Yingke Shanghai Law Firm
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Formulation of the questionIn the process of operation, medical and health enterprises will encounter various legal risks, among which the risk of employee fraud cannot be ignored. At present, the fraud methods of employees are relatively hidden, and some employees have strong anti-investigation capabilities, resulting in a low proportion of cases that are finally discovered and investigated, but the direct economic losses caused by employee fraud to enterprises and the potential damage to the reputation of enterprises are relatively large, which should attract the attention of medical and health enterprises.
Since May 2023, China's pharmaceutical industry has started the strongest anti-corruption action in history, and 14 departments, including the National Health Commission, the Ministry of Education, the Ministry of Industry and Information Technology, and the Ministry of Public Security, jointly issued the "Notice on Printing and Distributing the Key Points of Work to Correct Unhealthy Practices in the Field of Pharmaceutical Purchase and Sales and Medical Services in 2023" (Guo Wei Yi Ji Han [2023] No. 75), which requires strengthening the investigation and handling of unhealthy practices in the field of pharmaceutical purchase and sales and medical services, and improving the work style governance system. Focus on rectifying the problem of outstanding corruption in the field of medicine.
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Types and legal analysis of employee fraud in medical and health enterprisesIn practice, employee fraud in medical and health enterprises is mainly divided into the following four types.
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Commercial briberyType 1: Commercial bribery. Commercial bribery fraud is a more common and frequent type of fraud in medical and health enterprises, which can be divided into first-class fraud and bribery fraud. ** category mainly refers to the situation where employees take advantage of their positions to accept or solicit bribes from others to seek benefits for others. Such ** sometimes does not harm the interests of medical and health enterprises, and is essentially a destruction of the normal market competition order. Bribery mainly refers to the act of giving money or economic benefits to a counterparty (in practice, mostly hospitals, etc.) in order to seek improper benefits by employees on their own initiative or at the direction of the company. This kind of bribery is mostly beneficial to the business performance of the pharmaceutical company where the employee works, and if the employee pays bribes to the other party, even if the compliance system of the company is perfect, there is also a corresponding criminal legal risk.
Commercial bribery fraud mainly involves three criminal offenses:
The first is the crime of non-state functionaries. Article 163 of the Criminal Law stipulates that a staff member of a company, enterprise or other unit who takes advantage of his position to solicit property from others or illegally accept property from others to seek benefits for others, and the amount is relatively large, shall constitute this crime. At the same time, the staff members of the above-mentioned units, in the course of economic dealings, take advantage of their positions to violate state regulations and accept kickbacks and fees in various names, which belong to individuals, also constitute this crime. The standard for filing and prosecuting this crime is more than 30,000 yuan (the following currencies are RMB), and the maximum sentence is life imprisonment.
The second is the crime of offering bribes to non-state functionaries. Article 164 of the Criminal Law stipulates that this crime shall be constituted if a person gives property to a staff member of a company, enterprise or other unit in order to obtain improper benefits, and the amount is relatively large. The standard for filing and prosecuting this crime is that the amount of bribes offered by individuals is more than 30,000 yuan, and the amount of bribes offered by units is more than 200,000 yuan, and the maximum sentence is 10 years imprisonment.
The third is the crime of offering bribes. Article 389 of the Penal Code stipulates that a person who gives property to a State functionary for the purpose of obtaining improper benefits shall be guilty of this crime. At the same time, in the course of economic exchanges, those who violate state regulations by giving property to state functionaries in relatively large amounts, or who violate state regulations by giving kickbacks or fees in various names to state functionaries, shall be punished as bribery. The standard for filing and prosecuting this crime is 30,000 yuan or more, and if there are special circumstances, the amount of bribes offered is more than 10,000 yuan, and criminal responsibility will also be investigated, and the maximum sentence is life imprisonment.
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Misappropriation and misappropriationType 2: Misappropriation and misappropriation. The embezzlement and misappropriation category also appears from time to time in medical and health enterprises, which are mainly divided into the category of embezzlement and misappropriation of funds, both of which are fraudulent employees taking advantage of their positions to embezzle or misappropriate the property of the unit, the main difference is that the former is the subjective illegal possession of the fraudulent employees for the purpose, while the latter does not require the fraudulent employees to subjectively take illegal possession for the purpose.
The criminal offenses involved in embezzlement and misappropriation mainly include the crime of embezzlement in public office and the crime of misappropriation of funds.
Embezzlement. Article 271 of the Criminal Law stipulates that a staff member of a company, enterprise or other unit who takes advantage of his position to illegally take possession of the property of his or her unit and the amount is relatively large, shall constitute this crime. The standard for filing and prosecuting this crime is 30,000 yuan or more, and the maximum sentence is life imprisonment.
