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White House Pauses Enforcement of the Foreign Corrupt Practices Act
On February 10, 2025, the White House issued an Executive Order pausing enforcement of the Foreign Corrupt Practices Act (the FCPA). The FCPA, enacted in 1977, prohibits the payment of bribes to foreign government officials to obtain or retain business. In pausing the enforcement of the FCPA, the Executive Order states that the FCPA has “stretched beyond proper bounds and [has been] abused in a manner that harms the interests of the United States.” Specifically, the Executive Order explains that FCPA enforcement against U.S. citizens and businesses “for routine business practices in other nations” has been overexpansive and unpredictable, wasting “limited prosecutorial resources.”
The Executive Order establishes a 180-day period for the Attorney General to review the FCPA, with the potential to extend the period for an additional 180 days, if appropriate. During this period, no new FCPA investigations or enforcement actions will be initiated, and existing FCPA investigations or enforcement actions will be reviewed. Updated guidelines and policies will also be issued, which will govern new or continued FCPA investigations and enforcement actions.
After revised guidelines or policies are issued, the Attorney General will determine whether additional actions, “including remedial measures with respect to inappropriate past FCPA investigations and enforcement actions” are necessary.
The Executive Order can be found here.
Reporter, Lindsay Greenblatt, Los Angeles, +1 213 218 4032, lgreenblatt@kslaw.com.
FTC Updates HSR Notification Forms
On February 10, 2025, new forms approved by the Federal Trade Commission (FTC) for use by parties to submit the details of certain transactions pursuant to the Hart-Scott-Rodino (HSR) Act to the FTC and Department of Justice (DOJ) (together, the Agencies) became effective. The FTC also posted new instructions for the use of the forms, which are now specific to the Acquiring Person and Acquired Person. The forms require more information than the previously used form, particularly for transactions involving overlapping products or services between the parties. Parties to a transaction should plan accordingly.
Prior to being able to consummate a deal, the HSR Act requires parties to certain transactions to submit relevant detail to the Agencies so that they may review the competitive aspects of those transactions. The Agencies’ Annual Report on the HSR Act for fiscal year 2023 reflected that “protecting competition in healthcare markets” was a major focus of the FTC, such that a majority of the Agencies’ pre-merger enforcement actions involved healthcare transactions even though healthcare transactions represented only 3.6% of total reported transactions.
The FTC recently approved new rules for notifying the Agencies under the Act (the HSR Rules) to expand disclosure requirements and the scope of agency review. For more information on the significant changes to the HSR Rules, see our previous Client Alert.
Historically, for most transactions, both parties to a given deal have submitted the information required by the HSR Act using a common form that has not changed for decades. Effective February 10, 2025, however, there are specific forms for each of the Acquiring Person and the Acquired Person (the HSR Forms). The new Acquiring Person form is here and the new Acquired Person form is here. The instructions for the Acquiring Person Form is here and the instructions for the Acquired Person form is here.
The new HSR Forms reflect additional information requirements made effective by the HSR Rules.
Parties to transactions should be aware of the following key updates to the HSR Forms:
More Extensive Reporting Requirements, Particularly for Parties with Existing Business Overlaps or Supply Relationships
The new HSR Forms require the parties to submit the following categories of information:
- Transaction Agreements - A definitive agreement, or at least dated document, such as a term sheet or draft agreement, that provides additional details about the scope of the transaction, including the identity of the parties; the structure of the transaction; the scope of what is being acquired; calculation of the purchase price; an estimated closing timeline; employee retention policies; and transaction expenses or other material terms.
- Transaction Rationale – A brief description of the strategic rationale(s) for the transaction.
- Transaction Related Documents – Documents that discuss the proposed acquisition with respect to market share, competition, competitors, markets, etc. that were provided to the supervisory deal team lead or any officers or directors (the requirement to provide documents given to the supervisory deal lead is new).
- Overlap Description – A list of products or services offered by the Acquiring Person and the Acquired Person that overlap, along with information related to sales and customers.
- Supply Relationships Description – A list of products, services, assets or services purchased or sold by the Acquiring Person to the Target or a competitor of the Target.
For some categories of information, only the Acquiring Person form requires the information.
Certain Reporting Requirements Are Not Applicable to “Select 801.30 transactions”
The new HSR forms reflect that certain categories of information are not required on either the Acquiring Person and Acquired Person Form if the transaction is a “select 801.30 transaction,” which is a new category of transactions (1) notified under Rule 801.30, (2) that do not result in the acquisition of control as defined in the HSR Rules, (3) where there is no agreement, including any contemplated agreement, between any entity within the Acquiring Person and the Acquired Person, and (4) where the Acquired Person does not have the ability to serve on or control the board of the Acquired Person, or its management company or general partner.
The categories of information that are not required for “select 801.30 transactions” include:
- Transaction Rationale;
- Transaction Diagram;
- Plans and Reports;
- Transaction Agreements;
- Overlap and Supply Relationships Descriptions; and
- Defense and Intelligence Contracts.
