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Brush up on the new corporate fraud law

Executive Briefings Digest, January 6, 2003

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In response to the spate of corporate frauds that rocked the economy over the past year, President Bush in July signed into law the Sarbanes-Oxley Act (SOA), (H.R. 3763). While aimed at tightening regulatory oversight of publicly traded corporations and punishing wrongdoers, the SOA has substantial implications for the health care sector-an industry that is already a top priority for the Department of Justice.

Your management team should consider the following lessons learned from the corporate scandals that prompted the enactment of the SOA, says Ronald H. Levine, Esq., a partner in the Philadelphia-based law firm of Post & Schell:

• Install a rigorous process to monitor conflicts of interest Implement a thorough system to ensure adequate disclosure to the board of directors and to regulators
• Develop a comprehensive "deal approval" process to ensure that contracts with vendors are reviewed appropriately
• The board of directors must ensure that these three processes are in place and are adequate to the task
• The board must also demand sufficient detail to make informed decisions and evaluate risk

Source: Briefings on Long-Term Care Regulations,
http://www.hcmarketplace.com/Prod.cfm?id=62&S=EEBD

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