repaid, the name and
provider identification number of the facility that
submitted the overpayment, the corresponding payor's name
to which the overpayment was sent, and the date of the
check and check number (or electronic transaction number)
on which overpayment was repaid;
h. a description of how each overpayment was calculated and
the reason for the overpayment;
i. a description of the disclosures received under the
Reporting System or Confidential Disclosure Program
described in III.H, the status of any related actions
taken, and the results of any such actions, as well as a
summary of the confidential disclosure log required by that
section;
j. a description of any personnel action (other than hiring)
taken by Olsten as a result of the obligations in III.C.4
or III.I;
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k. a description of any ongoing investigation or legal
proceeding conducted or brought by a governmental entity
involving an allegation that Olsten has committed a crime
or has engaged in fraudulent activities (the report shall
include a description of the allegation, the identity of
the investigating or prosecuting agency, and the status of
such investigation, legal proceeding or requests);
l. a summary of the reviews conducted on Olsten's start of
care policies and practices as well as a certification from
the Compliance Officer that, to the best of his/her
knowledge, each employee has followed the requirements of
section III.G.
m. a summary of the actions taken to ensure compliance with
III.F and a certification from the Compliance Officer that,
to the best of his/her knowledge, the reviews required by
III.F have been conducted; and
n. a description of all changes to the form, manner, and
frequency of the ongoing clinical and billing reviews
described in III.J.
3. Certifications. The Implementation Report, Annual Reports, and
Final Report shall include a certification by the Compliance Officer under
penalty of law (including 18 U.S.C. ss. 1001), that: (1) Olsten is in compliance
with all of the requirements of this CIA, to the best of his or her knowledge;
and (2) the Compliance Officer has reviewed the relevant Report and has made
reasonable inquiry regarding its content and believes that, upon such inquiry,
the information is accurate and truthful.
VII. NOTIFICATIONS AND SUBMISSION OF REPORTS
---------------------------------------
Unless otherwise stated subsequent to the execution of this CIA, all
notifications and reports required under the terms of this CIA shall be
submitted to the entities listed below:
To the OIG:
----------
Civil Recoveries Branch - Compliance Unit
Office of Counsel to the Inspector General
Office of Inspector General
U.S. Department of Health and Human Services
330 Independence Avenue, SW
Cohen Building, Room 5527
Washington, D.C. 20201
Phone (202) 619-2078
Fax (202) 205-0604
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To O1sten:
---------
Chris Anderson, Chief Compliance Office
Olsten Corporation
175 Broad Hollow Road
Melville, NY 11747
Phone (516) 844-7390
Fax (516) 844-7111
Unless otherwise specified, all notifications required by this CIA may be made
by certified mail, express mail, hand delivery, facsimile or any other means,
provided that there is proof that such notification was made.
VIII. DOCUMENT AND RECORD RETENTION
-----------------------------
Olsten shall maintain for inspection documents and records relating to
reimbursement from the federal health care programs or with compliance with this
CIA for six years following the Effective Date or until otherwise required to
retain such records, whichever is later.
IX. DISCLOSURES AND PRIVILEGES
--------------------------
Subject to HHS's Freedom of Information Act ("FOIA") procedures, set
forth in 45 C.F.R. Part 5, the OIG shall make a reasonable effort to notify
Olsten prior to any release by OIG of information submitted by Olsten pursuant
to its obligations under this CIA and identified upon submission by Olsten as
trade secrets, commercial or financial information and privileged and
confidential under the FOIA rules. Olsten shall refrain from identifying any
information as trade secrets, commercial or financial information and privileged
and confidential that does not meet the criteria for exemption from disclosure
under FOIA.
Nothing in this CIA, or any communication or report made pursuant to
this CIA, shall constitute a waiver by Olsten of Olsten's attorney-client, work
product or other applicable privileges. The existence of any such privilege does
not excuse or otherwise affect Olsten's obligation to comply with the provisions
of this CIA.
X. BREACH AND DEFAULT PROVISIONS
-----------------------------
A. STIPULATED PENALTIES FOR FAILURE TO COMPLY WITH CERTAIN OBLIGATIONS
1. As a contractual remedy, Olsten and OIG hereby agree that
failure to comply with certain obligations 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. If a single
act or omission would authorize stipulated penalties under both the Quantum CIA
and this CIA, the OIG shall have the choice of which penalty provision to invoke
but shall not seek penalties under both CIAs for the same single act or
omission.
<PAGE>
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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 Olsten fails to
have in place any of the following during the entire period beginning 90 days
after the Effective Date and concluding at the end of the corporate integrity
period required by this CIA:
a. a Compliance Officer;
b. a Compliance Committee;
c. written Policies and Procedures;
d. an education and training program;
e. a mechanism for conducting compliance reviews or audits and
reporting material deficiencies; and
f. a Confidential Disclosure Program;
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 Olsten fails to
meet any of the deadlines to provide the Implementation Report or the Annual
Reports.
