Standards of Business Conduct
Manor Care, Inc. November
Manor Care, Inc. and its subsidiary organizations ("HCR Manor
Care" or "Company") are dedicated to providing the highest
quality in long-term care and related services. The Company is committed
to achieving this vision by conducting its operations in compliance with
applicable legal, regulatory and ethical standards. This statement is a
summary of those standards of business conduct which all Company
employees are expected to observe. All officers, managers, department
heads, salaried employees, appropriate accounting employees and other personnel
designated by the Company ("employees"), shall acknowledge
their receipt and understanding of this statement and periodically shall
confirm their understanding when requested by the Company.
Each employee is expected to understand and comply with the Standards.
However, no set of principles or standards can anticipate each and every
situation that may raise legal or ethical considerations. In the event an
employee is not sure whether what they have been asked to do or what they
contemplate doing is or is not legal or ethical, the employee must ask
before he/she acts. In such a situation, the employee can ask the
employee's immediate supervisor, next highest supervisor, any member of
the Corporate Compliance Committee, the Privacy Officer or the HCR Manor
Care Care Line. When in doubt, employees must ask before they act.
A. Compliance with Laws and Regulations
The Company and its employees acknowledge that the health care industry
is a highly regulated sector of the economy and certain business practices
that are permissible elsewhere may be illegal for health care providers.
To facilitate compliance with all applicable laws and regulations, the
Company has developed operating and administrative policies and
procedures which contain detailed guidance on legal requirements. The
Company regularly provides training and education on these policies and
procedures and the underlying regulatory provisions. Corporate
consultants assist nursing centers and other operations and their staffs
in ensuring that daily operations are conducted within the appropriate
legal framework. The Company's Legal Department is available to all
employees for advice and guidance on compliance with applicable laws.
Employees are required to perform their duties and responsibilities in
compliance with applicable laws and regulations and with the Company
policies and procedures that are designed to facilitate compliance.
Several federal laws, and corresponding or similar state laws, are
particularly applicable to health care providers. Employees are strictly
forbidden from engaging in any conduct which violates such laws and are
subject to immediate disciplinary action if such misconduct takes place.
These federal laws include the following.
Any knowingly false statement to a department or agency of the federal
government is a crime. The federal False Claims Act specifically makes
the submission of false claims to Medicare or Medicaid a crime.
Violations of this statute include claims for services that are not
medically necessary, claims for services that may be medically necessary
but are not covered by Medicare (e.g. experimental procedures), using a
code for a higher level of reimbursement than the code for the services
actually provided, billing for one global procedure as a number of
smaller ones to obtain a higher total level of reimbursement and
knowingly providing false information on cost reports or any other
documents or reports filed with Medicare or Medicaid. In addition,
knowingly creating false documentation in medical, financial or employee
records, or in other business records maintained by the Company, is
strictly prohibited by Company policy.
The Medicare and Medicaid Anti-Kickback Act and many comparable state
laws prohibit anyone from providing or offering to provide any
remuneration in cash or in kind, directly or indirectly, in return for
the referral of a patient whose treatment (item or service) is paid for
in whole or in part by Medicare or Medicaid. Illegal kickbacks can take a
wide variety of forms. They can be blatant direct payments for referrals
or they can be more subtle and indirect (e.g., rebates, income
guarantees, care or other expense allowances, cost-free loans, paid-for
vacations, etc.). The language of the anti-kickback statute is broad, and
many seemingly innocuous business practices may be deemed to be illegal
kickbacks by the government. Certain business practices may be exempt
under specific circumstances. In uncertain cases, the advice of the
Company's Legal Department shall be sought before engaging in the
Federal anti-fraud statutes are not limited to Medicare and Medicaid. The
federal mail and wire fraud statutes make it a crime to use the mails or
interstate wire communication (telephone) in furtherance of a scheme to
defraud, or to obtain money or property through false or fraudulent
pretenses or representations. Nearly every form of health care fraud
(e.g., billing for services not provided, for services not provided as
claimed, or for unnecessary services) can be attacked under these
statutes, if the mails or interstate wire communications are used.
