Health Law Blog - Healthcare Legal Issues

Skilled Nursing Facility and Nursing Home Initiatives – OIG 2017 Annual Work Plan

January 19th, 2017

Skilled Nursing Facility and Nursing Home Initiatives
OIG 2017 Annual Work Plan

The OIG’s 2017 Annual Work Plan identified a few new areas of focus relating to nursing homes and skilled nursing facilities. Nursing home compliance officers should consider these newly identified issues when developing their annual compliance work plan.

Investigation of Serious Nursing Home Conditions

The Work Plan references a 2006 OIG report which found that state agencies failed to investigate in a timely manner some of the most serious complaints regarding nursing home conditions. The report referenced nursing home complaints involving immediate jeopardy and/or actual harm to residents. Complaints that rise to this level of severity are to be investigated by applicable state agencies within a 2 and 10 day timeframe. The Work Plan states that OIG will determine the extent to which State agencies investigate serious nuring home complaints within the required timeframes. Nursing homes can expect this to put more pressure on states that are responsible for these investigations to meet these timeframes on a more regular basis.

Unreported Incidents of Potential Abuse and Neglect

This newly identified topic relates to skilled nursing facilities. The OIG states that is plans to “assess” the incidence of abuse and neglect that occurs in skilled nursing facilities. It then plans to make a determination whether these incidents were properly reported and investigated as required under applicable Federal and state law. It appears that the OIG will be taking a sampled representation of cases to investigate. This conclusion can be garnered from reference in the Work Plan to “sampled” incident reports. The OIG plans to interview state officials to assure that incident reports that are examined under its sampling system were reported as required under law. The OIG plans to go even further and determine whether each reportable incident was investigated and subsequently prosecuted by the state.

This area could create some immediate risk exposure to facilities who are sampled as part of the OIG’s investigation. Facilities who are found to have failed to appropriately report potential abuse and neglect incidents could be subject to sanctions.

Review of SNF Use of Minimum Data Set Tool

the OIG states that it will review documentation of selected Skilled Nursing Facilities to determine whether Minimum Data Set Tool have been properly used to determine the severity of the patient’s condition. SNF reimbursment is tied to the severity of the patient’s condition through application of this tool. Periodic assessments must be performed on each patient by applicable skilled nursing facility. Improper use of the tool results in higher reimbursment than may be justified by the patient’s condition.

This issue was called out by previous OIG studies that indicated higher levels of reimbursement were being paid due to improper use of the Minimum Data Set Tool. Again, this is an area of specific concern for facilities who are lucky enough to be selected for audit by the OIG. If the facility is found to have improperly assessed patient severity, overpayment and potential penalties may be imposed. A finding on a small sample could also lead to expansion past the initially reviewed cases.

Yates Memorandum and Compliance Investigations – New Newsletter Released

January 10th, 2017

Health Care Compliance Newsletter Released

Ruder Ware has released a new version of its newsletter covering health care law issues.  The current newsletter covers major changes in government enforcement practices and health care fraud penalties that significantly increase the stakes for health care compliance.  The newsletter contains a series of articles by Health Care Compliance Attorney, John Fisher, CHC, CCEP.

Access the newly released newsletter – Health Law Newsletter 2017

Past Newsletters are also available through this blog. Past Newsletters

Newsletter Signup

 

Health Care Compliance Attorney – Certified CHC Lawyer

January 10th, 2017

Health Care Compliance Attorney

Compliance Representation – Certified Health Care Compliance

The Ruder Ware Compliance Team provides a variety of compliance-related services across a number of industry sectors.  Our compliance practice in the health care industry is lead by Attorney John Fisher.  John is a practicing health care attorney who has substantial expertise in the compliance area.  He is certified in both Health Care Compliance and Corporate Compliance and Ethics.

Aggressive Governmental Fraud and Abuse Investigations

Government enforcement practices and ever changing regulatory requirements require health care providers of all types and specialties to function in a highly complex environment.  Government enforcement operates under a “return on investment” mentality which leads to extremely aggressive and sometimes unfairly overbroad enforcement actions.  This leaves even the most well intentioned health care provider feeling targeted and overburdened with regulatory requirements.

Ruder Ware Provides a Full Range of Compliance Services

The Ruder Ware compliance team has provided a broad range of compliance related legal services to a wide range of health care providers such as hospitals, mental health programs, skilled nursing facilities, ambulatory surgery centers, a variety of medical groups, diagnostic facilities, home health care providers, personal care agencies, clinically integrated provider groups, accountable care organizations and other providers.  Each provider that we represent has unique features and characteristics that require creative approaches to mitigate the impact of overzealous governmental enforcement and private whistleblowers.

