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The Temptation of Business as Usual

The OIG rejected grandfathering in existing medical businesses. Its position is clear: physicians who show good faith by getting out of businesses that violate the law might not be prosecuted. This creates a conflict for attorneys advising physicians about health care deals. Following the OIG's regulations would force an attorney to advise clients to get out of prohibited deals--inconvenient and expensive for the affected physicians. The conflict arises if the attorney also structured or advised on the deals that now must be undone.

The safe harbor regulations make it clear that they do not prohibit any previously allowed behavior. Anything that is prohibited by the regulations has been illegal since 1977. Physicians who entered into these deals after a full disclosure of the potential legal risks and ambiguities inherent in them have no reason to criticize their counsel. Physicians who were not informed of the tenuous footing of the deals may rightfully question their initial legal advice. This may make some attorneys reticent to stress the importance of modifying these deals. Until the OIG starts prosecuting physicians at a higher rate, it is tempting to ignore the regulations. It may be that the OIG will never prosecute any significant number of physicians, effectively nullifying the law.


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