Noting the additional scrutiny under the U.S. Foreign Corrupt Practices Act (FCPA) within the healthcare sector, Bass, Berry & Sims attorneys Lindsey Fetzer and Thad McBride authored an article for Risk Management highlighting recent enforcement trends and strategies for identifying, addressing and protecting against risks.
The volumes and penalties of FCPA enforcement by the Department of Justice (DOJ) and Securities & Exchange Commission (SEC) have risen exponentially in recent years. Healthcare companies are at particular risk because of the regular interaction between those companies and the government officials that regulate them. Enforcement actions have focused particular attention on payments made by third-party representatives to government officials.
To help healthcare companies know what to watch for, Lindsey and Thad outlined top risk areas that can trigger compliance issues. In addition to the fact that the healthcare industry is heavily regulated, there are risks related to government-ownership of healthcare entities, the urgency of medical care, reliance on third party vendors and distributors, and the incentives for conducting medical trials in the developing world, where corruption is often extensive.
Companies must practice vigilance with these risks in mind. This includes careful diligence before commencing a third-party relationship. Legal and compliance professionals should review third-party relationships to identify “red flags,” and ensure written agreements are in place with clear compliance representations and warranties to which the third party is bound. And once the relationship is commenced, all personnel dealing with the third party must know to watch for any potential issues and provide regular activity reports to leadership.
The full article, “FCPA Risk in the Health Care Sector,” was published by Risk Management on July 23 and is available online.