Fraudulent and deceptive practices can take many forms, and employees
must be careful not to make misrepresentations to suppliers, private
insurers or government agencies.
Violations of the above laws and related federal and state laws can
subject individuals and the Company to penalties and fines, and convicted
individuals may be punished by imprisonment. As stated earlier, employees
are strictly forbidden from engaging in such misconduct. The Company will
not employ or contract for services with any person or entity that has
been convicted of a criminal offense related to a government program or
who is known to have been debarred or excluded from participation in a
government program or otherwise sanctioned by a federal agency.
B. Confidential and Proprietary Information
1. General. HCR Manor Care,
like all companies, has proprietary and confidential information which
should not be disclosed to our competitors or to the general public.
Examples of such proprietary information are business, research and new
product and service plans; facility profit and loss information; facility
forms, policies and procedures; product systems and methods; vendor lists
and detailed information regarding customer or vendor requirements; and
unpublished financial and pricing (rates) information. All employees have
an obligation to keep such proprietary information confidential so as not
to harm the Company. Congress passed a privacy law to protect patients
and their health information from unlawful disclosures. Any disclosures
of medical records or other information concerning our residents could be
the basis for legal action against the Company and the employee
disclosing the information. Therefore, employees shall not, without
proper authority, give or release data or information concerning the
Company or its employees, patients, residents, customers, vendors or
contractors to anyone not employed by the Company. Such information may
be disclosed to other employees only if there is a proper business
purpose for such disclosure. The Legal Department or Privacy Officer
should be consulted on any questions concerning disclosure of potential
proprietary or confidential information.
2. Inside Information. Employees who possess material,
non-public information about the Company which could affect the Company's
stock price or otherwise influence an individual investor's decision to
buy or sell the Company's stock must refrain from trading in the Company's
stock until a reasonable period of time (usually, until the third
business day) has passed following the public disclosure of the
information. Typically, material information will be non-public
information about the Company's financial performance and other major
developments concerning the Company. In uncertain situations, employees
should review any proposed sale or purchase of the Company's stock with
the Legal Department prior to executing the trade.
3. Business Opportunities. Employees shall not take
advantage of business opportunities that the Company or any of its
customers are interested in pursuing without prior approval by the
Company. This prohibition extends to real estate or health care
facilities which the Company may be interested in buying or leasing.
C. Outside Business Interests
Employees shall avoid any outside financial or business interest that
might influence their decisions or actions on behalf of the Company
unless such interest has been fully disclosed in writing to the Company
and a determination has been made as to the acceptability of the
interest. Such outside interest could include, among other things:
1. A personal or family business or financial interest in an
enterprise which has business relations with the Company if such
financial interest represents a material part of the employee's net worth
or income, or if such business relations with the Company represent a
material part of the business of the outside enterprise, or
2. An investment in another business which competes with any of
the Company's interests if the investment represents a material part of
the income or net worth of the individual, or if the area of competition
represents a material part of the activity of the outside business.
Generally, the ownership of less than 1 percent of the stock of a
publicly traded company shall not be considered a conflict of interest.
Employees shall also avoid outside employment or activities that would
impair the effective performance of their responsibilities to the Company,
either because of excessive demands on their time, or because the outside
commitment is inconsistent or adverse to the interests of the Company.
Any employee who may have a potential conflict of interest should
disclose it to the Company and have the matter resolved prior to the
matter becoming an actual conflict.
D. Competitive Practices
The Company firmly believes that fair competition is fundamental to the
free enterprise system. The Company complies with and supports all laws
that prohibit restraints of trade, unfair practices or abuse of economic
The Company will not enter into agreements or arrangements that
unlawfully restrict its ability to compete with other businesses or the
ability of any other business to compete freely with the Company. Company
policy also prohibits entering into, or even discussing, any unlawful
arrangement or understanding that might affect its pricing policies or
the terms upon which its facilities or services are sold or that might be
construed as dividing customers or sales territories with a competitor.
