Skip to main content
Sister Publication Links
  • ESG: THE NEW IMPERATIVE
Subscribe
  • Sign Up Free
  • Login
  • Subscribe
  • News
    • Current News
    • COVID-19
    • Providers
    • Insurance
    • Government
    • Finance
    • Technology
    • Safety & Quality
    • Transformation
    • People
    • Regional News
    • Digital Edition (Web Version)
    • Patients
    • Operations
    • Care Delivery
    • Payment
    • Midwest
    • Northeast
    • South
    • West
  • Digital Health
  • Insights
    • ACA 10 Years After
    • Best Practices
    • Special Reports
    • Innovations
  • Opinion
    • Bold Moves
    • Breaking Bias
    • Commentaries
    • Letters
    • Vital Signs Blog
    • From the Editor
  • Events & Awards
    • Awards
    • Conferences
    • Galas
    • Virtual Briefings
    • Webinars
    • Nominate/Eligibility
    • 100 Most Influential People
    • 50 Most Influential Clinical Executives
    • Best Places to Work in Healthcare
    • Excellence in Governance
    • Health Care Hall of Fame
    • Healthcare Marketing Impact Awards
    • Top 25 Emerging Leaders
    • Top 25 Innovators
    • Diversity in Healthcare
      • - Luminaries
      • - Top 25 Diversity Leaders
      • - Leaders to Watch
    • Women in Healthcare
      • - Luminaries
      • - Top 25 Women Leaders
      • - Women to Watch
    • Digital Health Transformation Summit
    • Leadership Symposium
    • Social Determinants of Health Symposium
    • Women Leaders in Healthcare Conference
    • Best Places to Work Awards Gala
    • Health Care Hall of Fame Gala
    • Top 25 Diversity Leaders Gala
    • Top 25 Women Leaders Gala
    • - Hospital of the Future
    • - Value Based Care
    • - Supply Chain
    • - Hospital at Home
    • - Workplace of the Future
    • - Digital Health
    • - Future of Staffing
    • - Hospital of the Future (Fall)
  • Multimedia
    • Podcast - Beyond the Byline
    • Sponsored Podcast - Healthcare Insider
    • Video Series - The Check Up
    • Sponsored Video Series - One on One
  • Data Center
    • Data Center Home
    • Hospital Financials
    • Staffing & Compensation
    • Quality & Safety
    • Mergers & Acquisitions
    • Data Archive
    • Resource Guide: By the Numbers
    • Surveys
    • Data Points
  • MORE +
    • Contact Us
    • Advertise
    • Media Kit
    • Newsletters
    • Jobs
    • People on the Move
    • Reprints & Licensing
MENU
Breadcrumb
  1. Home
  2. Legal
November 16, 2021 05:00 AM

7 due diligence issues to avoid False Claims Act lawsuits

Tara Bannow
  • Tweet
  • Share
  • Share
  • Email
  • More
    Reprints Print
    checklist
    Getty Images/iStockphoto

    To avoid being the target of False Claims Act lawsuits, attorneys say private equity firms ought to make sure their companies are on the up and up prior to investing in them. That means extensive due diligence, often by third-party companies that specialize in the specific sector of healthcare the target company operates in.

    “Diligence, diligence, diligence,” said Mike Cole, managing director and healthcare industry leader of Alvarez & Marsal’s transaction advisory group. “You can’t know too much about this area, which is why our clients have a number of advisers, from the legal, accounting and operational perspectives, that are tacking all these issues at the same time.”

    If it’s a healthcare provider, for example, the potential buyer might want to bring in third-party billers and coders.

    Ultimately, liability in False Claims Act cases comes down to knowledge of noncompliance and failing to fix it despite having the power to do so.

    Why the Justice Department is targeting private equity

    Due diligence is an important part of that because it’s when a buyer ideally would learn about any potential wrongdoing. Attorneys say it’s important to preserve any documentation showing that issues raised during due diligence were resolved.

    “I think it’s crucial for any buyer or investor to understand what they’re taking on,” said Alice Harris, an attorney with Nexsen Pruet.

    Here are key compliance areas to look for in due diligence, according to Harris and attorneys Jennifer Malinovsky and Ed White of Nelson Mullins Riley & Scarborough.

    1. Physician contracting and compensation

    • Are terms of employment agreements consistent with regulatory requirements?
    • Is compensation reasonable and not tied to referral volume?

    2. Material contracts and related party contracts

    • Are they consistent with regulatory requirements? 

    3. Government investigations

    • Is target company operating under corporate integrity agreements?
    • Is target company under investigation by the DOJ, OIG or CMS?

    4. Billing and coding review and audits

    • Does target company perform coding and billing in-house or does it use a third party? 
    • Does target company conduct regular billing and coding audits?

    5. Licensure, certifications, accreditations and regulatory compliance programs

    • Are staff trained in relevant compliance areas? 
    • Are licenses, certifications and accreditations up to date?