4. A Stipulated Penalty of $2,000 (which shall begin to accrue on
the date the failure to comply began) for each day Olsten:
a. hires or enters into a contract with an Ineligible Person
after that person has been listed by a federal agency as
excluded, debarred, suspended or otherwise ineligible for
participation in the Medicare, Medicaid or any other
Federal health care program (as defined in 42
U.S.C.ss.1320a-7b(f)) (this Stipulated Penalty shall not be
demanded for any time period during which Olsten can
demonstrate that it did not discover the person's exclusion
or other ineligibility after making a reasonable inquiry
(as described in section III.I) as to the status of the
person);
b. employs or contracts with an Ineligible Person and that
person: (i) has responsibility for, or involvement with,
Olsten's business operations related to the Federal health
care programs or (ii) is in a position for which the
person's salary or the items or services rendered, ordered,
or prescribed by the person are paid in whole or part,
directly or indirectly, by Federal health care programs or
otherwise with Federal funds (this Stipulated Penalty shall
not be demanded for any time period during which Olsten can
demonstrate that it did not discover the person's exclusion
or other ineligibility after making a reasonable inquiry
(as described in section III.I) as to the status of the
person); or
<PAGE>
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c. employs or contracts with a person who: (i) has been
charged with a criminal offense related to any Federal
health care program, or (ii) is suspended or proposed for
exclusion, and that person has responsibility for, or
involvement with, Olsten's business operations related to
the Federal health care programs (this Stipulated Penalty
shall not be demanded for any time period before 10 days
after Olsten received notice of the relevant matter or
after the resolution of the matter).
5. A Stipulated Penalty of $2,000 (which shall begin to accrue on
the date Olsten fails to grant reasonable access) for each day Olsten fails to
grant reasonable access to the information or documentation necessary to
exercise OIG's inspection, audit and review rights set forth in section V.
6. A Stipulated Penalty of $1,500 (which shall begin to accrue 10
days after the date the OIG provides notice to Olsten of the failure to comply)
for each day Olsten fails to comply fully with any other obligation of this CIA
where the failure to comply does not form the basis for stipulated penalties
under provisions (1) - (5), above. With respect to the Stipulated Penalty
provision described in this section X.A.6 only, the OIG shall not seek a
Stipulated Penalty if Olsten demonstrates to the OIG's satisfaction that the
alleged failure to comply could not be cured within the 10-day period, but that:
(i) Olsten has begun to take action to cure the failure to comply, (ii) Olsten
is pursuing such action with due diligence, and (iii) Olsten has provided to OIG
a reasonable timetable for curing the failure to comply.
B. PAYMENT OF STIPULATED PENALTIES
1. Demand Letter. Upon finding that Olsten has failed to comply
with any of the obligations described in section X.A and deter-mining that
Stipulated Penalties are appropriate, the OIG shall notify Olsten of: (i)
Olsten's failure to comply with sufficient specificity to determine the basis
for the penalties; and (ii) the OIG's exercise of its contractual right to
demand payment of the Stipulated Penalties (this notification is hereinafter
referred to as the "Demand Letter").
Within 10 days of Olsten receiving the Demand Letter, Olsten shall
either: (1) cure the breach to the OIG's satisfaction and pay the applicable
stipulated penalties; or (ii) request a hearing before an HHS administrative law
judge (ALJ) to dispute the OIG's determination of noncompliance, pursuant to the
agreed upon provisions set forth below in section X.D. In the event Olsten
elects to request an ALJ hearing, the Stipulated Penalties shall continue to
accrue until Olsten cures, to the OIG's satisfaction, the alleged breach in
dispute. Failure to respond to the Demand Letter shall be considered a material
breach of this Agreement and shall be grounds for exclusion under section X.C.
2. Timely Written Requests for Extensions. Olsten may 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 unless and
until Olsten fails to meet the deadline granted by the extension.
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
<PAGE>
-23-
notification or report shall not begin to accrue until two business days after
Olsten receives OIG's written denial of such a request. 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
notification or report is due to be filed.
3. Form of Payment. Payment of the stipulated penalties shall be
made by certified or cashier's check, payable to "Secretary of the Department of
Health and Human Services," and submitted to the OIG at the address set forth in
section VII.
4. Independence from Material Breach Determination. Except as
otherwise noted, these provisions for payment of Stipulated Penalties shall not
affect or otherwise set a standard for the OIG's determination that Olsten has
materially breached this CIA, which decision shall be made at the OIG's
discretion and governed by the provisions in section X.C, below.
