Public Health Law Map - Beta 5 - Medical and Public Health Law Site

of an effective preventive law plan can serve to mitigate the charges. While calling
them compliance plans, rather than preventive law plans, the OIG has now mandated
that medical care providers institute preventive law audits for potential violations of
federal medical care regulations.
A preventive law audit has three goals: identifying mature, previously undetected legal
problems; identifying legally risky situations; and identifying potential legal risks. The
audit is usually performed by an attorney, and it requires the client’s cooperation and
participation. The client will have to provide partnership agreements, insurance
policies, leases, and all other legal agreements, answer questions, and fill out legal
audit forms. The result is the legal equivalent of a complete history and physical
examination.
1. Undetected Legal Problems
These are situations in which the legal risk has already occurred but the client is not
aware of the problem. This is what happened with Medicare/Medicaid fraud and
antikickback prosecutions. The law was on the books for many years before the
began enforcement. Many medical care institutions and practitioners were involved
with questionable practices that were going on for years, which suddenly posed
significant legal risks. Detecting such problems is important, even if the client does
not want to hear the bad news, because the client’s failure to comply will be detected
and penalized eventually.
2. Legally Risky Situations
Some situations may result in legal problems in the future—for example, a
partnership agreement that did not provide for an orderly dissolution if a partner dies.
This is not a problem until the partner dies. Once the death occurs, it is difficult and
expensive to remedy the problem.
When a legally risky situation is identified, the client must decide if the remedy is
cost- effective. The incomplete partnership agreement would cost little to correct,
and the benefit would be great. In cases in which the potential costs are both well
known and small, it may be cheaper to accept the risk than to invest in a remedy. An
example is the purchase of an inexpensive, easily replaced office machine. The
warranty provisions of a sales contract for an adding machine may be ambiguous, but
it is not worth the trouble to have an attorney redraft the contract.
3. Potential Future Risks
These are risks that may arise from changed circumstances. The client may get
divorced, necessitating a new will. The law governing medical practice may change,
necessitating changes in the office routine. It is impossible to anticipate all future
problems. The objective of the legal audit is not to predict the future but to compile
an inventory of the client’s legal relationships. This inventory will help both the client
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