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DOJ Guidance Identifies Suggestions for Due Diligence Processes in Health Care Mergers and Acquisitions

Posted on Monday, March 6, 2017 3:09 AM

The Criminal Fraud Section of the U.S. Department of Justice (DOJ) released guidance entitled “Evaluation of Corporate Compliance Programs.” The DOJ Guidance addresses multiple areas that need to be addressed before the Fraud Section evaluates an entity’s compliance program.

According to Ari J. Markenson, J.D., M.P.H., Partner at Winston & Strawn LLP, the DOJ guidance focused on the diligence process in the M&A context with the following specific areas of inquiry:
• Due Diligence Process
• Integration in the M&A Process
• Process Connecting Due Diligence to Implementation

The DOJ Guidance indicates that DOJ attorneys will assess the following:
• If the misconduct or the risk of misconduct was determined during M&A due diligence
• The risk review process for the acquired/merged entities
• The typical process that has been in place for the M&A due diligence
• The compliance function and how it was incorporated into the merger, acquisition, and integration process.
• Follow-up is the main concern

The DOJ Guidance explains that health care M&A buyers need to confirm that the implementation of the due diligence process used to review compliance-related matters is seamless. If compliance related issues are found, buyers need to pay attention to the mitigation efforts regarding the 60-day repayment rule.

The DOJ will also evaluate several components in determining whether or not it will pursue charges or how it might negotiate resolutions concerning criminal matters.

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