Sunday, October 2, 2011

Heightened Risks in Healthcare M&A?

By Tara Pihn

With all this talk about Practice Mergers, Hospital/Physician Alignment and the ascent of ACO's, I have to bring up the possibility of inadvertently acquiring Whistle Blowers as a risk associated with Practice Acquisition.  None of the recent articles on the topic that I have read, including Todd Demel's otherwise excellent June contribution, mention this very real risk.   Exhibit 1:   Whistle-Blower Suit at Mount Sinai  (11th Circuit Court via DBR).  The case involves an administrator employed in an Oncology practice that was acquired by Mt. Sinai in Miami Beach.  The complainant administrator had been employed by the practice for a dozen years and become an employee of the hospital in 2009.   I don't pretend to know the merits of the employee's case.  That said, some of the allegations seem improbable.  I do know that Mt. Sinai has enjoyed an above average reputation in the S. Florida healthcare community and recently was mentioned at the top of U.S. News & World Report's Hospital Rankings.  I am guessing they have a pretty good Compliance Department as well.  Without attempting to try this case in cyberspace, it's worth noting that opportunistic employees and former employees abound in this economy and have little loyalty to an acquirer. 

More recently I spotted this Whistle Blower headline in a local paper:  Doctors Receive $700k to resolve kickback allegations.  This involves Midtown Imaging and their employed doctors in WPB.  Again I don't pretend to know the merits of the case.  And for all I know, Midtown was culpable.   The point is that there are huge risks from within our organizations.  Payoffs from "blowing the whistle" can set one up for life so incentives are enormous. 

Meanwhile some law firms are trying to drum up business by soliciting Whistle Blower suits.  One example is  They are running this provocative advertisement headline in a S. Florida business paper:  Thinking About Blowing the Whistle on Corporate or Government Fraud?

There is no doubt that legitimate Whistle Blowers serve a beneficial purpose in exposing fraud and corruption and saving precious government resources.  However, just as in med mal, slip & fall, personal injury and product liability cases, frivolous litigation by opportunists (employees and their attorneys) does occur in the Whistle Blower world.   These unnecessary legal actions clog the courts and restrict an already sluggish economy.  They also harm lawful healthcare providers.    Compliance Departments must be extra vigilant in these trying economic times especially if engaged in a merger or acquisition.  An otherwise fine organization can be destroyed by one rogue employee.

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