Part 1 of this article series, published in the November 2021 issue of Compliance Today, outlined in general the American and Italian healthcare systems. Part 2, published in the December 2021 issue, outlined America’s primary healthcare fraud laws. Part 3 of this series outlines the Italian healthcare enforcement regime, criminal law, and the Anti-Corruption Act.
Italian enforcement against fraud and corruption, including in the healthcare field, has traditionally been reserved to criminal courts, with no specific effort to coordinate or combine these actions through civil remedies. In light of the largely state-funded healthcare system in Italy, government corruption is in the foreground of efforts to detect and prevent fraud, waste, and abuse in healthcare. Egregious scandals erupted in Italian healthcare sectors, especially in the 1990s. Perhaps the most notorious case involved Dr. Duilio Poggiolini, the Ministry of Health’s general manager of the pharmaceutical department whose fortune included gold, jewels, and paintings of enormous value. Poggiolini was charged and arrested for using his position for personal benefit, and his sentence of seven and a half years in prison was reduced on appeal. The scandal surfaced during an investigation, called “mani pulite,” by a pool of public prosecutors operating out of the Milan criminal court. They were able to pierce the veil of silence that long protected government corruption. While its success resulted from significant cooperation and solidarity among the prosecutors, their coordination was not officially structured as an institutional team.
Italian criminal law always has included crimes of government corruption. The Italian Criminal Code has been amended periodically, not only to increase the sanctions (as, for example, in the latest “Spazza-Corrotti” amendments in 2019), but also with the aim of criminalizing more subtle corruption than an outright offer of cash in exchange for favorable treatment by a public official.
The single most important criminal statute in Italian anti-corruption law is no. 190/2012 of November 28, 2012, titled “Provisions for prevention and repression of corruption and illegality in the public administration” (the Anti-Corruption Act). First, the Anti-Corruption Act identified evolving and more nuanced conduct in order to combat ever more sophisticated corruption phenomena, such as the following:
Additionally, the Anti-Corruption Act also has introduced criminal law sanctions for corruption among private parties (“corruzione tra privati”). Before the enactment of the Anti-Corruption Act, only conduct involving public officers was criminally relevant. The Anti-Corruption Act introduces an entirely new crime of corruption where both parties are private parties. Paragraph 1 of new Section 2635 of the Italian Civil Code applies to companies’ directors, general managers, or executives having the task to draw up financial documents, including auditors and liquidators. If upon receipt or promise of money or other benefits they breach the duties assigned to them and damage the company, they are subject to criminal sanctions (namely imprisonment of one to three years). In addition, as per Paragraph 2, companies’ employees who, under the direction of the above subjects, engage in the same conduct (upon receipt or promise of money or other benefits that breach their assigned duties and damage the company) also risk imprisonment of up to one year and six months. Persons who give or promise any such benefits to any of the above-mentioned actors can also be sanctioned, according to Paragraph 3.
The same Anti-Corruption Act also sets forth a number of additional measures to combat corruption:
The same Anti-Corruption Act introduced specific measures to protect public sector whistleblowers. These measures on whistleblowers in the private sector were only introduced recently by Law No. 179/2017. Public employees who become aware of suspected illegal behavior within their professional duties and then inform judicial authorities or their supervisor cannot be subject to sanctions, termination, or discrimination due to such a complaint. The same prohibition protects private-sector employees, who are encouraged (but not mandated) to set up whistleblowing channels, including anonymous complaints. Whistleblower reports in Italy, however, continue to be the exception, rather than the norm, in both sectors. This dynamic starkly contrasts with the American fraud-prevention statutes, particularly the false claims statutes, whose whistleblower provisions fuel both compliance efforts and government enforcement activities.
Legislative Decree 231/2001 introduced into the Italian legal system the criminal accountability of legal entities and companies, a concept previously excluded on the basis of the principle “societas delinquere non potest” (i.e., only individuals, and not corporations, may be subject to criminal sanctions). In fact, in 2001, the Italian legislature, to implement certain international conventions ratified by Italy, established specific sanctions affecting the assets of companies—and, therefore, the economic interests of the shareholders—if crimes are committed in the interest of or for the benefit of the organization. The list of such crimes has been expanded through subsequent legislation.
The liability of an entity pursuant to Decree 231 arises if:
On the other hand, the entity is not responsible when the aforementioned persons have acted in the exclusive interest of themselves or of third parties.
Sanctions against companies that are found responsible under Decree 231 can be both monetary (up to EUR1.5 million, in addition to the confiscation of resulting profits) or, worse, blacklisting. The latter include the following bans for a period of three months to two years:
Article 6 of Paragraph 1 of Decree 231, however, exempts an entity from responsibility under the following circumstances:
- the management body has adopted and effectively implemented, before the commission of the fact, organizational and management models suitable for preventing crimes of the same type of the one that occurred;
- the task of supervising the functioning and the observance of the models and of taking care of their updating has been given to a body of the entity with autonomous powers of initiative and control;
- people committed the crime by fraudulently evading the organization and management models;
- there has been no omission or insufficient supervision by the body referred to in letter b).
Exemption from liability requires not only a compliance program, but also a committee (organismo di vigilanza) actively supervising such program. The committee must be independent from the management of the company and may be composed of one to three members. The exclusion of corporate liability under Decree 231 is therefore conditioned on an active, effective, preventive, and continuous adoption of an organizational and management model charged with preventing the offense at issue. For the exemption to apply, the crime must have been committed by the fraudulent avoidance of the compliance structure put in place by the organization, without any failure or lack of supervision by the organismo di vigilanza. Incidentally, these are similar to principles that have been adopted in America. The organization’s compliance model must also include systems to provide information flows to and from the organismo di vigilanza, as well as a specific channel to report suspected violations directly to the organismo di vigilanza.
