Board oversight: Fiduciary duty of care and individual liability

by Gabriel L. Imperato, Joseph Picone

May, 2016

Directors of healthcare organizations have important responsibilities relating to corporate compliance requirements that are unique to the healthcare industry. The risks of non-compliance have grown dramatically over the last decade for healthcare organizations as the government has dedicated substantial resources to respond to healthcare fraud and abuse. Private whistleblowers, in addition to government investigators and auditors, also play a significant and unpredictable role in identifying improper practices and establishing liability for individuals and organizations.

The applicable duty-of-care standard requires that a director exercise his/her oversight functions to institute a proper compliance program to root out and prevent the occurrence of unlawful activities within the organization. When a director of any organization is made aware of allegations of unlawful activities and compliance violations, part of the remedy is an effective compliance program. Unfortunately, event the most expansive and effective compliance program may not prevent the occurrence of all unlawful or non-compliant activity or an external enforcement action or whistleblower case.

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