C. EXCLUSION FOR MATERIAL BREACH OF THIS CIA
1. Notice of Material Breach and Intent to Exclude. The parties
agree that a material breach of this CIA by Olsten constitutes an independent
basis for Olsten's exclusion from participation in Medicare, Medicaid, and all
other Federal health care programs (as defined in 42 U.S.C. ss. 1320a-7b(f)).
Upon a determination by the OIG that Olsten has materially breached this CIA and
that exclusion should be imposed, the OIG shall notify Olsten of: (a) Olsten's
material breach; and (b) the 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 Letter").
2. Opportunity to Cure. Olsten shall have 30 days after receiving
the Notice of Material Breach and Intent to Exclude Letter to demonstrate to the
OIG's satisfaction that:
a. Olsten is in full compliance with this CIA;
b. the alleged material breach has been cured; or
c. the alleged material breach cannot be cured within the 30
day period, but that (i) Olsten has begun to take action to
cure the material breach, (ii) Olsten is pursuing such
action with due diligence, and (iii) Olsten has provided to
the OIG a reasonable timetable for curing the material
breach.
3. Exclusion Letter. If at the conclusion of the 30-day period,
Olsten fails to satisfy the requirements of section X.C.2, OIG may exclude
Olsten from participation in the Medicare, Medicaid and all other Federal health
care programs (as defined in 42 U.S.C. ss. 1320a-7b(f)). OIG will notify Olsten
in writing of its determination to exclude Olsten (this letter shall be referred
to hereinafter as the "Exclusion Letter"). Subject to the Dispute Resolution
provisions in section X.D, below, the exclusion shall go into effect 30 days
after the date of the Exclusion Letter. The exclusion shall have national effect
and will also apply to all other federal procurement and non-procurement
programs. If Olsten is excluded under the provisions of this CIA, Olsten may
seek reinstatement pursuant to the provisions at 42 C.F.R. ss.ss.
1001.3001-.3004.
<PAGE>
-24-
4. Material Breach. A material breach of this CIA means:
a. a failure by Olsten to report a material deficiency, take
corrective action and pay the appropriate refunds, as
provided in section III.L;
b. repeated or flagrant violations of the obligations under
this CIA, including, but not limited to, the obligations
addressed in section X.A of this CIA;
c. a failure to respond to a Demand Letter concerning the
payment of Stipulated Penalties in accordance with section
X.B above; or
d. a failure to retain and use an independent review
organization for review/audit purposes in accordance with
section III.K above.
D. DISPUTE RESOLUTION
1. Review Rights. Upon the OIG's delivery to Olsten of its Demand
Letter or of its Exclusion Letter, and as an agreed-upon contractual remedy for
the resolution of disputes arising under the obligation of this CIA, Olsten
shall be afforded certain review rights comparable to the ones that are provided
in 42 U.S.C. ss. 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, the
OIG's determination to demand payment of Stipulated Penalties or to seek
exclusion shall be subject to review by an ALJ and Departmental Appeals Board
(DAB) in a manner consistent with the provisions in 42 C.F.R. ss.ss.
1005.2-1005.21. Notwithstanding the language in 42 C.F.R. ss. 1005.2(c), the
request for a hearing involving Stipulated Penalties shall be made within 10
days after receiving the Demand Letter and the request for a hearing involving
exclusion shall be made within 20 days after receiving the Exclusion Letter.
2. Stipulated Penalties Review. Notwithstanding any provision of
Title 42 of the United States Code or Chapter 42 of the Code of Federal
Regulations, the only issues in a proceeding for stipulated penalties under this
CIA shall be: (i) whether Olsten was in full and timely compliance with the
obligations of this CIA for which the OIG demands payment; and (ii) the period
of noncompliance. Olsten shall have the burden of proving its full and timely
compliance and the steps taken to cure the noncompliance, if any. If the ALJ
sustains the OIG and orders Olsten to pay Stipulated Penalties, such Stipulated
Penalties shall become due and payable 20 days after the ALJ issues such a
decision, notwithstanding that Olsten may request review of the ALJ decision by
the IDAB.
3. Exclusion Review. Notwithstanding any provision of Title 42 of
the United States Code or Chapter 42 of the Code of Federal Regulations, the
only issues in a proceeding for exclusion based on a breach of this CIA shall
be: (a) whether Olsten was in material breach of this CIA; (b) whether such
breach was continuing on the date of the Exclusion Letter; and (c) whether the
alleged material breach could not have been cured within the 30-day cure period,
and (i) Olsten had begun to take action to cure the material breach within the
30-day cure period, (ii) Olsten pursued such action with due diligence during
the 30-day cure period and afterwards until the material breach was cured, and
(iii) Olsten provided to OIG within the 30-day cure period a reasonable
timetable for curing the material breach.
