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Zall outlined the dangers facing an acquirer that turns a blind eye when it comes to due diligence in regards to a target's compliance with federal laws and regulations. "In any M&A transaction, knowing if the target is complying with regulations is critical," he said. "The penalty for failing to look at them is very severe. Not only are there financial penalties, but criminal as well. The federal government takes this very seriously because they spend so much on healthcare. ... Government spending on healthcare is almost a trillion per year." On the transaction review front, Schaeffer added that "recent cases have raised a perfect storm of reviews that include not only the federal government, but the state insurance agencies and state attorney generals. Healthcare is already highly politicized, and it's no secret that the AMA [American Medical Association] and like groups are highly organized and can bring the entire force of their organization to bear against a transaction." While his fellow panelists had dire warnings, Wilson Sonsini's Pak said he was "impressed with how favorable the regulatory outlook is for healthcare deals due to a number of court losses by the FTC in recent years." Pak thinks that "the courts have dealt favorable cards to merging parties, and dealmakers should keep that in mind," which can help move a deal forward in three different ways.
Luckily, the FTC's Wales was on hand to respond. "No doubt we have faced some challenges recently," Wales said. "We do have a pretty dismal merger enforcement record recently." Nevertheless, Wales said that "the losses haven't softened the agency's resolve and willingness to litigate cases or to demand remedies." "Oftentimes it's really only the toughest cases that get to litigation," he continued, "and in those cases both parties think they have a very strong argument." - George White See more stories from The Deal's Healthcare Dealmaking SymposiumCategories Deal Video
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At The Deal's Healthcare Dealmaking Symposium, members of a panel entitled "Regulatory Landscape Facing the Healthcare Industry" analyzed the various viewpoints within an industry that persistently faces issues of antitrust violation and enforcement. Moderated by The Deal's senior writer Cecile Kohrs Lindell, the panel featured Chul Pak, a partner at Wilson Sonsini Goodrich & Rosati; Fiona Schaeffer, a partner at Weil, Gotshal & Manges LLP; David P. Wales Jr., the deputy director of the Bureau of Competition at the Federal Trade Commission; and Richard J. Zall, a partner at Proskauer Rose LLP.
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