Dr. Roland Wiring November 16 2015 Stricter anti-corruption rules in healthcare sector CMS Germany | White Collar Crime - Germany Dr. Roland Wiring White Collar Crime IntroductionNew offencesIncreased risk of criminal liabilityCommentIntroductionCollaboration between the life sciences industry and healthcare practitioners has long been difficult to assess from a legal perspective. Where does desirable collaboration end and corruption begin? Practical risks are likely to arise in the near future. The forthcoming Act to Combat Corruption in the Healthcare Sector will significantly expand the applicability of criminal law, making effective compliance essential.The act(1) will shortly be enacted by Parliament. The new legislation closes the gaps identified by the government relating to criminal prosecution of corruption in the healthcare sector. It is a response to a 2012 Federal Court of Justice judgment, which ruled that it is not a criminal offence to offer bribes and favours to doctors in their own practices (March 29 2012 – GSSt 2/11) (for further details please see "Gifts and favours to doctors are not a criminal offence").New offencesEssentially, the act will introduce two new criminal offences; taking and giving bribes in the healthcare sector (Sections 299a and 299b of the Criminal Code). These new offences reflect the existing provisions of Section 299 of the code regarding bribery in commercial practice. The new definitions extend the offences to include not just doctors, but all healthcare professionals who require a state-recognised vocational qualification in order to carry out their jobs. This greatly broadens the extent of potential criminal liability. The lack of clarity with regard to terminology is an additional complication.The bill will introduce far-reaching corruption offences. Section 299a(1) states that imprisonment of up to three years or a fine may be imposed on any healthcare professional requiring state-recognised vocational training in order to carry out his or her job or to use a specific professional title. In carrying out his or her job, the individual may allow himself or herself to be promised or to accept a benefit for himself or herself or for a third party in return for:giving unfair preference to another party in domestic or foreign competition; orbreaching his or her professional duty to preserve the independence of the healthcare profession in prescribing or dispensing drugs and medicines, remedies and aids, medical products or patient and laboratory referrals.Under Section 299a(2) of the code, any healthcare professional within the meaning of Section 299a(1) who demands, allows himself or herself to be promised or accepts a benefit in return for breaching his or her professional duty to preserve the independence of the healthcare profession in purchasing drugs and medicines, remedies and aids or medical products shall be liable to a penalty.Section 299a is mirrored in the code's new Section 299b. This clause is particularly relevant to the life sciences sector, as it specifically targets those who offer benefits and makes criminally liable any member of the life sciences industry who offers a benefit or bribe in return for unfair preferential treatment in prescribing drugs, medicines or medical products, or who breaches his or her professional duty to preserve independence in the healthcare profession.Moreover, a revision to Section 300 of the code has been proposed. This defines particularly serious cases of taking and accepting bribes and in future will also apply to Sections 299a and 299b. The penalty for such offences will be imprisonment of between three months and five years, instead of just a fine as at present. An especially serious case will generally be deemed to exist where:the offence involves a particularly large benefit or bribe; orthe offender acts commercially or as a member of a gang whose purpose it is to persistently commit such offences.Experience with anti-corruption criminal law has shown that these thresholds can easily be exceeded.Under the new anti-corruption legislation, alleged breaches will be prosecuted only if an application for a criminal complaint is filed. However, the categories of people and entities entitled to file such applications are broad and include professional associations and the Association of Statutory Health Insurance Physicians.Increased risk of criminal liabilityIf the new legislation is ultimately enacted as anticipated, the risk of criminal liability to members of the healthcare professions and persons working in the life sciences industry will increase appreciably. This is attributable to the scope of the newly included offences, many aspects of which are not clearly defined. Exactly where the prosecuting authorities and courts will draw the line will not become clear until the new legislation is applied in practice.In order to avoid exposure, companies are advised to err on the side of caution in interpreting the new legislation and ensure that they have robust internal compliance systems in place. In doing so, they must bear in mind that the range of potential offences is now substantially broader. Hence, practices which in the past were not risky in terms of criminal law may now constitute criminal offences. The new legislation targets not only doctors with their own practices, but also – and primarily – dispensing chemists. The effects are manifold and there is a sense of deep unease in the healthcare sector.A criminal offence arising from breach of the independence of the healthcare profession constitutes a substantial practical risk. This is new and – unlike giving unfair preference in competition – has no equivalent corruption offence. The elements of this offence are not clearly defined. The benchmark is the code of conduct for the respective healthcare professions. The explanatory memorandum to the act indicates that it is subject to strict interpretation. For example, benefits granted in connection with the purchase of products may be relevant because they could affect subsequent decisions relating to the sale of over-the-counter products.In addition, criminal prosecutions are likely to increase. The first prosecution services specialising in corruption in the healthcare sector have already been established. The right of professional associations and health insurance funds to make criminal complaints and the exchange mechanism in the Social Code 5 are likely to increase the risk of prosecution even further.CommentThe forthcoming reform of the legislation to combat corruption in the healthcare sector will have significant implications. Major amendments in the course of the remaining legislative procedure are unlikely. With an increase in the potential for criminal prosecution looming, companies are advised to tighten their internal compliance processes and ensure that they have effective and robust risk management provisions in place in anticipation of the new legislation.For further information on this topic please contact Roland Wiring at CMS Hasche Sigle by telephone (+49 40 37 63 00) or email ([email protected]). The CMS Hasche Sigle website can be accessed at www.cms-hs.com.Endnotes(1) Published BR Drs, 360/15, August 14 2015.