Such organizational, management, and control model must:
Following the introduction of the Decree 231, many companies, especially in the healthcare industry, have adopted an organizational compliance program, and have appointed a “231” compliance committee. These steps have increased focus on the prevention of corruption, among other crimes, and have prompted companies operating in Italy to adopt increasingly sophisticated anti-corruption measures.
Soft laws are an essential component of anti-corruption laws. Under Italian law, apart from the actual laws and orders, there are guidelines and regulatory memoranda drafted by important stakeholders, which are integrated into the compliance framework and recognized by the Italian courts as guidelines in enforcement actions.
Several organizations have provided guidelines on the circumstances where Decree 231 will impose criminal liability. Confindustria (the general employers’ association) and Assobiomedica (the med tech manufacturers’ association) both have issued such guidelines. Additionally, codes of conduct for companies interacting with healthcare professionals have been issued by Farmindustria (the Italian pharma association) and Assobiomedica. Importantly, in the healthcare space, physicians also have their own professional code of conduct, which requires they act with professional integrity.
Such soft codes identify a number of best practices that are recognized by the industry as business and ethical standards for interactions with public officials, especially for healthcare professionals and healthcare organizations.
Lastly, a bill purporting to introduce an equivalent of the American Sunshine Act in Italy has twice been presented in Parliament. To date, the statute has yet to see the light of day, metaphorically.
During the COVID-19 pandemic, which flared up in Northern Italy as early as March 2020, the public healthcare system has been under tremendous pressure to perform. With hundreds of people dying each day, it was of paramount importance to urgently provide healthcare services to COVID-19 patients. All expectations were aimed at ensuring that the healthcare system efficiently worked without delays and obstacles to detect and prevent fraud, waste, and abuse under normal conditions.
The goals of efficiency and celerity have inspired Italian authorities throughout the crisis. This approach has been clearly exemplified by the ANAC guidelines issued during such months, primarily aimed at facilitating and accelerating procedures for the execution of public contracts. In its guidelines (e.g., “Vademecum per velocizzare e semplificare gli appalti pubblici,” published in a communication from the ANAC president on April 22, 2020), ANAC provided guidance to public hospitals on the fastest procedures available to purchase goods, thus addressing the urgent need to speed up public procurement processes. On July 2, 2020, the president of ANAC submitted to the Italian Parliament its annual report, focused on the Italian situation during the first half of 2020, in which he highlighted how authorities operated with the intent to simplify public procurement.
It has been argued that during the pandemic, and in crisis periods in general, the purposes of celerity and efficiency could lead to a lessening of preventive controls, which inevitably slows down processes. This may lead to a decreased expectation of impartiality, as goods and services that are deemed necessary (such as, for example, vaccines, sanitation supplies, personal protective equipment) must be guaranteed “no matter what.” Can this trend, coupled with increased spending in healthcare by the government, also lead to an increase in corruption?
The answer appears to be positive. The Organisation for Economic Co-operation and Development (OECD), which issued Policy Measures to Avoid Corruption and Bribery in the COVID-19 Response and Recovery, certainly agrees. COVID-19 “has brought about unprecedented challenges of human suffering, uncertainty and major economic disruption on a global scale” that can create a breeding ground for corruption and bribery. For this reason, in order to prevent corruption risks, the OECD recommends that “corruption prevention measures,” as well as “anti-corruption, integrity, procurement and competition standards,” continue to apply; that the use of intermediaries is avoided; and that whistleblowers’ protection mechanisms are strengthened.
Lastly, in Italy and in Europe the risks of corruption are bound to increase, in light of the envisaged injection of capital due to the national and European recovery funds, through the so-called Recovery Plan (which is also expected to benefit the healthcare system). As underlined by the OECD, identifying and addressing corruption risks will be crucial to protect trust in public institutions and business, and to galvanize public confidence in the government’s ability to mobilize an effective crisis response. “It is imperative that fundamental safeguards of the rule of law and public integrity are not weakened or disregarded in both the immediate response as well as the longer-term recovery from COVID-19.”
The American and Italian systems for preventing healthcare fraud, waste, and abuse encompass a broad scope of laws and regulations affecting global healthcare providers. The reality is that competent counsel familiar with both countries’ compliance frameworks are best equipped to advise their multinational clients through the complex and ever-evolving patchwork of statutory and regulatory requirements. While the delivery of quality healthcare remains a shared goal, eliminating waste through fraud and abuse in the delivery of such critical services remains an equally daunting but achievable task, all the more so in light of the historic financial commitments governments have recently made to fighting the COVID-19 pandemic.
By Pamela Coyle Brecht, Esq.; Paola Sangiovanni; and Marc Stephen Raspanti, Esq.
Pamela Coyle Brecht (firstname.lastname@example.org) serves as Pietragallo Gordon Alfano Bosick & Raspanti LLP’s Practice Chair for the firm’s global Qui Tam/False Claims Act Practice Group in Philadelphia, PA. Paola Sangiovanni (email@example.com) is a life sciences lawyer and partner in the law firm of Gitti and Partners, which is located in Milan, Italy. Her clients include med tech, pharma, and healthcare providers. Marc Stephen Raspanti (firstname.lastname@example.org) is a name partner of Pietragallo Gordon Alfano Bosick & Raspanti LLP, located in Philadelphia, PA. He is the founder of the firm’s White Collar Criminal Defense Practice Group as well as the firm’s Qui Tam/False Claims Act Practice Group.
Copyright 2022 Compliance Today, a publication of the Health Care Compliance Association (HCCA)