Misappropriation of funds. Article 272 of the Criminal Law stipulates that a staff member of a company, enterprise or other unit who takes advantage of his position to embezzle the funds of his unit for personal use or lend them to others, and the amount is relatively large and has not been repaid for more than three months, or if the amount is relatively large but has not exceeded three months, and he or she engages in profit-making activities or illegal activities, shall constitute this crime. The standard for filing and prosecuting this crime is more than 50,000 yuan, but if the misappropriated funds are for illegal activities, the standard for filing and prosecuting is more than 30,000 yuan, and the maximum sentence is more than seven years imprisonment.
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False invoicingType 3: False invoicing. The author searched in the Wolters Kluwer advance database with the keyword "medicine fictitious", and a total of 2,589 judgment documents were retrieved, and the more prominent provinces involved Shandong Province, Jiangsu Province, Anhui Province, Henan Province, Guangdong Province, etc. At present, a small number of employees of pharmaceutical companies reimburse and obtain funds in the name of sales expenses such as promotion service fees, consulting fees, sponsorship fees, and conference fees, which are then used to bribe relevant parties, and are also illegally embezzled and misappropriated. The above-mentioned behaviors lead to inconsistencies in ticket flow, logistics and capital flow, which is suspected of fraudulent behavior such as false invoicing.
The criminal offenses involved in false invoicing mainly include the crime of false invoicing and the crime of false invoicing.
False sins. Article 205 of the Criminal Law stipulates that if there is one of the acts of falsely issuing for others, making false invoices for oneself, allowing others to make false invoices for oneself, or introducing others to make false invoices, and it involves special VAT invoices, this crime shall be constituted. Where the standard for filing and prosecuting this crime is that the amount of tax falsely issued is more than 100,000 yuan or the amount of tax loss caused to the state is more than 50,000 yuan, the maximum sentence is life imprisonment.
False invoicing. Article 205-1 of the Criminal Law provides that this crime shall be constituted if the invoices other than those used to fraudulently obtain export tax rebates and tax deductions. The standard for filing and prosecuting this crime is that the amount of false invoices is 500,000 yuan or more; Issuing more than 100 false invoices with a face value of more than 300,000 yuan; Within five years, he has received a criminal penalty or two or more administrative punishments for false invoicing, and has issued false invoices, and the amount reaches 60% or more of the above-mentioned standards; The offence carries a maximum penalty of seven years in prison.
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Self-trading classType 4: Self-trading. It is mainly manifested in the establishment of a third-party company by a fraudulent employee in the name of himself or his relatives and friends, and the business cooperation with the company without reporting to the company. If such cooperation** is reasonable and does not directly harm the interests of the company, it is suspected of a conflict of interest. If you buy low and sell high, or conduct business cooperation with your company in an unreasonable manner, causing significant losses to the interests of your unit, you may be suspected of embezzlement or illegal profit for relatives and friends.
The self-dealing category mainly involves the crime of embezzlement and illegal profit-making for relatives and friends.
Embezzlement. It has already been discussed in the previous article and will not be repeated.
The crime of illegally making profits for relatives and friends. Article 166 of the Criminal Law stipulates that before the Criminal Law Amendment (12) came into effect, the subject of this crime was the staff of state-owned companies, enterprises, and public institutions, and after the Criminal Law Amendment (12) came into effect on March 1, 2024, this crime also applies to the staff of other companies and enterprises, that is, if they purchase goods or receive services from units operated and managed by their relatives and friends with a significantly higher than the market or significantly lower than the market Anyone who sells goods or provides services to units operated and managed by his relatives and friends, or purchases or accepts substandard goods or services from units operated and managed by his relatives and friends, causing major losses to the interests of the company or enterprise, shall be guilty of this crime and shall be sentenced to fixed-term imprisonment of up to seven years and a concurrent fine.
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Processing pathsWhen dealing with employee fraud cases, medical and health enterprises generally follow the following paths:
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Respond appropriately to reportsThe first is to properly respond to reports. At present, most of the fraud cases of employees of medical and health enterprises are reported by email (letter), and a small number are reported by email or in person. Since the vast majority of e-mail reports are anonymous, corporate compliance and legal counsel often have nowhere to start when investigating, and the efficiency is low. When receiving such reports, enterprises should deal with them properly, neither ignore them, nor should they expand the treatment, in line with the principle of tightening inside and loosening outside, contact the whistleblower in person as much as possible, verify the authenticity of the report, and report to the superior department in a timely manner under the premise of confidentiality.
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Meticulous analysis of the materialThe second is to analyze the material in detail. In practice, fraud reports are both more general and more detailed, and even have relevant materials. The vast majority of fraud cases involving employees of medical and health enterprises have a large number of materials, which requires careful analysis and careful study of the materials involved, and finally draw a preliminary conclusion on whether further investigation is needed. If some cases do not belong to the type of fraud at all after material analysis, there is no need for follow-up work. Of course, after the completion of this stage, a work report needs to be formed, in case the relevant materials and conclusions cannot be found when the case investigation is restarted in the future.
