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Merger and Acquisition Self-Disclosure Safe Harbor Announced

On Behalf of | Nov 15, 2023 | Firm News

Mathew J. Levy, Esq. & Stephen J. Cucolo, Esq.

By Mathew J. Levy, Esq. & Stephen J. Cucolo, Esq.

Buying a medical practice or healthcare related business? An acquisition may be a great way to grow one’s business and increase capacity to reach new clientele. However, when purchasing a business, a buyer is also purchasing some level of risk. For example, what happens if the company being acquired, unbeknownst to the buyer, had been engaged in illegal activity prior to your engagement? This is especially likely in the field of healthcare, which is highly regulated and in which possible violations of law like the Anti-Kickback Statute can carry both civil and criminal penalties.

To encourage the discovery and disclosure of criminal activity by purchasers, the Department of Justice has announced new safe harbors for the voluntary disclosure of criminal misconduct discovered during mergers and acquisitions. On October 4, 2023, Deputy Attorney General Lisa O. Monaco announced a new opportunity to protect purchasers who discover criminal activity in the course of pursuing an acquisition. Now, companies engaged in a merger or acquisition will be rewarded with a presumption against criminal prosecution if any misconduct is discovered as the result of thorough due diligence and is promptly reported to prosecutors.

The safe harbor requires that criminal misconduct be reported at least six months before a deal closes. In addition to reporting requirements, the parties must take remedial action, which may include remediation of illicit conduct, restitution, and disgorgement of illegally gained funds. These remedial actions must be completed within one year of closing. Therefore, the safe harbor’s time requirements mean that any potential merger must include an investigation into potential criminal misconduct early in the process. If any misconduct is found, voluntary self-disclosure of misconduct can save the disclosing party from expensive fines and penalties that they would otherwise be subject to, while failure to conduct a complete investigation into the actions of the acquisition target could result in successor liability for the purchasing party.

Mergers and acquisitions can be a technical process, requiring a deep understanding of many different regulatory regimes. Our experienced mergers and acquisitions team can assist in avoiding regulatory pitfalls and protecting from criminal and civil liability.

About the Authors: Mathew J. Levy is a Shareholder/Director of the Firm and co-chairs the Firm’s corporate transaction and healthcare regulatory practice. Mr. Levy has extensive experience in defending healthcare professionals in actions brought by State licensing authorities and Federal agencies. Mr. Levy has successfully defended numerous healthcare providers in actions involving the US Attorney’s Office investigations, Medicare Fraud Waste and Abuse investigations, Medicaid Fraud Control Unit investigations, OPMC, OPD, Medicare, Medicaid as well as commercial insurance audits. Mr. Levy has successfully structured and negotiated joint venture agreements, private equity transactions, venture capital transactions, stock purchase agreements, asset sale agreements, shareholders agreements, partnership agreements, employment contracts, managed care agreements and commercial leases. Mathew can be reached at 516-926-3320 or [email protected]

Stephen J. Cucolo is an associate at Weiss Zarett Brofman Sonnenklar & Levy, P.C. with experience representing healthcare providers in connection with transactional and regulatory matters including the formation and structure of business entities and the negotiation and drafting of contracts. Stephen can be reached at 516-627-7000 or [email protected]

Weiss Zarett Brofman Sonnenklar & Levy, P.C. is a Long Island law firm providing a wide array of legal services to the members of the health care industry, including corporate and transactional matters, civil and administrative litigation, healthcare regulatory issues, bankruptcy and creditors’ rights, and commercial real estate transactions.

This article contains general advice that is not designed to apply to the reader’s specific situation and does not constitute the formation of an attorney-client relationship.


By Mathew J. Levy, Esq.
[email protected]


Stephen Cucolo, Esq.
[email protected]