    6. HIPAA/HITECH and privacy matters 

    • Have regular risk assessments been conducted?
    • Have any required Office for Civil Rights notifications occurred?

    7. Tax matters for not-for-profit healthcare providers 

    • If applicable, does target company engage in activities that could negatively affect tax-exempt status?

    Download Modern Healthcare’s app to stay informed when industry news breaks.

    Related Articles
    Why the Justice Department is targeting private equity
    Studies show less staffing, more surprise bills after private equity takeovers
    Beyond the Byline: Feds ramp up scrutiny of private-equity backed healthcare providers
    Letter
    to the
    Editor

    Send us a letter

    Have an opinion about this story? Click here to submit a Letter to the Editor, and we may publish it in print.

    Recommended for You
    Copy of Abortion-legal_i.png
    Indiana's high court to hear abortion ban challenge
    anesthesia-main_i.jpg
    Federal judge throws out antitrust case against Blue Cross Blue Shield of Michigan
    Most Popular
    1
    More healthcare organizations at risk of credit default, Moody's says
    2
    Centene fills out senior executive team with new president, COO
    3
    SCAN, CareOregon plan to merge into the HealthRight Group
    4
    Blue Cross Blue Shield of Michigan unveils big push that lets physicians take on risk, reap rewards
    5
    Bright Health weighs reverse stock split as delisting looms
    Sponsored Content
    Daily Dose Newsletter: Sign up to receive a late afternoon weekday roundup of that day’s breaking news and developments in healthcare.
    Get Newsletters

    Sign up for enewsletters and alerts to receive breaking news and in-depth coverage of healthcare events and trends, as they happen, right to your inbox.

    Subscribe Today
    MH Magazine Cover

    MH magazine offers content that sheds light on healthcare leaders’ complex choices and touch points—from strategy, governance, leadership development and finance to operations, clinical care, and marketing.

    Subscribe
    Connect with Us
    • LinkedIn
    • Twitter
    • Facebook
    • RSS

    Our Mission

    Modern Healthcare empowers industry leaders to succeed by providing unbiased reporting of the news, insights, analysis and data.

    Contact Us

    (877) 812-1581

    Email us

     

    Resources
    • Contact Us
    • Advertise with Us
    • Ad Choices Ad Choices
    • Sitemap
    Editorial Dept
    • Submission Guidelines
    • Code of Ethics
    • Awards
    • About Us
    Legal
    • Terms and Conditions
    • Privacy Policy
    • Privacy Request
    Modern Healthcare
    Copyright © 1996-2023. Crain Communications, Inc. All Rights Reserved.
    • News
      • Current News
      • COVID-19
      • Providers
      • Insurance
      • Government
      • Finance
      • Technology
      • Safety & Quality
      • Transformation
        • Patients
        • Operations
        • Care Delivery
        • Payment
      • People
      • Regional News
        • Midwest
        • Northeast
        • South
        • West
      • Digital Edition (Web Version)
    • Digital Health
    • Insights
      • ACA 10 Years After
      • Best Practices
      • Special Reports
      • Innovations
    • Opinion
      • Bold Moves
      • Breaking Bias
      • Commentaries
      • Letters
      • Vital Signs Blog
      • From the Editor
    • Events & Awards
      • Awards
        • Nominate/Eligibility
        • 100 Most Influential People
        • 50 Most Influential Clinical Executives
        • Best Places to Work in Healthcare
        • Excellence in Governance
        • Health Care Hall of Fame
        • Healthcare Marketing Impact Awards
        • Top 25 Emerging Leaders
        • Top 25 Innovators
        • Diversity in Healthcare
          • - Luminaries
          • - Top 25 Diversity Leaders
          • - Leaders to Watch
        • Women in Healthcare
          • - Luminaries
          • - Top 25 Women Leaders
          • - Women to Watch
      • Conferences
        • Digital Health Transformation Summit
        • Leadership Symposium
        • Social Determinants of Health Symposium
        • Women Leaders in Healthcare Conference
      • Galas
        • Best Places to Work Awards Gala
        • Health Care Hall of Fame Gala
        • Top 25 Diversity Leaders Gala
        • Top 25 Women Leaders Gala
      • Virtual Briefings
        • - Hospital of the Future
        • - Value Based Care
        • - Supply Chain
        • - Hospital at Home
        • - Workplace of the Future
        • - Digital Health
        • - Future of Staffing
        • - Hospital of the Future (Fall)
      • Webinars
    • Multimedia
      • Podcast - Beyond the Byline
      • Sponsored Podcast - Healthcare Insider
      • Video Series - The Check Up
      • Sponsored Video Series - One on One
    • Data Center
      • Data Center Home
      • Hospital Financials
      • Staffing & Compensation
      • Quality & Safety
      • Mergers & Acquisitions
      • Data Archive
      • Resource Guide: By the Numbers
      • Surveys
      • Data Points
    • MORE +
      • Contact Us
      • Advertise
      • Media Kit
      • Newsletters
      • Jobs
      • People on the Move
      • Reprints & Licensing