<PAGE>
-25-
For purposes of the exclusion herein agreed to in the event of material
breach of this CIA, the ALJ's decision shall trigger the exclusion. Thus, the
OIG may proceed with its exclusion of Olsten if and when the ALJ issues a
decision in favor of the OIG. Olsten's election of its contractual right to
appeal to the DAB shall not abrogate the OIG's authority to exclude Olsten upon
the issuance of the ALJ's decision. If the ALJ sustains the OIG and determines
that exclusion is authorized, such exclusion shall take effect 20 days after the
ALJ issues such a decision, notwithstanding that Olsten may request review of
the ALJ decision by the DAB.
XI. ACQUISITIONS
------------
In the event that Olsten acquires (by purchase or otherwise) or
establishes new business units that provide any items or services for which
payment may be made by any Federal health care program after the Effective Date,
Olsten shall implement all applicable provisions of this CIA, including any
training or education requirements, within 90 days following such purchase or
establishment, or by such other date as agreed to by Olsten and OIG. If Olsten
is acquired by a third party, such third party shall assume Olsten's obligations
hereunder.
XII. EFFECTIVE AND BINDING AGREEMENT
-------------------------------
Consistent with the provisions in the settlement agreement pursuant to
which this CIA is entered, and into which this CIA is incorporated, Olsten and
the OIG agree as follows:
A. this CIA shall be binding on the successors, assigns and
transferees of Olsten;
B. this CIA shall become final and binding on the date the final
signature is obtained on this CIA;
C. any modifications to this CIA shall be made with the prior written
consent of the parties to this CIA; and
D. the undersigned Olsten signatories represent and warrant that they
are authorized to execute this CIA. The undersigned OIG signatory
represents that he is signing this CIA in his official capacity and
that he is authorized to execute this CIA.
<PAGE>
-26-
ON BEHALF OF OLSTEN
/s/ William P. Costantini, Esquire July 19, 1999
- ------------------------------------------------ -------------
William P. Costantini, Esquire DATE
Executive Vice President and General Counsel
Olsten Corporation
/s/ Stuart M. Gerson July 16, 1999
- ------------------------------------------------ -------------
Stuart M. Gerson DATE
Epstein Becker & Green, P.C.
Attorneys at Law
1227 25th Street, N.W.
Washington, D.C. 20037-1156
As Counsel for Olsten Corporation
/s/ Lynn Shapiro Snyder July 16, 1999
- ------------------------------------------------ -------------
Lynn Shapiro Snyder DATE
Epstein Becker & Green, P.C.
Attorneys at Law
1227 25th Street, N.W.
Washington, D.C. 20037-1156
As Counsel for Olsten Corporation
<PAGE>
-27-
ON BEHALF OF THE OFFICE OF INSPECTOR GENERAL
OF THE DEPARTMENT OF HEALTH AND HUMAN SERVICES
/s/ Lewis Morris July 19, 1999
- ------------------------------------------------ -------------
LEWIS MORRIS DATE
Assistant Inspector General for Legal Affairs
Office of Inspector General
U.S. Department of Health and Human Services
<PAGE>
UNITED STATES DISTRICT COURT
FOR THE MIDDLE DISTRICT OF FLORIDA
AND
THE SOUTHERN DISTRICT OF FLORIDA
AND
THE NORTHERN DISTRICT OF GEORGIA
UNITED STATES OF AMERICA, )
)
v. )
) Case No. Cr. ________
KIMBERLY HOME HEALTH CARE, INC. )
d/b/a OLSTEN KIMBERLY QUALITY CARE )
)
Defendant. )
PLEA AGREEMENT
--------------
The Defendant, KIMBERLY HOME HEALTH CARE, INC. and its parent,
Olsten Corporation, have engaged in plea discussions with the United States
pursuant to Rule 11 (e)(1)(c) of the Federal Rules of Criminal Procedure and
agree as follows:
1. KIMBERLY HOME HEALTH CARE, INC., is a Missouri corporation,
which in January, 1996 merged with Kimberly Services, Inc. (KIMBERLY). KIMBERLY,
d/b/a Olsten Health Management and Olsten Kimberly Quality Care, is a
wholly-owned subsidiary of Olsten Corporation ("Olsten") of Melville, New York.
Olsten and its subsidiaries own, operate, manage and provide staffing services
for home health agencies in several states. At all times material to this Plea
Agreement, Defendant KIMBERLY engaged in the business of providing management
services for home health care agencies.
2. Upon execution of this Plea Agreement, the United States will
file criminal Informations in the United States District Court for the Middle
District of Florida, the United States District Court for the Southern District
of Florida, and the United States District Court for the Northern District of
Georgia. Defendant will waive venue and its Indictment rights and plead guilty
to the crimes specified in these Informations as follows:
a. In the Middle District of Florida, the Defendant will plead
guilty to one count of Mail Fraud in violation of 18 U.S.C. ss.ss. 1341 and 2.
b. In the Southern District of Florida, the Defendant will plead
guilty to one count of Conspiracy in violation of 18 U.S.C. ss. 371.
c. In the Northern District of Georgia, the Defendant will plead
guilty to one count of offering kickbacks in violation of 42 U.S.C. ss.1320-7b.