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Timely internal investigationsThe third is timely internal investigation. Most cases of fraud involving employees in healthcare companies require an internal investigation, but when to initiate a formal internal investigation process is a difficult one. In practice, the practice is different, some enterprises even directly omit the process of material review and analysis, and directly enter the internal investigation, but due to insufficient preparation, the results are not satisfactory; In some cases, the company failed to carry out a formal internal investigation until the fraudulent employee resigned and left the company. Some enterprises do not entrust third-party professionals such as external professional lawyers to intervene due to cost considerations, resulting in the independence and impartiality of internal investigations being questioned and unable to effectively carry out follow-up work. Due to insufficient preparation, some companies have missed the valuable opportunity to conduct the first interview with the fraudulent employee, and have failed to collect evidence and transcripts of the interview in favor of the company. Therefore, the author believes that an internal investigation procedure that is well-prepared, well-targeted, and focused should be carried out in a timely manner according to the specific circumstances of each case.
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Initiation of labor and civil punishment proceduresFourth, the procedure of labor and civil punishment was initiated. Generally speaking, medical and health enterprises will adopt different follow-up strategies for employees involved in fraud after investigation, among which the most common is to terminate the employee's labor contract, but the termination of labor relations can be divided into the employee's voluntary resignation, the company's strong dismissal, and the two parties reach a consensus, and different methods will lead to different consequences. Some companies will consider civil litigation to protect their rights, especially if the employee has violated the interests of the company due to fraud. In addition, some enterprises will also use criminal accusations to investigate the criminal liability of fraudulent employees, and there is a growing trend, but criminal accusations are different from labor, civil and other legal procedures, and the evidence required is higher, requiring more time and energy from the reporting enterprise.
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Be prepared for follow-upFifth, do a good job in follow-up response. Many pharmaceutical companies do not have follow-up procedures when dealing with employee fraud cases, especially for forcibly dismissing employees involved in fraud and criminal charges. Generally speaking, the forcible dismissal of the fraudulent employee involved in the case is likely to lead to subsequent labor arbitration, and the pharmaceutical company involved in the case needs to respond to the labor arbitration matters in advance; On the other hand, criminal accusations need to deal with whether the accusation is unsuccessful, whether it is necessary to carry out criminal case filing reconsideration, review, and case filing supervision procedures of the procuratorate.
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ResponseEmployee fraud in medical and health enterprises is not a new topic, and how to build a strict anti-corruption and anti-fraud network from the mechanism and system requires the joint efforts of relevant departments and enterprises.
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Conduct business in strict accordance with national regulationsThe first is to carry out business in strict accordance with relevant national regulations. Medical and health enterprises must carry out business in strict accordance with relevant national regulations, such as the seven prohibited behaviors that Chinese medicine representatives are not allowed to carry out in accordance with the State Food and Drug Administration's "Administrative Measures for the Filing of Medical Representatives (Trial)": carrying out academic promotion and other activities without filing; Carrying out academic promotion and other activities without the consent of the medical institution; Undertake drug sales tasks, implement sales behaviors such as collection and processing of purchase and sale bills; Participate in the statistics of the number of drug prescriptions issued by individual doctors; Provide donations, funding and sponsorship directly to departments and individuals within medical institutions; misleading doctors to use drugs, exaggerating or misleading efficacy, concealing known adverse reaction information of drugs, or concealing adverse reaction information reported by doctors; Other interventions or behaviors that affect the rational use of drugs in clinical practice.
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Establish a complete compliance systemSecond, it is necessary to establish a complete compliance system. On the one hand, medical and health enterprises need to establish an anti-fraud culture. Culture is soft power, which is reflected in the company's handling of every employee's fraud case, whether it is tolerated or connived, whether it is patient or counterattacked, whether it is support or say no, every employee is observing, and it is also imperceptibly affected. On the other hand, medical and health enterprises need to build an anti-fraud mechanism. It is reflected in whether there is a mechanism for discovering fraud in the enterprise, whether there is a follow-up mechanism for rapid processing, whether there is a pre-existing mechanism for self-prevention, whether there is a perfect training mechanism, and even specifically, whether the enterprise announces to employees the email address and number of the fraud report.
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Respond together with the help of external forcesThird, we should use external forces to jointly deal with it. There are clouds in ancient poems: I don't know the true face of Lushan, only because I am in this mountain. Some medical and health companies will think that their compliance mechanism and system are already perfect, but employee fraud cases are still emerging; When dealing with some fraud cases, I feel that I have done my best, but in terms of the final result, it is still unsatisfactory, and it cannot be affirmed by the enterprise leaders and cannot achieve the expected goals. In this case, the enterprise can rely on external forces, such as professional internal investigation lawyers and accountants, to change the way of thinking, and perhaps achieve the effect of a bright future.
Note: This article and its content only represent the views of the author and are not regarded as formal legal opinions or recommendations of Beijing Yingke (Shanghai) Law Firm. If you need ** or a citation, please indicate the source.