Foreign Corrupt Practices Act enforcement by the DOJ/SEC generates much interest.
However, just as interesting (perhaps more interesting because there is actual judicial scrutiny) is civil litigation which touches upon FCPA issues. (This dynamic was discussed in FCPA Ripples).
A most interesting civil case to pass along as the Government of Bermuda recently filed this civil complaint against Lahey Clinic Inc., a non-profit academic medical center incorporated in Massachusetts, alleging various bribery related offenses.
In summary fashion, the complaint alleges:
This case arises from Defendants’ creation and operation of one or more corrupt enterprises designed to exploit and unlawfully capitalize on the influence of Dr. Ewart Brown (“Brown”), the former Premier of Bermuda, longstanding Member of Bermuda’s Parliament and owner of two private health clinics in Bermuda. Over the course of nearly two decades, Lahey conspired with Brown to design and perpetuate an unlawful enterprise fueled by Lahey’s payment of bribes to Brown disguised as “consulting fees,” in return for which Brown facilitated and ensured that Lahey: received preferential treatment when bidding on healthcare contracts issued by the Bermudian Government; obtained privileged access to Bermudian patients that it could service at its facilities in Massachusetts and in Bermuda; and made millions of dollars reading and interpreting medically unnecessary MRI and CT scans performed at Brown’s clinics. The enterprise was wildly successful and resulted in the enrichment of both Lahey and Brown at the expense of the Bermudian Government and people.
For his part in the scheme, Brown, while serving as Premier and in other high-ranking positions of public trust within the Bermudian Government and thereafter, ensured that Lahey became the overseas healthcare provider of choice for Bermudians, directed lucrative healthcare contracts to Lahey, secured a prestigious board appointment for Lahey at Bermuda’s state-run hospital, actively exerted his influence to lobby for and obtain increased reimbursements for diagnostic tests reviewed by Lahey employees in Massachusetts, and induced physicians to refer patients to his clinics for diagnostic testing by paying them kickbacks even where such testing was not medically necessary.
Together, Lahey and Brown concocted a scheme built upon bribery and greed and carried out with complete disregard for Brown’s position of public trust or for the physiological and psychological impact on patients who were subjected to excessive, medically unnecessary, and frankly dangerous scans so that Brown and Lahey could obtain greater reimbursements, which they split. Bermudians soon ranked among the most scanned patients in the world, receiving nearly twice as many scans as nations with comparable populations. Brown benefitted handsomely from the scheme, collecting millions of dollars in fees he split with Lahey, which enabled him and his wife, Wanda Henton-Brown, to purchase and maintain real property in the United States, including a home worth in excess of $3 million on Martha’s Vineyard and apartments in New York, and properties in Turks and Caicos. Lahey’s revenues also grew substantially throughout its relationship with Brown. For example, between 2006 and 2016, Bermudian public healthcare insurers paid Lahey over $40 million for services that Lahey provided in Massachusetts, and Brown paid Lahey hundreds of thousands, if not millions, of dollars in fees to interpret MRI and CT scans performed at his clinics.
Bermuda brings this action under the Racketeer Influenced and Corrupt Organizations Act (“RICO”), 18 U.S.C. §1961 et seq., to recover for injuries it has suffered to its business, property, and right to honest services as a direct and proximate result of Defendants’ unlawful acts, including violations of wire and mail fraud statutes (18 U.S.C. §§ 1341, 1343, 1346), the Foreign Corrupt Practices Act, 15 U.S.C. §§ 78dd-1, et seq., the Travel Act, 18 U.S. Code § 1952, the Money Laundering Control Act, 18 U.S.C. § 1956, and Massachusetts General Laws c.271 § 39. Bermuda also brings this action to recover for injuries suffered as a result of Defendants’ unfair and deceptive business practices under Massachusetts General Laws c. 93A, § 11, and under the common law theories of conspiracy, fraud, and unjust enrichment. Defendants’ unlawful activity and practices have resulted in Bermuda’s payment of millions of dollars for medically unnecessary services and for contracts and other services tainted by bribes.”
Recently, Lahey Clinic filed this motion to dismiss. In summary fashion it states:
“Lahey is a non-profit academic medical center incorporated in Massachusetts that has served the citizens of this state by supplying high quality care since its founding by Frank Lahey, Like many large hospitals, Lahey also treats international patients and has developed an international reputation by sending Lahey doctors to other countries to provide medical services there. One of these countries is Bermuda, where Lahey doctors have traveled for at least 20 years, supplying much needed medical care. This lawsuit concerns Lahey’s relationship with Dr. Ewart Brown, a medical doctor in Bermuda, who owns and operates two clinics there. In addition to, and while maintaining his medical practice and clinics, Dr. Brown has for many years been active in Bermuda politics. He was elected to the Bermuda House of Assembly in 1993 and held different elected positions from then through 2010, the last four years of which he served as Premier of Bermuda.
Dr. Brown’s political party, the Progressive Labor Party, is currently not the majority political party in Bermuda. The Attorney General of Bermuda, a member of the current majority party, filed this lawsuit purportedly on behalf of the Government of Bermuda. The Complaint alleges RICO violations as well as common law fraud. The Attorney General’s action is baseless and appears more designed to smear Dr. Brown’s name, and Lahey as the vehicle for doing so, rather than allege sufficient facts on which relief can be granted. As discussed below, the Complaint should be dismissed under Rules 12(b)(6) and 9(b).”
FCPA Training Doesn't Need To Be Boring
Legal information presented in dozens of slides is so old-school. FCPA training doesn't need to be this way. Make FCPA training memorable and effective by engaging learners through gaming and other active learning techniques.