Both chambers of the German Federal Parliament have passed an Anti-Corruption Act (the “Act”) for the healthcare sector. The Act will come into effect before the summer break. The new Act was introduced in response to a decision of the Great Senate of the Federal Court of Justice (Bundesgerichtshof) dated 29 June 2012 (GSSt 2/11). The central issue in that decision was whether physicians were officeholders or representatives of health insurance funds so as to fall within the category of individuals who could be liable under applicable bribery and corruption law. The Great Senate decided that physicians could not be classified as officeholders or representatives such that they did not attract liability.

The Act is intended to address the Great Senate’s finding so as to penalize both bribery and corruption by physicians and other individuals in healthcare affiliated professions. The new provisions do not substantially deviate from existing prohibitions contained in the general Professional Code for Physicians and in statutory health insurance law, but they will significantly increase the sanctions for prohibited behaviour. The Anti-Corruption Act and existing disciplinary and regulatory law will complement one another.

Once the Act comes into force, corrupt behaviour will be punishable by monetary penalties or prison sentences of up to three years. In particularly serious cases, fines will not be available and prison sentences will range from three months to five years.

The Act has wide application: it prohibits corrupt behaviour by physicians, hospitals, pharmacists and other individuals in healthcare affiliated professions. It remains unclear whether carriers of healthcare institutions (such as hospitals or medical care centres (Medizinische Versorgungszentren)) are also covered by the term “healthcare affiliated professions”. It is highly recommended that contracts be drafted so as to comply with the new regulations and that existing contracts be amended to take account of the new restrictions.

Following harsh criticism, the draft law was modified in two key ways:

  • Public prosecutors can act on their own motion to initiate a prosecution and a complaint or special public interest in prosecution will not be required.
  • The reference to the Professional Code has been removed from the Act. The inclusion of this reference was criticised on the basis that the elements of the offence under the Act would have differed between different federal states.

We expect that prosecutions will focus on cooperation contracts between medical care providers and pharma and medical technology companies. Until now, unlawful contracts would be rendered invalid and would result in action and sanctions by the Association of Statutory Health Insurance Physicians, the Medical Associations and the Hospital Supervision Authorities. From this point forward, prosecutions will be an additional option to deal with unlawful cooperation contracts. The Act is not intended to place every cooperation contract under a general suspicion of bribery or corruption. Although these concerns have been publicly expressed, they are neither supported by the Act’s wording nor by its legislative history and motivation.

It remains to be seen how prosecutors will manage the controls and investigations under the new Act. Various questions of interpretation will likely also need to be resolved by the courts. In the meantime, and to seek to prevent any risk of criminal prosecution, early legal consultation is highly recommended.

Find more articles in May’s edition of Corporate Crime Matters