We will compete fairly in the marketplace. Thus, the Company will not
interfere with contracts made between a prospective customer and one of
our competitors nor will the Company engage in marketing practices that
are intended to injure or discredit a legitimate competitor through the
use of misrepresentations or false innuendo.
These principles of fair competition are basic to all our operations.
They are integral parts of the following sections that cover the
Company's dealings with suppliers, customers and public officials.
E. Dealings with Suppliers
The Company is a valuable customer for many suppliers of goods and
services. Those who wish to do business with the Company must understand
that all purchases by the Company will be made exclusively on the basis
of price, quality, service and suitability to the Company's needs.
Purchases of goods or services must not lead to Company employees or
their families receiving personal benefits of any kind, whether direct or
Gifts or entertainment involving customers and suppliers can be
misunderstood even if exchanged out of the purest of motives. Such
practices can appear to be attempts to influence our employees into
directing Company business to a particular supplier. To avoid even the
appearance of improper relations with suppliers or potential suppliers,
the following standards shall apply to the receipt of gifts and
entertainment by Company employees:
1. Gifts or Other Benefits. Employees are prohibited from
soliciting gifts, gratuities, or any other personal benefit or favor of
any kind from suppliers or potential suppliers. Employees are prohibited
from accepting gifts of money or gifts which have significant monetary
value (e.g., transportation or lodging for vendor meetings). Employees
may accept unsolicited non-money gifts provided that such gifts are of
nominal material value.
Any gift of more than nominal value must be reported to your supervisor.
Some gifts may be perishable so as to make their return impractical.
Supervisors can permit acceptance of such gifts, or may require that such
gifts be returned or donated to charitable or other non-profit
organizations. Supervisors may also require employees to inform givers
that such gifts are discouraged.
2. Entertainment. Employees shall not encourage or solicit any
entertainment from any individual or company with whom our Company does
business. Entertainment includes, but is not limited to, activities such
as dinner parties, theater parties and sporting events.
From time to time, employees may accept unsolicited entertainment, but
only under the following conditions:
a. The entertainment occurs infrequently;
b. It arises out of the ordinary course of business;
c. It involves reasonable and not lavish expenditures; and
d. The entertainment takes place in settings that are reasonable,
appropriate and fitting to employees, their hosts and the business at
3. Vendor-Sponsored Events. From time to time, Company vendors or
suppliers may invite employees to vendor-sponsored luncheons, trade
shows, educational seminars or similar events. Prior to accepting any
such invitation, the employee shall obtain approval from his or her
F. Dealings with Residents, Patients, Families and Other Customers
Employees must keep all dealings with residents, patients, the families
of residents and patients, and other potential customers fair and
above-board. The Company earns and retains business because of the
quality of its facilities and services. Residents, patients or family
members should never think that they have to give gifts to get good
service. Under no circumstances should we, as individual employees, ever
solicit or accept any gifts from residents, patients or family members.
All offers of gifts from residents, patients or their families must be
declined and reported to the facility administrator or executive
If a resident or a family member wants voluntarily to recognize a group
of employees or the facility generally, they can contribute a gift that
is used for the benefit of all facility employees. The facility
administrator or executive director must ensure that the gift is
voluntary and that it goes to benefit the employees as a group.
G. Dealings with Referral Sources or Potential Customers
The Company must be extra careful on the subject of gifts and
entertainment involving referral sources or other potential customers.
Such care is required because federal law and the laws in many states
prohibit any payment for patient referrals, and gifts or lavish
entertainment could be mistakenly construed as payment for such
referrals. Generally, the following guidelines would apply to such gifts
Entertainment for potential customers or referral sources may only be
provided with supervisory approval. Entertainment must be of sufficiently
limited value so that the entertainment cannot be construed as a referral
fee, kickback, bribe or payoff. Entertainment must also be consistent
with accepted ethical customs and practices, and public disclosure of the
facts would not embarrass the Company. Entertainment shall be limited to
activities and events which are considered normal and acceptable in
conjunction with the related business transaction. In uncertain situations,
the Legal Department should be consulted prior to arranging the
Gifts to referral sources or other potential customers of more than
nominal value are not permitted. Even in the case of gifts of nominal
value, other than nominal public relations items with the Company logo or
name (e.g., coffee mug, calendar), employees should first receive
approval from their supervisor. Obviously, gifts of cash or cash
equivalents, in whatever amount, are never permitted.
