Practice Management Alert

The DOJ wants wrongdoers to find self-disclosure more palatable.

Independently owned medical practices are more and more rare, and as practices go through the mergers and acquisitions (M&A) process, staff members on both sides of a merger or acquisition have compliance regulations. The U.S. Department of Justice (DOJ) recently announced a Voluntary Self-Disclosure Safe Harbor law to encourage organizations to report any wrongdoing discovered during the adjustment in ownership.

“Encouraging companies to self-report misconduct can result in a virtuous cycle: by giving a path to resolution and declination to companies trying to do the right thing, we are able to identify and prosecute the individuals who are not,” said Lisa O. Monaco, deputy attorney general for the DOJ in an October press conference.

Shore Up Your Compliance Program

The new DOJ policy could affect healthcare businesses that aren’t compliant with the Anti-Kickback Statute, the False Claims Act, or engage in fraudulent billing practices, say Colleen Powers, Chad Sukurs, Erin Drummy, and Eric Rupenthal, attorneys at Hall Render, in online analysis.

Bolstering your compliance program so your staff know the regulatory expectations the practice must meet, as well as what to do if they discover violations, is crucial. The DOJ wants to help compliant organizations extend their good practices to entities they hope to acquire.

“The last thing the Department wants to do is discourage companies with effective compliance programs from lawfully acquiring companies with ineffective compliance programs and a history of misconduct. Instead, we want to incentivize the acquiring company to timely disclose misconduct uncovered during the M&A process,” Monaco said.

The Hall Render attorneys recommend engaging counsel with experience in healthcare business transactions to look for signs of any misconduct. Failing to perform robust due diligence could mean that organization leading the acquisition would be subject to liability after the transaction.

Make sure executive-level decisionmakers on both sides of a merger or acquisition receive relevant compliance training, the attorneys say.

Pay Attention to Timeline

Monaco notes that clear timelines are a major component of this policy. The numbers to keep in mind are six months and one year.

“As a baseline matter, to qualify for the Safe Harbor, companies must disclose misconduct discovered at the acquired entity within six months from the date of closing. That applies whether the misconduct was discovered pre- or post-acquisition,” she said. “Companies will then have a baseline of one year from the date of closing to fully remediate the misconduct.”

The projected timelines are more like guidelines, in that every M&A process is unique. “Depending on the specific facts, circumstances, and complexity of a particular transaction, those deadlines could be extended by Department prosecutors,” Monaco said.

Companies finding misconduct that could affect national security or cause ongoing or immediate harm should disclose their discoveries straightaway, instead of abiding by the monthslong timelines.

Understand Enforcement Actions

One of the DOJ’s aims is reducing recidivism, especially repetitive, flamboyant disregard for regulations punished by financial penalties.