WSJ logo
Forbes logo
Fox News logo
Bloomberg logo
Los Angeles Times logo
Washington Post logo
CNN logo
Telemundo logo
New York Times
NY Post logo
NBC logo
Daily Beast logo
USA Today logo
Miami Herald logo
CNBC logo
Dallas News logo

Healthcare Compliance Audit for Private Equity Funds

Experienced Healthcare Compliance Audit Team

Are you seeking to purchase a company in the healthcare industry but are worried about their compliance with federal law? If so, then you need the services of a healthcare compliance professional.

Purchases of portfolio companies can be a great source of profit and growth; however, the failure to ensure the satisfactory healthcare compliance of the company you seek to purchase could be disastrous for your fund and fund managers.

Remember that the companies you choose to purchase may be regulated entities at the federal level subject to numerous statutes. And in the eyes of federal agencies, the internal operations, corporate culture, and compliance of the companies that you purchase reflect upon you.

Therefore, fraud and crime within the company exposes the fund to liability. Do not fall prey to this unfortunate scenario without be satisfied as to the compliance of your portfolio companies.

At Oberheiden, P.C., our team of healthcare compliance attorneys can provide detailed and meticulous audits of healthcare entities that private equity funds are seeking to purchase.

We can help you feel assured that your investment is not only a safe investment of a company fully compliant with healthcare laws and regulations but also that your investment will be a successful one. We carry out dedicated healthcare compliance audits and due diligence procedures on portfolio companies for our fund clients.

Call Oberheiden, P.C. today for a free consultation to protect your reputation, save time and money, and prevent your exposure to liability.

Put our highly experienced team on your side

Dr. Nick Oberheiden
Dr. Nick Oberheiden



John W. Sellers
John W. Sellers

Former Senior Trial Attorney
U.S. Department of Justice

Local Counsel

Joanne Fine DeLena
Joanne Fine DeLena

Former Assistant U.S. Attorney

Local Counsel

Joe Brown
Joe Brown

Former U.S. Attorney & Former District Attorney

Local Trial & Defense Counsel

Amanda Marshall
Amanda Marshall

Former U.S. Attorney

Local Counsel

Aaron L. Wiley
Aaron L. Wiley

Former Federal Prosecutor

Local Counsel

Roger Bach
Roger Bach

Former Special Agent (OIG)

Michael Koslow
Michael Koslow

Former Supervisory Special Agent (FBI)

Chris Quick
Chris Quick

Former Special Agent (FBI & IRS-CI)

Kevin M. Sheridan
Kevin M. Sheridan

Former Special Agent (FBI)

Ray Yuen
Ray Yuen

Former Supervisory Special Agent (FBI)

Dennis A. Wichern
Dennis A. Wichern

Former Special Agent-in-Charge (DEA)

What Is A Healthcare Compliance Audit?

A healthcare compliance audit is an independent review of a healthcare entity to ensure that it is following all applicable rules, laws, regulations in the healthcare industry regarding patient care.

Federal compliance measures many factors such as patient billing, the privacy of patient information and data, company safety, filings with the government for reimbursement, etc.

A healthcare compliance audit is a means of discovering weaknesses in a business’ healthcare standards. These audits are important so that providers and patients have a full understanding of the healthcare entity’s internal operations.

An audit will also let private equity funds know if the healthcare company they are considering purchasing is compliant with federal law.

The Office of the Inspector General (“OIG”) provides a list of seven elements of an effective healthcare compliance program:

  1. Implementing written policies, procedures and standards of conduct.
  2. Designating a compliance officer and compliance committee.
  3. Conducting effective training and education.
  4. Developing effective lines of communication.
  5. Conducting internal monitoring and auditing.
  6. Enforcing standards through well-publicized disciplinary guidelines.
  7. Responding promptly to detected offenses and undertaking corrective action.

Failure to Maintain Healthcare Compliance

Consequences for Noncompliance

Noncompliance with federal authorities—such as the Department of Health and Human Services (“HHS”) and the OIG—that regulate healthcare entities can be severe. Such consequences may include:

  • Civil and criminal penalties;
  • Possible jail time;
  • Referral to healthcare entity’s state medical board for evaluation;
  • Exclusion from federal government programs such as Medicare and Medicaid programs;
  • Loss of business contacts and customer base;
  • Reputational damage.

