Fraud in Healthcare
Healthcare companies have bribed doctors to use their products or pay government officials to ease the opening of new markets. Both of these actions violates the FCPA since many overseas healthcare providers are employees of their governments. In addition, companies also end up violating the FCPA’s books and records and internal control provisions by hiding the bribe payments using sham contracts, consulting agreements, marketing costs and other false transactions.
In the largest healthcare (non-pharmaceutical) FCPA enforcement action to date, Fresenius Medical Care AG & Co. in 2019 agreed to pay $231 million to the SEC and Department of Justice in a global settlement to resolve violations of the FCPA in multiple countries over the course of nearly a decade. The Germany-based provider of products and services for individuals with chronic kidney failure engaged in misconduct in Saudi Arabia, Morocco, Angola, Turkey, Spain, China, Serbia, Bosnia, Mexico, and eight countries in the West African region. Fresenius failed to have sufficient internal accounting controls and made improper payments through a variety of schemes, including using sham consulting contracts, falsifying documents, and funneling bribes through a system of third party intermediaries.
Paying Off Foreign Officials
The Foreign Corrupt Practices Act (FCPA) was enacted by Congress as a means to reduce bribery of foreign officials by U.S. companies. The act specifically prohibits bribes to foreign officials for the purpose of obtaining or retaining business.
In 2014, Bio-Rad paid $55 million to settle SEC and DOJ charges that its subsidiaries made improper payments to foreign officials in Russia, Vietnam, and Thailand in order to win business. An SEC investigation found that Bio-Rad Laboratories lacked sufficient internal controls to prevent or detect approximately $7.5 million in bribes that were paid during a five-year period and improperly recorded in books and records as legitimate expenses like commissions, advertising, and training fees. The improper payments resulted in $35 million in illicit profits.
Some companies have been charged for repeat violations of the FCPA. Biomet, an Indiana-based medical device manufacturer, agreed to pay more than $30 million in 2017 to resolve repeat violations of the FCPA. The company was first investigated in 2012 and paid more than $22 million to settle SEC and DOJ charges that the company bribed doctors in Brazil and Mexico from 2000 to 2008. After the settlement, as Biomet was implementing recommendations from the independent monitor, the company learned about potential anti-bribery violations in Brazil and Mexico and notified the monitor and the SEC in 2013. “Biomet didn’t entirely learn its lesson the first time around as it continued to use a prohibited agent in Brazil and engaged in a new bribery scheme in Mexico,” according to the SEC.
Reporting FCPA Violations
Whistleblowers are crucial in identifying and prosecuting potential FCPA violations. Federal law provides protection to whistleblowers and prohibits retaliation. Whistleblowers who come forward with information about FCPA violations can receive a monetary award. Whistleblowers are encouraged to contact an attorney to help them through the process and ensure their rights are protected.
With over 30 years of experience, the attorneys on Baron & Budd’s whistleblower representation team have represented dozens of clients in government fraud cases returning over $5.4 billion to federal and state agencies, with whistleblower recovery shares as high as 49%. They are ready to help if you have evidence of an FCPA violation.
Please call (866) 401-5971 or complete our contact form if you would like more information. For more information, see What You Need to Know About Becoming a Whistleblower. Please understand that contacting us does not mean that you have established an attorney-client relationship with Baron & Budd, P.C.