We Help You Prepare for an Eventual External Examination of Your Compliance Process

Our compliance practice functions under the philosophy that all providers will eventually be called upon to defend their compliance programs.  This may come through a self-disclosure after an infraction that is discovered through self assessment or audit.  Less ideally, it could come from a money hungry whistleblower who will not let go of a case until there is a payday.  It could also come at the hands of a government criminal or civil prosecutor.  Regardless of the source of challenge, at some point in the future, a compliance program will be put to the test.  When this happens, it must be effective to detect and correct potential compliance problems.  This requires both a well designed plan.  It also requires a showing that the plan is actively operating to identify risk areas, audit for anomalies in areas where risk may be present, and comes full circle to take appropriate action to correct potential problems that are identified.  If this is happening when your time comes; when your compliance program is put to the test, you will have gone a long ways toward mitigation of potential negative consequences.

Penalties Are Increasing and the Scope Activity Considered Abusive Continues to Expand

Some may wonder how the government plans to pay for changes in the health care system.  One of the primary sources of payment in the future will be through enforcement of actual or perceived fraud and abuse.  Currently, the Federal government received an 800% return on every dollar that it invests on pursuing health care fraud and abuse.  With increased penalties and more draconian enforcement systems in place, the government is poised to turn the enforcement business into an even more lucrative proposition.  The stage is set with laws that increase penalties to such an astronomical level that even a much less than certain case will be settled rather that risk being dragged through a proceeding that a provider is likely to lose in the end.

The Danger of Whistleblower Claimants

Whistleblowers also are incentivized to file cases as they seek to benefit personally from provider activity that may not fully conform to regulatory expectations. No provider is immune, no matter how effective its corporate responsibility program. For these reasons, all providers need experienced Compliance Counsel to assist them in trying to prevent regulatory violations, to determine the scope of and assist with correcting identified compliance issues and to defend them in the event they do become a target of government investigative activities.

Whistleblowers can come from a number of different places.  Disgruntled employees are a prime candidate to bring a whistleblower complaint.  How these complaints are handled is extremely important to minimizing their potential negative impact on you operations.  Once a Whistleblower attorney becomes financially committed to a case, they tend not to let go easily.  Settlement can be very difficult to attain on reasonable terms.  It is fair to say that in many cases the government gives more latitude to settle cases if the provider cooperates.

There are some reasonable government enforcement individuals who appropriately utilize their discretion when a provider cooperates and has not intentionally bilked the system.  Whistleblowers on the other hand, have their sites set on the full maximum amount of calculated False Claims Act damages.  They are looking for a pay day.  We can help you avoid this type of situation altogether by helping establish an effective compliance program that takes appropriate action to mitigate exposure if infractions are discovered.

General Compliance Counsel Services

We act as general compliance counsel to numerous health care providers and companies as well as business in other industries such as transportation, finance, manufacturing, securities, and other industry areas.  Ruder Ware represents businesses with worldwide operations who we routinely counsel regarding the impact of anti-bribery laws and other laws that impact international operations.  Our multidisciplinary approach enables us to apply our expertise in compliance process and investigations to various industry sectors that are represented by other attorneys in our firm who have extensive knowledge of the regulatory requirements that impact their business or industry sector.  For example, we have applied our compliance knowledge with our significant clientele in the transportation industry, paper manufacturing industry, financial sector, and heavy manufacturing for international distribution.

Roots in the Highly Regulated and Ever Changing Health Care Industry

Our compliance practice got its start primarily in the health care industry and has flourished into other areas building on our experience and success in health care.  The health care industry has historically been out in front of many other industries which enabled our firm to get into the compliance service industry early and gained significant experience that has served our team well. Our compliance team has gained substantial experience handling compliance that impact the Federal False Claims Act, Civil Monetary Penalties Law, Stark Law and Anti-Kickback Statute. We routinely counsel our clients on how to apply systems to proactively comply with a multitude of regulations that apply to their regulations.  We recommend processes that apply to all types of health care providers and across all industry sectors.

Proactive and Aggressive Risk Identification Process

Our recommended process creates a “living and breathing” process that is continually at work within an organization to identify potential risk areas.  Those identified areas where risk is likely to be present can then be further analyzed to ascertain the types of potential risks and a behaviors that create those risks.  A process can then be applied to mitigate risk through establishment of policies and procedures, checklists, and process flow that are intended to reduce risk.  Employees are trained on these processes and monitoring and auditing occurs to assure that processes are being regularly followed.  The entire process must be documented to the detail.  If incidents occur in spite of the risk reduction process, proof of the proactive activities that were taken to prevent these occurrences will be of great assistance in mitigating the negative consequences of the discovered infraction.  Generally, self disclosure, with confidence that you are backed up by a continually operating compliance system are your best defensing most cases to the negative consequences of the discovered non-compliance.