Key Laws Regulating Healthcare Entities

The following statutes affect healthcare entities:

  • Anti-Kickback Statute (“AKS”): This statute prohibits the knowing and willful offering or receipt of anything of value to induce referrals of patients or referrals for services payable by a federal program.
  • Stark Law: This statute prohibits physicians from referring patients to a healthcare entity in which the physician or their immediate family member has a financial relationship.
  • Eliminating Kickbacks in Recovery Act (“EKRA”): This statute was passed in October 2018 as a part of the SUPPORT Act and prohibits laboratories, clinics, recovery centers, and other clinical treatment entities from accepting or paying kickbacks for the referral of patients.
  • False Claims Act: This statute prohibits individuals and companies from knowingly defrauding governmental programs such as Medicare or Medicaid and causing false claims to be submitted to governmental programs.
  • U.S. Code Section 1001: This Section prohibits anyone from making false statements to the government.

As demonstrated, healthcare entities are subject to many federal statutes. Noncompliance by healthcare companies could reflect negatively on the private equity funds that invested large amounts of capital in these companies.

It could also cost these funds substantial sums of money to make their portfolio companies compliant as well as expose them to federal liability.

Federal Government Trend of Targeting Private Equity Funds

The federal government has been increasingly willing to investigate and target private equity funds for the healthcare-related frauds of their portfolio companies.

Factors that tend to draw the watchful eye of federal agencies towards funds include situations where the funds (1) own a substantial interest in a portfolio healthcare company; (2) direct the progress and operations of the healthcare company; and (3) have a position on the board of directors or upper management of the healthcare company.

This oftentimes seems nonsensical to many private equity funds. After all, why should the fund be liable for the operations of their portfolio company? In realty, however, there are many situations where federal agencies will hold the fund and its managers liable for the conduct and noncompliance of its portfolio companies.

As an example, courts are likely to hold private equity funds equally liable with their portfolio healthcare company for healthcare fraud in situations where the fund invested in the company and knew of alleged kickback violations. The fund would definitely be liable if some members of the fund were directly involved in the fraud of the portfolio company.

This is why it is so important to properly guard against the risk of federal liability rooted in healthcare companies. Hiring a team of healthcare compliance audit professionals can help ensure this for your fund and its managers.

Healthcare Compliance Audits versus Company Representations

In the past, a common practice was that healthcare companies would provide representations and warranties or establish pre-determined damages and indemnification in contractual arrangements. These are no longer sufficient.

The fines, penalties, and possible jail time for healthcare fraud pose too great a risk to private equity funds. Funds often have portfolios with more than one company in the same industry.

If one healthcare company has fraud identified in its operations, that company may be prohibited from participating in governmental programs in the future such as Medicare or Medicaid.

Oftentimes, the private equity fund will also be liable for the fraud. In these cases, the fund may have to surrender all healthcare companies in its portfolios in order to prevent that one company with fraud from making the other healthcare companies ineligible for participation in government programs.

This only underscores the necessity for private equity funds to obtain a detailed and independent healthcare compliance audit before investing significant amounts of capital into a healthcare company.

Need Advice with Healthcare Compliance Audits?

Federal agencies are increasing their investigative efforts into private equity funds for their connection to healthcare companies within their portfolio that allegedly engage in healthcare fraud, crime, and other misconducts.

This can be damaging to the business of the fund and its managers because it exposes them to federal liability, costs the fund more time and money to correct risks and bring the company up to compliance, and prevents the fund from producing a return on investment.

Preventing these circumstances by arranging a healthcare compliance audit on the company is the best way to safeguard the business of the fund, its reputation, and its future.

At Oberheiden, P.C., we can help you by performing a detailed healthcare compliance audit to identify instances of healthcare fraud within your portfolio companies; performing risk assessment and due diligence procedures to identify fraud; and defending you against possible federal investigations.

Compliance creates value and prevents a host of problems down the road. Do not fall prey to a federal investigation simply because you failed to obtain a proper screening or audit of your portfolio companies or believed one was unnecessary. Let us help you.

Call us today or contact us online for a free consultation to discuss arranging a healthcare compliance audit for one of your proposed healthcare company investments.

Why Clients Trust Oberheiden P.C.

  • 1,000+ Cases Handled
  • Available Nights & Weekends
  • Experienced Trial Attorneys
  • Former Department of Justice Trial Attorneys
  • Former Federal Prosecutors, U.S. Attorney’s Office
  • Former Agents from FBI, OIG, DEA
  • Cases Handled in 48 States
Email Us Call: 888-680-1745