Third Party Valuation No Silver Bullet in Health Care Deals

Third Party Valuation No Silver Bullet in Health Care Deals

Dec 04, 2013

Article

Brownstein Client Alert, December 4, 2013

Drakeford v. Tuomey and U.S. vs. Bradford Regional Medical Center

With the Affordable Care Act and market forces driving consolidation and creative transactions across the health care industry, health care professionals and deal makers have come to rely heavily on third party valuation reports to support compliance with the Stark Law, the federal Anti-Kickback Statute, the False Claims Act (“FCA”) and other health care regulatory requirements. However, even a strong valuation report does not shift the burden of proof to regulators; at best serving only as one persuasive fact. A valuation report that fails to take into account the stringent requirements of the Stark Law, including appropriate use of valuation methodologies, offers even less comfort, as illustrated by Drakeford v. Tuomey, CA No. 3:05-2858-MBS (US District Court, SC, 9/13/13).

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