3. Pursuant to 18 U.S.C. ss. 3571(d), the maximum sentence to be
imposed by the Courts for each Count in the Informations is a fine of the
greater of twice the gross pecuniary gain, or twice the gross pecuniary loss,
from the offenses charged.
<PAGE>
-2-
4. If acceptable to the Courts, Defendant and the United States
will waive the presentence investigation and report pursuant to Rule 32 (c)(1)
of the Federal Rules of Criminal Procedure and ask that Defendant be sentenced
at the time the guilty plea is entered.
5. Subject to the Courts' approvals of this Plea Agreement,
Defendant will pay a criminal fine of $3,360,000 and a Special Assessment of
$400, pursuant to 18 U.S.C. ss. 3013, in the Middle District of Florida, a
criminal fine of $3,360,000 and a Special Assessment of $400, pursuant to 18
U.S.C. ss. 3013, in the Southern District of Florida, and a criminal fine of
$3,360,000 and a Special Assessment of $400, pursuant to 18 U.S.C. ss. 3013, in
the Northern District of Georgia.
6. The United States and Defendant agree that restitution shall
not be imposed as any part of Defendant's criminal sentences. In its
determination not to seek restitution, the United States has taken into
consideration the restitution paid pursuant to the agreement entered into
between the United States, Defendant and Olsten settling civil and
administrative claims and remedies (the "Civil and Administrative Settlement").
7. The total amount of the fines, assessments, and settlement in
Paragraphs 5 and 6 above shall be paid in full within five business days after
entry of final judgment by the Courts.
8. This Plea Agreement is entered into in conjunction with a
corresponding Civil and Administrative Settlement between Olsten and the United
States. If the Civil and Administrative Settlement is not executed by date of
acceptance of the Plea Agreement by the district courts, the United States and
Defendant may withdraw from this Plea Agreement.
9. Defendant and its parent, Olsten, agree to cooperate fully and
completely with the United States in any criminal, civil and/or administrative
investigations and proceedings of any present and former officers, directors,
employees and agents, and of any parties with whom it had or has a business or
professional relationship, including but not limited to vendors, contractors,
partners, joint venturers, physicians, and referral sources, in connection with
the ownership, operation, and management of home health care agencies ("Relevant
Lines of Business") . The extent and nature of that cooperation is more fully
described in Paragraph 10 below.
10. Defendant and its parent, Olsten, agree that such full and
complete cooperation shall include but not be limited to:
a. Defendant and Olsten will provide complete production of all
non-privileged information relating to the Relevant Lines of Business,
including: books, papers, documents and other objects in Defendant's and
Olsten's custody and control; reports of financial and other audits; and
documents reflecting severance or termination agreements with former employees.
Whenever such data are retained in computerized format, Defendant and Olsten
shall provide access to such data and assistance in operating the computers as
is necessary to produce the data requested. Defendant and Olsten will make all
reasonable efforts to facilitate access to, and encourage the cooperation of,
their agents and accountants in producing information as reasonably requested by
the United States.
<PAGE>
-3-
b. Defendant and Olsten will provide testimony and any other
information deemed necessary by the United States or a court to identify or
establish the original location, authenticity, or other evidentiary foundation
for any documents and to authenticate such documents in any criminal, civil and
administrative investigations and proceedings in which the United States is
involved.
c. Defendant and Olsten will not assert any claim of privilege,
including attorney-client privilege or attorney-work product privilege, with
respect to any documents or testimony requested by the United States to
establish the original location, authenticity or evidentiary foundation for
documents referred to in subparagraph 10(a) above.
d. Defendant and Olsten will provide testimony and/or other
information orally by competent corporate representatives as requested by the
United States, to include sworn testimony before federal grand juries or in
federal trials, as well as oral briefings to federal government representatives.
e. Defendant and Olsten will take reasonable steps to facilitate
access to, and encourage the cooperation of, individual current and former
employees from whom testimony or information is sought in their individual
capacities. Defendant and Olsten agree to advise in writing its current
employees, and former employees who inform Defendant that they have been
contacted by the United States, that the individual's cooperation is in the best
interests of Olsten. Cooperation provided pursuant to this subparagraph will
include identification of witnesses who, to Defendant's and Olsten's knowledge,
may have material information related to the matters covered by the
Informations.
f. Defendant and Olsten will provide oral briefings to law
enforcement authorities regarding the results of all relevant internal
investigations.