In some situations, the Company may itself be a referral source. Given
that it is illegal both to receive payment for a referral or to give such
payment, the above rules apply to Company employees where the Company is
the referral source.
H. Dealings with Public Officials
The regulatory nature of the Company's business often requires employees
to be in contact with public officials. The employees who regularly make
these contacts have special responsibilities for upholding the Company's
good name. The following standards point out these special
1. No employee shall make any form of payment, direct or indirect,
to any public official as inducement for any official action or omission
to act. The Company will never pay a bribe. Any requests to Company
employees that appear to be attempts at bribery must be reported
immediately to your supervisor and to the Compliance Committee.
2. No employee shall give any gifts to a public official.
3. Employees may provide public officials with items containing
the Company logo (such as pins, caps, mugs, notebooks, etc.) if the items
are part of the Company's general marketing and public relations
programs, are of nominal value and are given for informational purposes
4. On special ceremonial occasions, the Company may publicly give
gifts of more than nominal value to public institutions or public bodies.
Such gifts can commemorate special events or milestones in the Company's
history, such as a new facility dedication. These may be transmitted
through public officials, but the gifts are given to the public
institutions and public groups they represent, not to the officials
personally. Any such gifts must be approved in advance by the Company's
President, Chief Operating Officer or Chief Financial Officer.
5. From time to time, employees may entertain public officials to
the extent permitted by law, but only if the entertainment is not
solicited by the public official, the entertainment occurs infrequently
and it arises out of the ordinary course of business. Supervisory approval
must be obtained prior to arranging the entertainment. The entertainment
must not involve lavish expenditures under the circumstances, and the
settings and types of entertainment must be reasonable, appropriate and
fitting to our employees, their guests and the business at hand. In
uncertain situations, the Legal Department should be consulted prior to
arranging the entertainment.
I. Political Activities and Contributions
The HCR Employees Good Citizenship Fund has been established for the
purpose of enabling our employees conveniently to make political
contributions to the extent permitted by law. Contributions to the fund
are completely voluntary. When prohibited by law, employees shall not use
Company funds for contributions of any kind to any political party,
political action committee, or any candidate for any office of any
national, state or local government. When Company funds lawfully may be
used for political contributions, all such contributions must be approved
by senior officers.
The Company encourages individuals on their own behalf to become involved
in political and civic affairs. Employees who participate in partisan
political activities must make every effort to ensure they do not leave
the impression that they speak or act for the Company. The Company will
not infringe on the right of any employee to decide whether, to whom and
in what amount he or she will make personal political contributions. The
same is true of volunteer political activity so long as it does not
interfere with the employee's work for the Company.
J. Proper Accounting and Candor in Dealing with Auditors
Compliance with generally accepted accounting rules and internal controls
is expected at all times. The Company policies and procedures as outlined
in the accounting manuals and supporting memoranda are to be followed
without exception. The financial records of the Company must always
reflect the transactions they are intended to record. All appropriate
assets and liabilities shall be recorded in the regular books of the
Company. Employees are forbidden to use, authorize or condone the use of
unrecorded bank accounts, unauthorized cash accounts (slush funds),
improper adjustments to the accounts of the Company, falsified books or
any other devices that could be utilized to distort the records or
reports of the Company’s true operating results and financial condition.
Complete candor is required with the Company’s independent and internal
The Company’s Chief Financial Officer or Controller shall be consulted
for advice on how to handle any uncertain matters.
