On June 4 2016 the Act to Combat Corruption in the Healthcare Sector entered into force after years of controversial debate. The act, which establishes the criminal offences "passive bribery in the health sector" (Section 299a of the Criminal Code) and "active bribery in the health sector" (Sector 299b of the Criminal Code), has intensified compliance risks for companies in the healthcare sector. In addition to criminal law provisions, possible labour law consequences in the event of violations should also be kept in mind.
The implementation of the new standards was preceded by a landmark decision rendered by the Federal Court of Justice on March 29 2012 (GSSt 2/11) (for further details please see "Stricter anti-corruption rules in healthcare sector"). The court ruled that providing benefits to office-based physicians is not a criminal offence because they are neither public officials nor representatives of state health insurance institutions. The act's new wording does not simply close a legal loophole – it goes much further, because in the future benefits provided to both doctors and other members of state-organised healthcare professions will come under the scrutiny of prosecution authorities.
Under Section 299a of the Criminal Code, liability is found in:
"any healthcare professionals requiring state-organised training in order to carry out their profession or to bear a specific professional title, who – in pursuing their profession – demand, allow themselves to be promised or accept a benefit for themselves or another as consideration for according an unfair preference to another in domestic or foreign competition 1. by prescribing medicinal products, remedies and therapeutic products or medical devices, 2. by purchasing medical products or therapeutic products or medical devices intended for direct application by the healthcare professionals or their assistants, or 3. by referring patients or specimens for testing."
Conversely, under Section 299b it will be a criminal offence to offer, promise or grant such benefit to any of the above-mentioned persons. Whereas under Section 299a, only persons belonging to the group of people mentioned in that provision can be criminally liable, under Section 299b any person can be an offender (eg, employees of companies dealing in pharmaceuticals, medicinal products or biotechnology, or wholesale companies cooperating with healthcare professionals). The list of healthcare professions is long and includes doctors and pharmacists, as well as physiotherapists and nurses.
Two important changes were made to the legislation shortly before it was passed. First, the version focusing on the purchase of medicinal products or medical devices was changed to the effect that henceforth only the purchase of such medicinal products or medical devices that the purchasers apply themselves is supposed to be relevant. Therefore, pharmacists are de facto excluded from at least this version. Second, the controversial version referring to breach of the duty concerning the preservation of the independence of healthcare professionals was deleted. It was planned for some time to punish breaches of this duty under professional law. Apart from practical considerations, this version was objected to in particular due to its lack of specificity and its constitutional aspects.
Another major change concerns the practical risk of prosecution – the requirement that criminal charges be brought was deleted. Sections 299a and 299b are now offences requiring public prosecution. This means that offenders will be prosecuted ex officio if there is an initial suspicion that an offence has been committed. A criminal charge is unnecessary.
The entry into force of the new regulations marks a turning point for the practice of law. Henceforth, practice will focus on activities which were not previously criminal offences and were therefore tolerated – although they may have been controversial in terms of competition law or professional law.
The risk profile has now changed, for both members of the healthcare profession and the life sciences industry. Owing to the breadth of the new criminal offences, it remains unclear where exactly the boundary lies between what is still permissible and what is already impermissible. The guiding principle is likely to be that which was already permissible under professional and competition law will now become impermissible because of the new criminal offences. Criminal law is likely to follow civil law in this respect.
Companies in the life sciences and healthcare sector are urgently advised to examine existing contracts and practices and to document them (even more) precisely. Moreover, compliance systems should be put in place – unless this has already been done. Although the pharmaceutical and medicinal product sectors have implemented codes of conduct and established compliance systems much more frequently than other sectors, smaller companies in particular appear to have some catching up to do. To avoid becoming the focus of the authorities from the beginning – after all, the aim is to prevent initial suspicion and possible investigations generating public attention – conservative interpretation of the new laws and strict internal compliance systems are advisable. Internal compliance procedures should be adjusted to the new risk profile and effective risk management actions should be taken (eg, by examining previously concluded agreements, training employees and strictly heeding the principles of healthcare compliance).
What if a violation is committed? Regardless of their criminal law relevance, compliance violations by employees can entail far-reaching liability risks for the company. If there is evidence that the legal representative of a company has breached a supervisory duty or is guilty of organisational fault in terms of Sections 30 and 130(1) of the Regulatory Offences Act, the company might be liable for millions of euros in fines (Section 30(2) of the Regulatory Offences Act), which could be an existential burden for the company. If a company establishes compliance rules (eg, by implementing compliance policies), these must be implemented and consistently enforced in terms of labour law. The employees (eg, pharmaceutical representatives) are the ones who cooperate with physicians and, for example, conduct advanced training courses for physicians. Employees who commit compliance violations by offering, promising or granting unfair benefits to physicians breach their contractual duties. This may constitute good cause for dismissal without notice.
For further information on this topic please contact Roland Wiring or Anja Schöder at CMS Hasche Sigle by telephone (+49 40 37 63 00) or email (firstname.lastname@example.org or email@example.com). The CMS Hasche Sigle website can be accessed at www.cms-hs.com.
This article was first published by the International Law Office, a premium online legal update service for major companies and law firms worldwide. Register for a free subscription.