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Supporting Health Care Policies for Blacklisted Persons Nets Fine for Florida Companies

Friday, October 31, 2014
Sandler, Travis & Rosenberg Trade Report

The Treasury Department’s Office of Foreign Assets Control announced Oct. 29 a $128,704 penalty against three Florida corporations to settle potential civil liability for 39 apparent violations of U.S. economic sanctions between 2008 and 2011. These corporations, affiliates of an international healthcare group headquartered in the United Kingdom, (1) provided insurance support services for healthcare policies that provided coverage to persons designated on OFAC’s List of Specially Designated Nationals and Blocked Persons, (2) processed and paid reimbursement claims made by a policyholder for medical treatments in Cuba, and (3) issued health insurance policies or otherwise provided health insurance coverage to certain beneficiaries that were persons designated on the SDN List. OFAC states that the corporations misinterpreted the scope and application of the regulations administered by OFAC and did not monitor or screen health insurance policyholders, dependents or providers against the SDN List.

The base penalty amount for the apparent violations was $95,337. The following were found to be aggravating factors: the corporations acted with reckless disregard for U.S. sanctions requirements and failed to exercise a minimum degree of caution or care to avoid the conduct that led to the apparent violations; the corporations had actual knowledge or reason to know that the policyholders they insured (and the beneficiaries of the claims they serviced) were sanctioned; the corporations’ conduct resulted in harm to U.S. sanctions program objectives; and the corporations do not appear to have had an OFAC compliance program at the time the apparent violations occurred. Mitigating factors include that the corporations have not received a penalty notice or finding of violation in the last five years, have taken steps to implement more effective controls and procedures as a remedial response to the apparent violations, and substantially cooperated with OFAC’s investigation by submitting the relevant documents and information in a clear and organized fashion and by executing and then extending a statute of limitations tolling agreement. OFAC also determined that the corporations voluntarily self-disclosed the apparent violations, which constitute a non-egregious case.

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