K. Company Assets
All employees are responsible for safeguarding Company assets. Each
employee must ensure that Company expenditures are utilized for
legitimate business purposes, with proper record keeping for all Company
funds spent. Company assets must be used for Company business and not for
the personal benefit of any individual. Any suspected misuse of Company
assets must be reported to your supervisor.
L. Patient Trust Funds
In no case shall patient trust fund monies be used for any purpose other
than those described in the patient trust fund policy of the Company.
Patient trust funds are for the exclusive use of the patient and can be
used only upon written approval of the patient or the patient's official
M. Petty Cash and Vending Machine Income
Petty cash levels will be established by the Company. Petty cash shall be
used only for appropriate business purposes.
Vending machine income shall be deposited only into the revenue account
of the facility and shall not be used or spent for any purpose by
N. Government Investigations
The Company has a policy of cooperating with all government inquiries,
requests for information or investigations. In addition, the Company
expects all employees to also cooperate. In order to make certain that
all government inquiries, requests for information and investigations are
handled in a coordinated and efficient manner, all such matters should be
reported immediately to your supervisor, the Legal Department or the
Compliance Committee. (Routine government contact, such as state health
department surveys and reimbursement audits, should be handled pursuant
to normal Company policy.) When contacted by a government official or
agent, whether such contact is during business hours or after business
hours at home, an employee should request identification, obtain the
agent's name and telephone number, and stress that the Company will
cooperate and that an appropriate management employee will be in prompt
contact. The employee should make certain to contact their supervisor or
a member of the Compliance Committee as soon as possible.
O. Compliance with Standards
1. Initial Distribution. Current employees designated to receive
these Standards will receive their copies immediately after publication.
Future employees designated to receive these Standards will receive their
copies at the time they are hired.
2. Initial Verification. Upon receiving a copy of the Standards,
current and future employees shall:
a. Become thoroughly familiar with the Standards.
b. Resolve any doubts or questions about the Standards with their
supervisors Supervisors should consult with the Company's Legal
Department on any activities or practices that might raise questions.
c. Inform their supervisors of any existing holdings or activities which
might be, or appear to be, at variance with the Standards Employees shall
cooperate in implementing appropriate corrective action which shall be
approved by the supervisor and the Legal Department if necessary.
d. Prepare written disclosures of such information, if requested by
e. Sign the verification form and return it to their supervisor who will
make it a part of each employee's permanent record.
3. Maintaining Compliance. Employees have the responsibility of
understanding all of the Standards and complying with them. Supervisors
have the responsibility of maintaining an awareness on the part of their
employees of the importance of complying with the Standards. Employees
and supervisors will be asked periodically to confirm their understanding
of the Standards and their compliance with them.
P. Reporting Violations of Standards
Employees have the obligation to report violations of the Standards that
they observe or that are made known to them, including any issues
regarding accounting, internal accounting controls or auditing. Failure
to do so can have serious consequences for the employees and the Company.
Reports should be made by employees to their supervisor, the Compliance
Committee, the Privacy Officer or to the HCR Manor Care Care Line (800)
366-1232. Reports can be made confidentially and anonymously; however,
employees should realize that anonymous reports may make it difficult (or
in some cases impossible) to conduct an effective investigation.
Employees may be requested to submit a written report setting forth the
facts of the alleged violations. The Company shall endeavor to maintain
the confidentiality of individuals reporting violations of these
Standards, consistent with the Company's obligation to investigate
violations and/or to report improper activity to the appropriate
authorities. The Company will not tolerate any form of retaliation or
discrimination against any individual reporting violations of the
Any employee who reports a violation that has not been properly addressed
by his supervisor should contact a member of the Company's Compliance
Committee. The names and phone numbers of Committee members are posted in
Supervisors who receive a report of a serious violation of these
Standards should notify a member of the Compliance Committee. Management
has the right to determine what disciplinary action will be taken for a
violation, ranging from an oral reprimand to termination. Proposed
disciplinary action is subject to review by senior management. Employees
should be aware that, in addition to any disciplinary action taken by the
Company, violations of some Standards may require restitution and may
lead to civil or criminal action against individual employees.