Kompanie Healthcare Partners LLP

Pre-Acquisition OIG & Stark Law Regulatory Due Diligence

Shielding private equity sponsors from successor liability, Department of Justice False Claims Act enforcement, and unindemnified billing recoupments across target clinical practices.

Unlike standard corporate acquisitions where liabilities can be ring-fenced through asset purchase structures, healthcare M&A exposes buyers to strict federal successor liabilities. Under the False Claims Act, acquiring entities can inherit devastating multi-million dollar treble-damage penalties if a target practice engaged in fraudulent coding, unbundled lab tests, or violated Stark Law physician self-referral prohibitions. Kompanie LLP conducts forensic pre-closing regulatory audits: reviewing medical director agreements, scrutinizing in-office lab arrangements under the Eliminating Kickbacks in Recovery Act (EKRA), and sizing transaction indemnification escrows to insulate the sponsor's investment fund.

Deliverables

  • Audit of existing physician employment contracts and medical director agreements against Stark Law FMV standards.
  • Forensic review of in-office laboratory and pharmacy dispensing arrangements under EKRA and AKS regulations.
  • Sizing of pre-closing special indemnity escrows and representation & warranty insurance (RWI) policy exclusions.
  • Drafting post-close voluntary disclosure submissions (OIG Self-Disclosure Protocol) when historic liabilities are identified.

Frequently asked questions

Can an asset purchase agreement shield a private equity buyer from Medicare fraud liabilities?

Not if the buyer assumes the target practice’s Medicare Provider Agreement (CMS-855). Assuming the existing provider number confers 100% successor liability for past Medicare overpayments and False Claims Act penalties. A forensic pre-close compliance audit is essential before deciding whether to assume or obtain new provider billing enrollment.

What is the risk of EKRA in multi-specialty healthcare platforms?

The Eliminating Kickbacks in Recovery Act (EKRA) applies to all commercial and federal healthcare business involving clinical laboratories and recovery centers. Unlike AKS, EKRA does not contain a blanket safe harbor for percentage-based marketing or employee sales compensation, making aggressive sales bonus structures a major regulatory trap.