Henry Schein 2012 Annual Report Download - page 33
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The applicable requirements have been subject to varying interpretations, as well as heightened enforcement
activity, over the past few years. Also, significant enforcement activity has been the result of actions brought by
“relators,” who file complaints in the name of the United States (and if applicable, particular states) under federal
and state false claims laws, and under the federal False Claims Act can be entitled to receive up to 30% of total
recoveries. Violations of the federal False Claims Act can result in treble damages, and each false claim submitted
can be subject to a penalty of up to $11,000 per claim. The Health Care Reform Law significantly strengthened the
federal False Claims Act and federal anti-kickback law provisions, which could lead to the possibility of increased
whistleblower or relator suits, and among other things made clear that a federal anti-kickback law violation can be a
basis for federal False Claims Act liability.
We also are subject to certain laws and regulations concerning the conduct of our foreign operations, including
the U.S. Foreign Corrupt Practices Act and anti-bribery laws and laws pertaining to the accuracy of our internal
books and records, which have been the focus of increasing enforcement activity in recent years.
Failure to comply with health care fraud laws and regulations could result in significant civil and criminal
penalties and costs, including the loss of licenses and the ability to participate in federal and state health care
programs, and could have a material adverse impact on our business. Also, these laws may be interpreted or
applied by a prosecutorial, regulatory or judicial authority in a manner that could require us to make changes in our
operations or incur substantial defense and settlement expenses. Even unsuccessful challenges by regulatory
authorities or private relators could result in reputational harm and the incurring of substantial costs. In addition,
many of these laws are vague or indefinite and have not been interpreted by the courts, and have been subject to
frequent modification and varied interpretation by prosecutorial, regulatory authorities, increasing compliance risks.
While we believe that we are substantially compliant with the foregoing laws and regulations promulgated
thereunder, and have adequate compliance programs and controls in place to ensure substantial compliance, we
cannot predict whether changes in applicable law, or interpretation of laws, or changes in our services or marketing
practices in response, could adversely affect our business.
If we fail to comply with laws and regulations relating to the confidentiality of sensitive personal
information or standards in electronic health data transmissions, we could be required to make
significant changes to our products, or incur penalties or other liabilities.
State, federal and foreign laws, such as the federal Health Insurance Portability and Accountability Act of 1996,
regulate the confidentiality of sensitive personal information and the circumstances under which such information
may be released. These measures may govern the disclosure and use of personal and patient medical record
information and may require users of such information to implement specified security measures, and to notify
individuals in the event of privacy and security breaches. Evolving laws and regulations in this area could restrict
the ability of our customers to obtain, use or disseminate patient information, or could require us to incur significant
additional costs to re-design our products in a timely manner to reflect these legal requirements, either of which
could have an adverse impact on our results of operations. Other health information standards, such as regulations
under HIPAA, establish standards regarding electronic health data transmissions and transaction code set rules for
specified electronic transactions, for example transactions involving claims submissions to third party payers.
These also continue to evolve and are often unclear and difficult to apply. In addition, under the federal Health
Information Technology for Economic and Clinical Health Act (“HITECH Act”), which was passed in 2009, some
of our businesses that were previously only indirectly subject to federal HIPAA privacy and security rules became
directly subject to such rules because the businesses serve as “business associates” to our customers. On January
17, 2013, the Office for Civil Rights of the Department of Health and Human Services released a final rule
implementing the HITECH Act and making certain other changes to HIPAA privacy and security requirements.
Compliance with the rule is required by September 23, 2013, and will increase the requirements applicable to some
of our businesses. Failure to maintain the confidentiality of sensitive personal information in accordance with the
applicable regulatory requirements, or to abide by electronic health data transmission standards, could expose us to
breach of contract claims, fines and penalties, costs for remediation and harm to our reputation.
Our global operations are subject to inherent risks that could adversely affect our operating results.
Global operations are subject to risks that may materially adversely affect our business, results of operations
and financial condition. The risks that our global operations are subject to include, among other things:
• difficulties and costs relating to staffing and managing foreign operations;