Health Care Compliance: Why It's Important

A well-developed compliance plan or program can not only demonstrate any entity's commitment to employing thoroughly qualified staff and executives, but also foster early detection and reporting of problems such as fraud, abuse or medical error, as well as promote effective communication through all administration and staff.

With the already narrow margins many businesses face, and the fact that civil and criminal liability is a constant threat, entities need to maximize any receivables and work to ensure safe harbor from penalties, lawsuits or any other threats that could jeopardize their business or personnel. Along those lines, creating and maintaining required documentation is vital to the compliance obligations (and financial well-being) of a health care company.

Essential Elements Of A Compliance Program

For employers, proper documentation is essential to avoiding vicarious liability under the Fair Labor Standards Act (FLSA) and to ensure that the company can satisfy the requirements of any DOL, IRS, immigration or state agency audit.

Specifically, health care-related entities should focus in developing an effective compliance program. They should take into account:

  • Office of Inspector General (OIG) guidelines and work plans
  • Health Insurance Portability and Accountability Act (HIPPA)
  • Licensure and reporting
  • Physician self-referral provisions (Stark) and Anti-Kickback Statutes
  • When an "Adverse Event" is reportable
  • Proper billing
  • Coding
  • Avoiding Medicare audits for overpayments
  • Patient satisfaction surveys

Compliance Program Personnel

A good compliance program should have a designated compliance officer and an experienced attorney as a legal advisor to review laws, regulations, policies, procedures, and contracts that apply to physician, providers, and services. The legal advisor can ensure that proper documentation, deadlines and records are in place as the first line of defense in the event of any complaints, audits or civil litigation.

Both the compliance officer and legal advisor should have access to company information to properly investigate any complaints in accordance with the business's code of conduct, bylaws, applicable laws and regulations, to be able to make recommendations to the board of directors on the best course of action.

Consequences Of Compliance Failure

A failure to implement a proper health care compliance plan could expose the entity and its directors to liability under Caremark, a landmark case which holds that a corporate board director's responsibility includes assurances that necessary information and reporting systems are in place to provide to senior management and to the board itself timely, accurate information to reach informed judgments regarding the company's compliance with law and its business performance. The lack of such systems and compliance may result in directors and other executives being held personally liable to shareholders for any losses.

Get Help Protecting Your Business

Navigating the requisite compliance field is no easy task. Contact Clark Firm PLLC with any questions or to set up a review and evaluation of the current system in place. We are available by email or by phone: 469-513-1711. Our lawyers serve clients in Dallas and throughout greater Texas.


In re Caremark International Inc, 698 A.2d 959 (Ct. Chanc. Del. 1996).