Compliance Program Development and Assessment

Our compliance attorneys have experience creating and implementing compliance programs to fit the specific needs of our business and health care clients.  Compliance programs are not “one size fits all.”  A program must be tailored to address the specific risks that are presented by the type and scope of business.   We are adept at creating solutions that leverage compliance resources to achieve the most efficient and effective compliance operation.  We have developed compliance programs for national and multinational business in a variety of industries.  We have also helped small businesses develop compliance programs that are scaled to the size of their businesses and the resources that are necessary to mitigate compliance risk.  Contrary to some professional, legal forms sites, and novice compliance professionals, there is no single set of forms that can be used to craft a proper compliance program.  Some elements are common in most plans, but the failure to customize a compliance program to the specific business is perhaps the most common mistake that can be made and results in a major threat to the effectiveness of the program and the ability to use the program to mitigate potential legal exposure.

In additions to creating compliance program structures, Ruder Ware’s compliance team has developed a series of comprehensive compliance program assessment and effectiveness tools that we use to identify gaps in compliance program operations.  We use a systematic approach to evaluating compliance programs to assure that they are operated effectively to identify and mitigate compliance risk.  A compliance program is of little value if it cannot be demonstrated to be effective.  We can provide an independent, detailed and systematic evaluation of any compliance program.  The results of this assessment can be integrated into the compliance cycle to enhance effectiveness and improve efficiencies.  We also use variations on this process to assist clients in creating compliance work plans that identify and prioritize compliance operations, audit and monitoring areas, and achievement of specific compliance goals.

Our compliance attorneys are active in national compliance organizations.  We are also committed to maintaining active certifications in compliance and ethics as a means to assure that we are up to date on legal and regulatory requirements as well as the standards that must be met to achieve effective compliance operations.

Internal Compliance Audits Under the Attorney-Client Privilege/Work Product Doctrine

We regularly work through the attorney-client privilege and work product doctrine, as necessary, to internally investigate compliance issues with the provider. We are familiar with the intricacies of various state and federal laws that relate to privilege.  We are also attuned to enforcement policies relating to waiver of privilege and the relationship of privilege to the ability to secure cooperation credit from investigative agencies.

Privilege issues are intricately involved with internal investigations and we take great pains to assure that the process that we use to conduct investigation maintain privilege to the greatest extent possible.  In order to maintain privilege, it is generally necessary to retain outside counsel to direct and control the investigation including securing necessary consultants, experts, and support personnel.  We have relationships with external support consultants and experts in several industries and technical areas.

Educating Clients and Their Employees On Compliance Related Issues

Education of staff is a critical element of an effective compliance program.  Without training individuals within the organization, a compliance plan is little more than a set of policies gathering dust on a shelf.

Our compliance team can assist clients in creating training systems, preparing training material, and performing training programs.  Out compliance attorneys will often provide training sessions on compliance oversight responsibilities to the Board of Directors of a company or to key committee members, officers, and upper management staff.  It is critical for the success of a compliance program that there be acceptance from the top of the organization.  This is where the environment of compliance is created.

We have assisted clients conducting in person compliance training and have conducted web based compliance training modules in basic and special compliance subject areas.  We have also been called in to provide training as part of a corrective action program after compliance risks are detected.  We are also involved in specialized training on issues such as Stark Law compliance, physician compensation, and other issues that are unique to the provider but present unusually complex regulatory requirements.

Extension to Provider Certification and Deficient Surveys

In addition to providing proactive compliance advice, our team provides legal representation in connection with deficiency reports and survey findings.  We can assist providers through the informal dispute resolution process in connection with state and federal surveys.  In cases of serious deficiencies we can represent providers in the appeal process and related proceedings.  Where Civil Monetary Penalties are assessed, we can often negotiate as part of the appeal process for a reduction in penalties, severity or scope of findings.   In extreme cases, deficiencies can also involve overpayments and self-disclosure.  We have can assist providers in the assessment of whether a self-disclosure may be necessary and in appropriate cases, we can conduct the necessary investigations and prepare self disclosure submissions.

Other  Areas Handled By Compliance Team

Although our compliance practice grew originally out of our health care practice, it now extends beyond the health care industry into manufacturing, global transportation, relocation services, financial institutions, and other industry segments.  Our systematic approach to compliance can be applied to virtually any industry together with regulatory experts in that area.

