Six months from the date of closing. That’s how long acquiring companies have under the newly announced Department of Justice (DOJ) Mergers and Acquisitions (M&A) Safe Harbor Policy to disclose misconduct discovered in the context of a merger or acquisition – whether discovered pre or post-acquisition. And the acquiring company has one year from the date of closing to remediate, as well as provide restitution to any victims and disgorge any profits.
Over the last two years, the DOJ has made clear its priority to encourage companies to self-disclose misconduct aiming to ...
On June 28, 2023, the U.S. Department of Justice (“DOJ”) and the U.S. Department of Health and Human Services, Office of Inspector General (“HHS-OIG”), along with other federal and state law enforcement partners, announced a nationwide health care fraud enforcement action targeting a variety of alleged health care fraud schemes. As has been the case over the last few years, DOJ and HHS-OIG have moved away from categorizing the enforcement action as a “takedown”. The government has not explained the naming change, but one explanation is that it is no longer properly considered a true “takedown” because the enforcement activity (charges, arrests) occurs over many weeks leading up to the day it is announced.
Imagine you’re a longtime employee of a company that operates in a highly regulated industry. Your employment has seen its ups and downs throughout the years, and you have witnessed many transitions: new policies and procedures implemented, new leadership appointed, and new rules and regulations with which your company must comply to remain in lawful standing with regulators. Occasionally, you’ve observed activity that might be questionable but you never thought much about it. That is, until you’re called into a meeting with your company’s lawyers who inform you that “the U.S. Attorney’s Office wants to meet with you.” What do you do next?
In many cases, the payment of restitution by a party in a lawsuit involving the government or a governmental entity creates a tax-deductible business expense under Title 26, United States Code, Section 162(f) (hereinafter, “Section 162”). When it comes to violations of the False Claims Act, the Anti-Kickback Statute, Stark Law, or even common law fraud claims and contract disputes, understanding how this statute operates can offer substantial short- and long-term tax-benefits to entities facing stiff financial recoupments. While it is unlikely that the costs of an investigation or restitution order will ever generate a financial net-gain for the entity footing the bill, it is important to appreciate that restitution and proactive remediation costs are viewed differently by both government enforcers (i.e. prosecutors) and tax-collectors, compared with other types of remuneration. Recognizing that there is a difference can, in some cases, help mitigate significant financial burdens.
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