The Sarbanes-Oxley (SOX) Act of 2002 (Public Law 107-204) was designed to protect the interests of investors and enhance corporate oversight and accountability of public traded companies. Specifically, SOX mandates auditing, quality control, ethics, detailed/timely disclosures and independent /informed authentication of all financial statements.
To date, there are only two provisions of SOX that apply directly to HealthCare (Non-Profit) Organizations — whistleblower protections and retention of all documentation pertinent to an investigation. However, the healthcare legal industry is advising hospitals to look at SOX as “best practice” and adhere to as many provisions as possible.
This advice is based on increasing challenges to the tax exempt status and increased regulations passed by state legislatures and Attorneys General. Currently, 20 states are involved in class action suits claiming that hospitals haven’t provided enough “charity care” to justify tax exempt statuses. In addition, many state legislatures have passed healthcare financial accountability legislation that is stricter than SOX.
For more information on the Sarbanes-Oxley Act’s relevance to healthcare, please contact Linda Mancini at (781) 272-8001.