Our health care compliance attorney has also received certification in Corporate Compliance and Ethics which includes global compliance issues.  We are routinely called upon to apply our industry and compliance knowledge to develop compliance operations across a variety of industries.

Beyond the false claim and fraud and abuse inquiries, our compliance team also routinely handles a number of other regulatory compliance matters such as provider certification, provider specific requirements, Sarbanes-Oxley and international compliance areas such as the Foreign Corrupt Practices Act, the UK Anti-Bribery Act, and a variety of other laws that require  effective compliance efforts application to identify and systematically address mitigation of risk.

Government Investigations and Defense

Federal and state governmental regulatory agencies have become very aggressive in investigating and prosecuting compliance failures.  Our compliance investigation team can conduct internal investigations and can often work with governmental agencies to coordinate investigative functions.   We can assist providers who are under scrutiny of the governmental in formulating a proper response to governmental audits, formal and informal investigations, subpoenas and other information requests. We can work with provider clients to shape appropriate response depending on the issues involved and the positions and approach being taken by governmental authorities.  We are also able to coordinate internal investigations to assure that privilege is retained where necessary and to preserve the ability to obtain cooperation credit from the government.

Compliance With Voluntary Self Disclosure Protocols and Process

We have experience with the self disclosure protocol and processes established by the Office of Inspector General and Center for Medicare and Medicaid Services.  We have assisted clients in the assessment of potential compliance risks to determine whether self-disclosure is necessary or appropriate.   We have also conducted investigations of various issues to assess the nature and extent of potential risk.  When it is determined that self disclosure is prudent, we assist clients in preparing necessary disclosure documents and support.  We also interact with governmental agencies to resolve issues through self-disclosure.

Compliance Team Subject Areas

  • Compliance Plan Structure and Operation
  • Compliance Auditing and Monitoring Programs
  • Compliance Work Plan and Task Prioritization
  • Risk Area identification, Scoring and Prioritization
  • Compliance Process Trainings
  • Compliance Risk Area Specific Training
  • Regulatory Interpretation and Guidance
  • Structuring Policies and Procedures
  • Governmental Investigations
  • Internal Investigations
  • Cooperation and Coordination With Governmental Investigators
  • Joint Defense Agreements and Cooperation With Joint Defendants
  • Civil Monetary Defense and Appeal
  • Foreign Corrupt Practices Act
  • International Anti-Bribery Law Compliance
  • Compliance Coordination with Subcontractors and Downstream Entities
  • Health Care Compliance Issues
  • Transportation and Global Relocation Compliance
  • Privacy Act and Health Information Compliance
  • False Claims Act Investigations and Enforcement Actions
  • Survey, Certification and Deficiency Citations
  • Breach Disclosure Assessment and Notification

 

John H. Fisher, CHC, CCEP is a health care attorney at the Ruder Ware law firm.  John is actively involved representing clients on legal and compliance issues.  He has represented clients in creating compliance programs and in a variety of operational issues.  He also assists providers in addressing risk areas and potential compliance issues including preparing self-disclosure and working with the government to resolve disclosed compliance issues and overpayment.  John consults as a subject matter expert and provider legal backup to other attorneys and law firms from around the country on specialized compliance, regulatory and health care issues.  John has followed legal issues impacting health care provider for over 25 years.  As such, he is knowledgeable on the current legal standards as well as the historic perspective that is often relevant to an appropriate analysis. 

Don’t Overlook Special Status of Behavioral Health Records

January 9th, 2017

Most health care providers have implemented HIPAA compliant policies and procedures and have made them operational.  We often see providers who have not given appropriate levels of thought to behavioral health records.  HIPAA and state laws generally provide different levels of protection for patient information that relates to mental health issues or alcohol and drug treatment.  This requires providers to have policies and procedures in place that help employees identify these types of records and which describes appropriate precautions and special rules that apply.

Generally, Federal law treats general mental health records in the same way it treats other types of health information.  Many state statutes require more protection over confidentiality of mental health records than general health information.  Further distinction is made between general mental health/behavioral health records and the subset of those records that include psychotherapy notes.   Psychotherapy notes are rarely subject to disclosure to third parties.  In many cases even the subject patient can be denied access to psychotherapy notes.

It is important that policies and procedures clearly define mental health records and psychotherapy notes and describe the special restrictions that are applicable to both.  Clearly, the special restrictions on psychotherapy notes must be honored.  It is also important that healthcare providers do not apply the broader restrictions that are applicable psychotherapy notes to more general mental health records. Failing to understand the distinction between the various types of records can have adverse consequences under applicable laws and can even put patient care at risk.

