Translator：Zhang Xiaotong

On the afternoon of June 2nd, the Landing Corporate Risk Control team held a seminar on medical institution risk control at the Shanghai Landing Law Offices, chaired by lawyer Pu Guiping.

Lawyer Pu Guiping has over 10 years of experience as a legal consultant in hospitals. He has defended a Bureau-Director level leader in the medical system in a bribery case and a grassroots doctor in a medical accident case, resulting in an acquittal. Pu explained that on May 10th, 14 departments including the National Health Commission, Ministry of Education, Ministry of Industry and Information Technology, and the National Medical Products Administration jointly released a notice on correcting misconduct in the medical procurement and service sectors for 2023, further strengthening regulation in the medical sector. From January to May this year, 83 hospital directors were investigated. Moreover, since April 28th, the Shanghai Medical Insurance Bureau issued penalties to 13 hospitals within 10 days. The seminar today discusses the myriad legal issues currently faced by medical institutions, exploring how to provide more specific and effective legal services.

Topics discussed during the seminar included the forms and characteristics of risks faced by medical institutions, risk control measures, and effective defense strategies.

Professor Shang Jiangang, with 16 years as a lawyer and 7 years as a senior judge, and currently a master's tutor at Shanghai University of Political Science and Law, highlighted that current crimes in medical practice mainly revolve around the procurement, use, and management of drugs, devices, and consumables. However, compliance issues in the medical industry are not limited to commercial bribery. After detailing the industry norms, Professor Shang summarized the three compliance dimensions in the medical field: cyber and data compliance, regulatory compliance, and data carrier compliance. Drawing from his rich practical experience and deep legal theory, Professor Shang provided a deeper understanding of compliance issues in the medical field.

Lawyers He Chunfeng and Ji Ming, both with medical backgrounds, combined their professional experiences to shed light on specific problems in medical institutions.

Attorney He Chunfeng approached the subject from the perspective of types of medical institutions, combining with the three cases he handled representing doctors, internet medical platforms, and pharmaceutical companies, and explored the characteristics and risks of public hospitals, private hospitals, and online medical treatment platforms. At present, the main risks in public hospitals are focused on commercial bribery in the procurement and use of equipment, drugs, and medical consumables. The risks faced by private hospitals are more complex, often involving high-risk operations such as leasing departments and false advertising. Private hospitals that are included in the medical insurance system are involved in frauds such as fictitious hospitalizations, disaggregated charges, excessive examinations, and treatments. In medical beauty and other consumer medical institutions, illegal behaviors such as unlicensed operations, non-compliant treatments, and the use of substandard products occur frequently. For the emerging online medical platforms, how to introduce foreign drugs for treating rare diseases is also an important issue in platform compliance.

Attorney Ji Ming focused on the emerging legal risks faced by medical institutions in three areas: falsification of clinical trial data, management of medical health data, and management of human genetic resources. Regarding the issue of falsifying clinical trial data, Attorney Ji pointed out that clinical trials require a collaborative and systematic study involving sponsors, research institutions (medical entities), principal investigators, contract research organizations, and others. However, in practice, when medical institutions collaborate with personnel such as CROs, CACs, and CRCs, a variety of issues often arise. These issues can lead to significant obstacles in the progress of clinical trials. The progress of these trials is crucial for pharmaceutical companies to gain a competitive edge. This situation can easily lead to non-compliant scenarios where procedures are not standardized, and data is neither authentic nor complete. As the national supervision of drug clinical trials becomes increasingly stringent, falsifying clinical trial data is now categorized as a criminal offense. Therefore, medical institutions should pay close attention to this issue.Next, Attorney Ji discussed the legal risks to be aware of in the management of medical health data and its cross-border transmission. Following that, he mentioned that the illegal collection and cross-border transfer of human genetic resources are now regulated under the criminal law in our country, which is also an issue that medical institutions should be aware of. Lastly, Attorney Ji explored and shared insights regarding the legal risks related to medical aesthetic institutions.

Tian Lei, the Director of the Criminal Department, highlighted the recurring issue of "red packets" (bribes) in the medical field. With anti-corruption measures intensifying, risks in the medical industry are accumulating, especially in the management and operation of medical institutions. Regarding effective defense strategies, Attorney Tian shared his defense approach from cases he represented involving alleged illegal medical practices and suspected bid-rigging incidents.

Lawyers from the Corporate Risk Control team, with their years of legal experience, offered their insights on the risks in the medical industry.

Attorney Mei Man believes that the traditional legal risks for medical institutions are primarily divided into two categories: medical disputes arising from medical practices and the gray interest chain of medical devices and drugs. In the criminal field, common commercial bribery crimes are diminishing with the continuous improvement of anti-corruption measures. Time-specific behaviors, such as proactively turning in a portion of bribes and then excessively accepting gifts, and the provision of specialized "public relations expenses" by medical device and pharmaceutical companies, have almost ceased to exist. However, due to the penetration of digital elements in various industries, most new criminal risks fall between the intersections of criminal-civil or criminal-administrative laws. This presents both new opportunities and challenges for attorneys providing legal services to medical institutions.
 

Zhao Guihua, an associate professor at the Fujian Normal University Union College and an attorney from Shanghai Landing (Fuzhou) Law Firm, pointed out that according to data released by the National Health Commission, in 2015, the number of private medical institutions in China exceeded that of public medical institutions for the first time. Furthermore, the treatment volume of private institutions grew at a rate far surpassing that of public ones. However, despite such rapid development of private medical institutions, there have been continuous occurrences of alleged criminal activities involving these institutions and their medical staff. Through big data research, it was found that the criminal risks associated with private medical institutions include crimes like illegal medical practice, production and sale of counterfeit drugs, bribery by non-state employees, fraud, environmental pollution, medical incidents, illegal business operations, and more. Therefore, to promote the healthy development of private medical institutions, it is crucial to focus on and research the prevention of criminal legal risks associated with them.
 

Lawyer Pu Tian offered three suggestions on precisely controlling legal risks for medical institutions: setting up firewalls for violations that have occurred, designing compliant strategies or alternative plans based on the characteristics of the medical industry and law, and differentiating responsibilities among employees, companies, and management to respond effectively when risks occur.

The seminar consisted of two rounds: in the first round, participants shared their views on the topics discussed; in the second round, they engaged in interactive discussions on specific medical issues and service forms.

In the next step, Landing Corporate Risk Control Team will also enter universities and medical institutions, continuously engaging in discussions and exploration, solving challenges, and providing higher quality services to medical institutions.