Frequently Asked Questions: Conflict Of Interest

Conflicts of interest occur in several ways in the business world. Usually, they refer to individuals benefiting from something that is detrimental to the company they work for or its clients. It may involve self-dealing and personal gain; taking bribes or benefits to provide others with confidential information; accepting gifts for preferential treatment or service; hiring or giving preferential treatment to a spouse or relative (nepotism); engaging in retaliation against those that report potential or suspected violations.

Not all conflicts of interest are illegal. However, those that involve inducements to influence referral of business that implicate the Anti-Kickback Statue or the Stark Law are illegal. Further, conflicts of interest that improperly use or disclose protected health information (PHI) could seriously implicate HIPAA. 

COI management requires ongoing monitoring and periodic auditing. It is best practice for healthcare organizations to establish an oversight committee or authority that is responsible for reviewing potential conflicts and deciding whether a COI exists and whether the organization’s COI policy was violated.

First, establish a method for individuals to disclose conflicts of interest; whether that is a paper or electronic form through the intranet or application or a dedicated phone, email or web-reporting. Second, the oversight committee should identify which individuals must fill out disclosures, such as specific levels of management, specific departments, and/or board members. Third, create an annual schedule for collection disclosures. If an individual encounters a new conflict prior to the annual disclosure period, the individual should be required to self-report the disclosure at that time. Fourth, the oversight committee must review all reported conflicts and identify which are not actual conflicts, which require oversight, and which need to be resolved. The oversight committee should send significant conflicts to the Board of Directors for their review. Finally, the Board of Directors should annually review the Conflicts of Interest Policy to ensure it meets regulatory standards. As an additional level of compliance, the Compliance Officer should also implement independent conflict of interest audits at fixed intervals to ensure the COI Program is always operating efficiently and effectively.

Some COI may violate federal or state laws, such as the Anti-Kickback Statute and the Stark Law. Other conflicts, when disclosed, may seriously damage the reputation of the organization. COI can have a significant negative impact on employee morale if it is perceived that there is unequal treatment in the workplace.

Your approach to resolve a COI depends on the type of conflict. For example, when an employee declares a potential conflict of interest, they could simply be moved away from projects where these conflicts occur. For conflicts that have already occurred, the oversight committee must look at the gravity of the offence and how to rectify the situation. Remediation could include making a disclosure to regulators and instigating disciplinary actions against the offenders. It is best practice to require new employees, as part of on-boarding, to disclose any potential COIs. Upfront disclosure can help to mitigate a greater conflict down the road.

Organizations should implement an easy process for individuals to report potential conflicts of interest, either before or once they occur. Examples of reporting channels include reporting directly to the Compliance Officer or the oversight committee, reporting using a dedicated paper or electronic form through the intranet or application or a dedicated phone, email or web-reporting.

The Compliance Officer should oversee the COI program as part of their official capacity and with the mission to educate individuals on the COI policy and adhere to the policy in place. Additionally, for larger organizations, it is suggested to create an COI oversight committee to oversee the COI program and to assist the Compliance Officer in reviewing disclosed conflicts.

A COI arises when an individual’s financial, personal or outside interests may compromise or bias or be perceived to compromise or bias their professional judgement and objectivity in conducting or reporting research. Some examples of a relationship that may constitute a research conflict of interest are a financial and/or equity interest in an entity involved in your professional field, a fiduciary duty that you hold to an external entity, or a personal relationship with a collaborator. Conflicts of interest are the result of situations which might create the perception of bias, rather than any specific actions by an individual. For this reason, perceived conflicts are considered conflicts of interest whether they have materially impacted an investigator’s actions. It is important to understand that the determination of a conflict of interest is an acknowledgement of such a situation, not an implication of any wrongdoing or impropriety.