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Corruption
enforcement actions
target foreign doctors
and hospital employees
By Robert Christopher Cook, JD and Louis P. Gabel, JD
Editor’s note: Christopher Cook is a partner
with the international law firm Jones Day in
Washington in DC, where he advises clients
regarding compliance with the Foreign Corrupt
Practices Act. He may be reached by telephone
at 202/879-3734 or by e-mail at christophercook@JonesDay.com.
Louis Gabel has recently accepted a position as an
Assistant United States Attorney in Detroit, Michigan.
He was an associate at Jones Day in Washington,
DC at the time this article was written.
Companies with operations outside
the United States, including health
care suppliers and providers, are
increasingly at risk of being investigated or
prosecuted for corruption that occurs in
foreign marketplaces. The US Department
of Justice (DoJ) and the Securities and
Exchange Commission (SEC) are the government
agencies with authority to conduct
enforcement investigations and institute
criminal or civil actions pursuant to the
Foreign Corrupt Practices Act (FCPA). Both
have stepped up scrutiny of corrupt foreign
dealings across all industries. The health care
industry is a particularly ripe target for such
investigations.
Health care companies face an acute risk of
exposure to public corruption (and attendant
enforcement investigations) due to their sales
and marketing in foreign countries because
health care customers in those countries are
oftentimes government-owned hospitals or
government-employed physicians. When
physicians and hospital employees are in a
position to influence purchasing decisions,
payments or gifts that could influence their
judgment run the risk of being considered
unlawful under the FCPA. Health care
companies thus must endeavor to create compliance
programs and controls that are robust
enough to minimize the risk of violating the
FCPA or other public corruption laws when
dealing with such situations. They must also
be prepared to act decisively and swiftly once
a potential violation is discovered.
The good news is that health care companies
are in a better position than many to address
these issues overseas. Laws governing physician
relationships in the United States, such
as the Anti-kickback Statute and the Stark
Law, are similar in many important respects
to the FCPA. To the extent that health
care companies have in place policies and processes
to comply with such requirements in
the United States, they are closer to ensuring
FCPA compliance overseas.
Anti-corruption laws
The FCPA makes it a crime to pay, offer,
authorize, or promise to award anything of
value to a foreign government official in order
to assist in obtaining business. The FCPA
applies to companies with formal ties to the
United States and those who take action in
furtherance of a violation while in the United
States. Companies and individuals who are
otherwise subject to the FCPA can even be
held liable for bribes paid to foreign officials
if no actions or decisions take place within
the United States. That is, the FCPA controls
the conduct of US persons and US companies
anywhere in the world. As a result, the FCPA
potentially applies to a wide range of companies
and individuals who have expanded their
operations beyond this country’s borders.
Criminal penalties under the FCPA can reach
$2 million per violation, and individuals can
face up to five years in prison per violation.
In addition to criminal liability, civil penalties
can include a fine of up to $500,000 per
violation or disgorgement of profits that were
obtained as a result of the violation. Other
consequences could follow from an FCPA
conviction, such as exclusion from certain
federal programs (including Medicare and
Medicaid) or ineligibility to receive export
licenses.
In addition to US anti-corruption laws such
as the FCPA, an increasing number of foreign
countries have enacted laws aimed at curbing
bribery. For instance, the thirty member
countries of the Organisation for Economic
Co-operation and Development (OECD)
and five non-member countries adopted
the Convention on Combating Bribery of
Foreign Public Officials in International
Transaction in 1997. The OECD Convention
obligates these signatory countries to enact
and enforce laws similar to the United States’
FCPA. Similarly, 170 countries have now
signed on to the United Nations Convention
against Corruption, which contains
measures for preventing and criminalizing
corruption. China in particular has become
more aggressive in its attempts to stamp out
public corruption, with top Chinese officials
announcing that the country’s anti-corruption
efforts were to be treated as a top priority.
Indeed, in July 2007, China executed the
former head of China’s Food and Drug
Administration for taking bribes from eight
drug companies.
October 2008
84
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