More Detailed Business Disclosures
In addition to information on existing competition, products in development, and supply relationships summarized above, HSR filings will now also require more detailed disclosures about holdings in affiliated entities and funds outside of the traditional ownership chain. These enhanced disclosure requirements may: (i) increase scrutiny on conglomerate mergers and serial or “roll up” acquisitions (e.g., involving private equity firms), (ii) complicate deals involving nascent competition or potential competition theories and (iii) could expose vertical relationships previously overlooked in horizontal merger reviews.
Given the significant changes and additional information demanded by the new HSR form, it is important that companies engaged in reportable transactions consult with antitrust counsel early in the process.
Reporter, Christopher C. Jew, Los Angeles, + 1 213 443 4336, cjew@kslaw.com.
OIG Modifies Favorable Advisory Opinion Regarding a Clinical Trial Medicare Cost-Sharing Arrangement – On February 12, 2025, OIG posted a modification to a favorable advisory opinion that was previously issued to requestors on September 29, 2021. OIG found that although the modified clinical study cost-sharing subsidy would involve prohibited remuneration under the federal Anti-Kickback Statute (AKS), OIG would not impose sanctions, and the Modified Arrangement would not violate the civil monetary penalty provision regarding beneficiary inducements (CMP).
The requestor initially proposed subsidizing certain portions of a Medicare beneficiary’s obligations to pay for an Alzheimer’s disease clinical trial. The clinical trial involved researching the effectiveness of using PET scans to detect beta amyloid (Aβ) plaques in patients who may have Alzheimer’s disease. OIG issued a favorable opinion, and the requestor implemented the subsidies. After implementing the proposed arrangement, CMS issued a memorandum that shifted coverage decisions for the clinical trial PET Aβ scans to the Medicare Administrative Contractors (MACs). MAC decisions to provide coverage for the PET Aβ scans results in Medicare a cost-sharing obligation that the requestor wanted to continue subsidizing. Accordingly, the requestor sought a modification to the initial favorable advisory opinion to continue to offer cost-sharing subsidies to study participants in the same manner as before the CMS memorandum was issued (the Modified Arrangement).
OIG noted that the only change to the arrangement was the change to Medicare coverage policy, and the purpose of the subsidies was to diversify participants in the study. Accordingly, OIG concluded that even though the Modified Arrangement would implicate the AKS and CMP, the Modified Arrangement posed a low risk of fraud and abuse, and the OIG would not impose sanctions.
A copy of the modified OIG Advisory Opinion is available here.
Reporter, Taylor Whitten, Sacramento, +1 916 321 4815, twhitten@kslaw.com.
OIG Audit Finds that Medicare Improperly Paid Suppliers for Catheters – In February 2025, OIG published its findings related to a nationwide audit of Medicare payments to suppliers of intermittent urinary catheters and kits (Catheters). OIG conducted the audit to confirm whether Medicare paid Catheter suppliers in accordance with Medicare requirements. The results of the audit suggest that Medicare did not pay some Catheter suppliers in accordance with Medicare requirements, and OIG estimated that $35.1 million of the $303.3 million paid by Medicare to Catheter suppliers during the audit period was improperly paid.
The OIG Audit
In response to high improper payments for urological supplies, which include Catheters, identified from 2014 through 2021, OIG conducted its audit of payments made to Catheter suppliers to determine whether such payments were made in accordance with Medicare requirements. OIG performed its audit on payments made from July 2021 through June 2022 (the Audit Period). The audit included a review of $303.3 million in Medicare Part B payments made during the Audit Period to 2,659 suppliers for 575,229 claim lines for Catheters provided to 110,847 enrollees. To conduct its review, OIG reviewed the documentation for a stratified random sample of 105 claim lines. A claim line included a supply of Catheters provided to a single enrollee on a single date of service. If the payments made for a particular claim line did not meet Medicare requirements, then the payments were considered to be improperly paid.
Findings
OIG’s audit revealed that of the 105 reviewed claim lines, fifteen claim line payments did not meet Medicare requirements. Of those fifteen improper payments, seven of the payments were improper because the suppliers failed to meet Medicare requirements for catheter refills, proof of delivery, or a standard written order. Additionally, ten of the reviewed claim lines were improper because the medical records did not support the patient’s eligibility for the particular Catheter. Based on these results, OIG estimates that, for the audit period, approximately $35.1 million of the $303.3 million paid by Medicare for Catheters was improperly paid. OIG states that the improper payments are primarily a result of suppliers’ lack of understanding regarding Medicare coverage and documentation requirements.
OIG’s Recommendations
OIG recommends that CMS instruct Medicare contractors to recover the identified overpayments made to Catheter suppliers. OIG also recommends that CMS perform additional medical reviews of Catheter claims. Further, OIG suggests that CMS educate Catheter suppliers on best practices for documenting eligibility for Catheters and documenting refills of Catheters.
The full OIG audit report is available here.
Reporter, Sophie Mouros, Houston, +713 276 7370, smouros@kslaw.com.