g. Defendant and Olsten will retain all material records of its
Relevant Lines of Business in their original form for five years from the date
of execution of this Agreement. Before the expiration of the five-year period
described above and before disposing of any records covered by this
subparagraph, Defendant will consult with the United States Department of
Justice concerning the continuing need for preserving such records.
h. If Defendant and/or Olsten sells or otherwise divests any part
of its Relevant Lines of Business within five years from the date of this Plea
Agreement, and if such transaction could impair the access of Defendant, Olsten
or the government to the information described in this paragraph, Defendant
and/or Olsten will include in any contract for the sale of any such business an
obligation on the part of the purchaser which comports with the requirements of
this Plea Agreement as to the retention and production of records, and the
production of information and testimony.
i. Defendant and Olsten agree that the cooperation described in
this paragraph will be ongoing, and will continue as to any investigation
conducted by the Department of Justice, the Federal Bureau of Investigation, The
Department of Health and Human Services, The Defense Criminal Investigative
Service, the United States Postal Inspection Service and the state Medicaid
Fraud Control Units commenced within five years of the date of execution of this
Plea Agreement.
<PAGE>
-4-
11. Defendant agrees to disclose to the Criminal Division, Fraud
Section of the Department of Justice any evidence of misconduct that management
has grounds, after appropriate inquiry, to believe may constitute a violation of
federal law or regulation regarding the activities, past and present, of any
employees, officers, directors, agents, consultants, partners, joint venturers,
or other persons associated with Defendant, its parent corporation, its
predecessors, successors, or direct and indirect subsidiaries of which
Defendant, its parent corporation, and/or direct or indirect subsidiaries of
which Defendant and/or its parent corporation becomes aware. Defendant shall
establish and/or maintain existing procedures by which Defendant's officers,
employees or agents, including those persons responsible for administering its
compliance and hotline programs, as well as its internal or external auditors,
and senior management personnel shall report all such allegations to a
Compliance Officer. These disclosures to the United States Attorneys offices
shall be made within 60 days of that date on which Defendant and/or Olsten
becomes aware of such misconduct.
12. If the Courts accept this Plea Agreement, and Defendant and
Olsten comply with this Agreement, including the cooperation described in
Paragraphs 9 and 10, the United States agrees not to prosecute Defendant and
Olsten, its previous or current parent corporations, its predecessors,
successors, or direct or indirect subsidiaries or entities in which they have or
had any ownership interest, for other possible criminal offenses arising from or
relating to the matters covered by the Informations (Relevant Offenses).
13. The promises not to prosecute referred to in Paragraph 12 do
not extend to any individual, including any current or former officer, director,
employee or agent of the Defendant or Olsten.
14. Defendant and Olsten agree that any failure to provide full and
complete cooperation as described in Paragraphs 9 and 10 above will be a breach
of this Plea Agreement and will empower the United States to seek to set aside
the Plea Agreement and to pursue all possible violations against the Defendant.
However, Defendant and Olsten shall be entitled to receive reasonable notice in
writing from the United States to Defendant's and Olsten's General Counsel of
the specific circumstances constituting an alleged failure to provide the
cooperation required by this Plea Agreement and shall have 30 days from receipt
of such written notice, unless the United States determines that less time is
necessary, to cure any such failure before the United States initiates any
action to set aside this Plea Agreement. In the event this Plea Agreement is set
aside pursuant to this Paragraph and a prosecution is initiated, the
admissibility of certain statements made by Defendant and Olsten shall be
governed by Paragraph 24 below.
15. Defendant and Olsten agree that this Plea Agreement shall not
prevent, preclude or prejudice the United States from proceeding in the future
with investigations and prosecutions of any federal criminal violations which
may be committed after the date of execution of this Agreement by Defendant,
Olsten, or by any of their officers, directors, employees and/or agents.
<PAGE>
-5-
16. This Plea Agreement is binding on the United States Department
of Justice, including all the offices of United States Attorneys. This Plea
Agreement does not bind the Internal Revenue Service of the United States
Department of Treasury or Defendant or Olsten with respect to any civil or
criminal liability, if any, of Defendant, or its previous or current parent
corporation, for federal income or other taxes. The provisions of this Plea
Agreement do not preclude the United States from prosecuting Defendant and/or
Olsten for any violations of 18 U.S.C. Section 1501 et seq., 18 U.S.C. Section 4
or any Title 26 and Title 18 offense in connection with the enforcement of
federal revenue laws, including but not limited to conspiracies to commit such
offenses and conspiracies to defraud the United States by impeding, impairing,
obstructing and defeating the lawful function of the United States Treasury and
the Internal Revenue Service in the ascertainment, computation, assessment or
collection of revenue.
