The Importance of Reps and Warranties in a Healthcare Transaction

The importance of representations and warranties (R&W’s) in a healthcare transaction is often overlooked. The healthcare industry is a highly regulated industry, and the critical importance of R&W’s should not be minimized.

Whether the transaction is for an employment matter, third-party vendor contract, or the merger and acquisition of a healthcare related business, R&W provisions of very contract should be closely scrutinized.

Below is a brief list of R&W items that should be included in a healthcare contract, as well as items that should raise concern if they are not included in a contract.

• Neither party in a transaction is under the threat of or involved in current civil or criminal litigation that may be related to any type of fraud or abuse

• Both parties to the transaction should confirm that they have required licenses that may be needed in order to finalize transaction. Action that involves the suspension revocation and termination.

• The parties to a contract should affirmatively state that there is no current action to suspend, revoke, or terminate a required license.

• The parties to a transaction should confirm that they are in compliance with all applicable and controlling law state and federal.

• Neither party to a transaction have been involved in any prohibited or illegal conduct;

In matters that involve a healthcare transaction, the R&W provisions contains within a healthcare contract should be thoroughly and carefully drafted and reviewed in order to ensure that the parties to the transaction are protected after the transaction is completed.