17. Defendant agrees that all costs (as defined in the Federal
Acquisition Regulations ("FAR") ss. 31.205-47 and in Titles XVIII and XIX of the
Social Security Act, 42 U.S.C. ss.ss. 1395 et. seq. and ss.ss. 1396 et. seq.,
and the regulations promulgated thereunder) incurred by or on behalf of
Defendant and/or Olsten, in connection with (1) the government's investigations,
and Defendant's and/or Olsten's investigations and defense, of the matters
covered by this Agreement; (2) the negotiation of this Plea Agreement; (3) any
corrective action undertaken by Defendant and Olsten pursuant to this Plea
Agreement; and (4) the payments made to the United States pursuant to this Plea
Agreement, shall be unallowable costs for government contract accounting and for
Medicare, Medicaid, CHAMPUS and FEHBP reimbursement purposes.
18. Defendant and Olsten have taken and agree to take the following
remedial actions:
a. Olsten has established an employee hotline by which its
officers and employees can report any facts or circumstances which the officer
or employee believes may constitute misconduct which may violate federal law;
and
b. Upon acceptance of this Plea Agreement by the Courts and
execution of the Civil and Administrative Settlement Agreement, Defendant and
Olsten agree to adopt and apply the Corporate Integrity Agreement, which is
incorporated in the Civil and Administrative Settlement, to all of the health
care facilities and lines of business located in the United States that they own
or operate.
19. Defendant and Olsten agree that they will, within 120 days of
acceptance of this Plea Agreement, reaffirm, in writing, corporate procedures
and policies which shall prohibit their corporate directors, officers, employees
and agents from engaging in the practices described in the Informations and in
the Civil and Administrative Settlement.
20. Defendant and Olsten shall, within 90 days of acceptance of
this Plea Agreement, file with the Department of Justice signed certifications
from each of their corporate officers and all other officers and employees
principally responsible for negotiating contracts with potential referral
sources, all personnel responsible for approving such activities, and all
directors, managers and supervisors of employees responsible for preparing or
submitting billings to government agencies or private payors, acknowledging that
each has received and read a copy of this Plea Agreement, the Informations, and
the Civil and Administrative Settlement.
<PAGE>
-6-
21. Defendant and Olsten shall, within 120 days of acceptance of
this Plea Agreement, conduct instructional meetings for all personnel described
in Paragraph 20 above, at which meetings outside legal counsel, ethics officers
and auditors shall thoroughly explain and review these criminal and civil
proceedings and the corporate procedures and policies described in Paragraph 18
above.
22. Defendant and Olsten agree that neither of them will file for
voluntary bankruptcy protection within 90 days after making the payments
described in Paragraphs 5 and 6 above.
23. If this Plea Agreement or any material provision thereof,
including the sentences agreed-upon in Paragraphs 5, 6 and 7 above, is rejected
by any district court, the parties shall be released from their obligations
under this Plea Agreement and it shall be null and void. It is further agreed
that, in this event, Defendant may withdraw any of its plea of guilty if such a
plea has been entered, and that the United States may move to dismiss the
Informations without prejudice. The Defendant will have no objection to such
dismissal, nor any objection, on the basis of such dismissal or on the basis of
the voiding of this Plea Agreement, to the continuation of the investigation or
the return of any indictment. It is further agreed, that if this Plea Agreement
is rejected, the admissibility against Defendant or Olsten of any statements
made by Defendant or Olsten or their representatives during the course of and in
furtherance of the plea discussions will be determined under Rule 11(e)(6) of
the Federal Rules of Criminal Procedure and Rule 410 of the Federal Rules of
Evidence, and the terms of all agreements previously entered between Olsten and
the United States. Defendant acknowledges that all leads derived from such
statements may be used against Defendant or Olsten in any subsequent proceeding.
24. If Defendant fails to comply with any material provision of
this Plea Agreement and a district court either sets aside this Plea Agreement
or declares this Plea Agreement null and void, the Defendant and Olsten will be
subject to prosecution for the criminal violations alleged in the Informations
and/or any other violations for which prosecution would otherwise be barred by
Paragraph 12 ("Relevant Offenses"). In any such prosecution, the admissibility
against Defendant of any statements made by legal representatives of Defendant
or Olsten in connection with the negotiation of this Plea Agreement, or pursuant
to its terms will be determined under Rule 11(e)(6) of the Federal Rules of
Criminal Procedure, Rule 410 of the Federal Rules of Evidence, and the terms of
all agreements previously entered between Defendant and/or Olsten and the United
States. All leads derived from such statements may be used against the
Defendant. Statements made by other employees of Defendant or Olsten whose
testimony is provided pursuant to Paragraph 10 above shall be admissible
notwithstanding Rule 11 and Rule 410.
25. In the event this Plea Agreement is set aside for any reason,
Defendant shall be entitled to the return of payments made to the United States
under this Plea Agreement as set forth in Paragraphs 5 and 6 above.
26. Defendant and Olsten agree that all criminal statutes of
limitations for the Relevant Offenses shall be tolled from September 1, 1998,
until the date on which the Courts accept or reject this Plea Agreement. In
addition, in the event that this Plea Agreement is set aside pursuant to
Paragraph 24 above, Defendant and Olsten agree that the statutes of limitations
for the Relevant Offenses further shall be tolled from the time of acceptance of
this Plea Agreement until the date on which the Plea Agreement may be set aside.
<PAGE>
-7-
27. Defendant and Olsten waive and will not assert any defenses
they may have, based in whole or in part on the Double Jeopardy Clause of the
Fifth Amendment, or under the Excessive Fines Clause of the Eight Amendment, to
criminal prosecutions in which this Plea Agreement has been entered, or to any
prosecutions, or civil or administrative proceeding pursuant to the terms of
this Plea Agreement, or of the Civil and Administrative Settlement. Nothing in
this agreement waives any rights that Defendant may have under the Double
Jeopardy or Excessive Fines Clause to any subsequent prosecution, civil or
administrative proceeding, that relates to the Relevant Offenses.
28. Defendant is pleading guilty because it is guilty of the crimes
charged in the Informations.
29. The Defendant is aware that Title 18, United States Code,
Section 3742 affords Defendant the right to appeal the sentence imposed in this
case. Acknowledging this, in exchange for the undertakings made by the United
States in this Plea Agreement, Defendant hereby waives all rights conferred by
Title 18, United States Code, Section 3742 to appeal any sentence imposed,
including any restitution order, or to appeal the manner in which the sentence
was imposed, unless the sentence exceeds the maximum permitted by statute or is
the result of any upward departure from the guideline range the court
establishes at sentencing. Defendant further understands that nothing in this
Plea Agreement shall affect the government's right and/or duty to appeal as set
forth in Title 18, United States Code, Section 3742(b). However, if the United
States appeals Defendant's sentence pursuant to Section 3742(b), Defendant shall
be released from the above waiver of appellate rights. Defendant understands
that, although Defendant will be sentenced in conformity with the Sentencing
Guidelines, by this agreement, Defendant waives the right to appeal the sentence
on the basis that the sentence is the result of an incorrect application of the
Sentencing Guidelines.
30. Defendant agrees that a person who is a senior executive
officer of both Defendant and Olsten will appear to enter the guilty plea and
for the imposition of sentence. Defendant and Olsten also expressly agree that
they will not, and will instruct their representatives not to, make any public
statements or representations which are in any way contrary to the Defendant's
admission of guilt in this Plea Agreement.
31. This is the entire Plea Agreement between the United States and
Defendant. Except as provided in the Civil and Administrative Settlement,
particularly as the Settlement relates to the ability of Defendant, Olsten, and
its related entities, to participate in federally-funded programs, no other
promises, representations or inducements have been made to the Defendant or its
attorneys and none will be made unless in writing and signed by all parties.
<PAGE>
-8-
AGREED AND ACCEPTED:
KIMBERLY HOME HEALTH CARE, INC.
/s/ William P. Constantini
- ------------------------------
WILLIAM P. CONSTANTINI
EXECUTIVE VICE PRESIDENT AND GENERAL COUNSEL,
OLSTEN CORPORATION
EXECUTIVE VICE PRESIDENT
KIMBERLY HOME HEALTH CARE, INC.
/s/ Stuart M. Gerson, Esquire
- ------------------------------
STUART M. GERSON, ESQUlRE
EPSTEIN BECKER & GREEN, PC
/s/ Phillip A. Bradley, Esquire
- ------------------------------
PHILLIP A. BRADLEY, ESQUIRE
LONG ALDRIDGE & NORMAN LLP
<PAGE>
-9-
Respectfully Submitted,
THOMAS E. SCOTT
UNITED STATES ATTORNEY
/s/ Angel A. Cortinas
- ------------------------------
ANGEL A. CORTINAS
Assistant United States Attorney
Florida Bar No. 797529
CHARLES R. WILSON
UNITED STATES ATTORNEY
/s/ Robert T. Monk
- ------------------------------
ROBERT T. MONK
Assistant United States Attorney
RICHARD H. DEANE, JR.
UNITED STATES ATTORNEY
/s/ Russell G. Vineyard
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RUSSELL G. VINEYARD
Assistant United States Attorney
Georgia Bar No. 727890
/s/ Randy S. Chartash
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RANDY S. CHARTASH
Assistant United States Attorney
Georgia Bar No. 121760
JOSHUA R. HOCHBERG
CHIEF, FRAUD SECTION
Criminal Division
U.S. Department of Justice
/s/ Ann Arbor
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ANN ARBOR
Senior Litigation Counsel