This issue is further complicated because State and Federal protections can be different and even conflicting.  This requires providers to perform a preemption analysis to determine which law to follow.  That analysis can be different depending on the type of record involved and the purpose and nature of the contemplated release.

Psychotherapy notes are given special treatment under Federal law.  Psychotherapy notes are defined under Federal law as notes recorded by a health care provider who is a mental health professional documenting or analyzing the contents of a conversation during a private counseling session or a group, joint, or family counseling session and that are separate from the rest of the patient’s medical record.  Psychotherapy notes can rarely be released to a third party and often even the patient can be denied access to these records.  Certain information is not included within the definition of psychotherapy notes such as medical prescriptions, session start and stop times, frequency of treatment, results of clinical tests, summaries of diagnosis, symptoms, prognosis, etc.  This information is considered to be mental health records but does not receive the same special protection as psychotherapy notes.

Organizations should read and understand the distinction between general mental health records and psychotherapy notes.  Separation is key to complying with restrictions that are applicable to psychotherapy notes.  Psychotherapy notes should be stored separately from the patient’s medical records (which includes behavioral and mental health records).

Organizations that use electronic medical records (EMR) system must devise ways to separate psychotherapy notes from other types of medical records.  This might include integration of special naming and filing standards into the electronic record. Staff training is required to assure that the differences between psychotherapy notes and mental health records is maintained.

Some state laws complicate the analysis even further by provided additional restrictions on general mental health records.  Depending on your state, this analysis can become quite complicated and dependent on the purpose and nature of the contemplated release, application of preemption rules, and interpretation of state and Federal statutes and regulations.

Off-Campus Provider-Based Departments Neutrality

December 23rd, 2016

Off-Campus Provider-Based Departments Site-Neutrality

The 21st Century Cures Act contains new provisions that prohibits the Centers for Medicare & Medicaid Services (CMS) from paying different rates for services provided in for services furnished in off-campus provider-based department (PBD) of a hospital.    The CY 2015 Outpatient Prospective Payment System Final Rule (79 FR 66910-66914) created a HCPCS modifier for hospital claims that is to be reported with every code for outpatient hospital items and services furnished in an off-campus provider-based department of a hospital. This 2-digit modifier was be added to the HCPCS annual file as of January 1, 2015, with the label ‘‘PO.’’ Reporting of this new modifier was voluntary for CY 2015, with reporting required beginning on January 1, 2016.

The 21st Century Cures Act revises this policy beginning January 1, 2017, with some exceptions. One exception is for OPBDs that billed for services furnished as of November 2, 2015 (the date the law was enacted). The 21st Century Cures Act expounds on this exception and permits providers to be grandfathered under the old rules if the Secretary received a properly filed provider-based attestation for the site from the provider prior to December 2, 2015.  Furthermore, if  an off-campus provider-based department was in development as of November 2, 2015 and made a timely filing of a certification to CMS,  the old rules can be applied even though the department was not operating as of the cut-off date.

John H. Fisher, CHC, CCEP is a health care attorney at the Ruder Ware law firm.  John is actively involved representing clients on legal and compliance issues.  He has represented clients in creating compliance programs and in a variety of operational issues.  He also assists providers in addressing risk areas and potential compliance issues including preparing self-disclosure and working with the government to resolve disclosed compliance issues and overpayment.  John consults as a subject matter expert and provider legal backup to other attorneys and law firms from around the country on specialized compliance, regulatory and health care issues.  John has followed legal issues impacting health care provider for over 25 years.  As such, he is knowledgeable on the current legal standards as well as the historic perspective that is often relevant to an appropriate analysis.  

President Signs the 21st Century Cures Act

December 21st, 2016

21st Century Cures Act Signed by President Obama

21st Century Cures ActOn  December 13, 2016, signed the 21st Century Cures Act into law.  The Cures Act was perhaps the most significant piece of health care related legislation since the passage of the Affordable Care Act.  The Cures Act had strong bi-partisan support in both houses and included a wide variety of miscellaneous provisions that are intended to improve and modernize the health care system.  Perhaps the most forward looking provisions in the Cures Act relate to mental health and substance abuse treatment and advancement of biomedical research.  However, the Cures Act contains numerous subject area revisions that expand well beyond these two areas.  Just a few of the areas covered by the Cures Act include the following:

 

  • Mental Health and Substance Abuse
  • Funding of Opioid Addiction Services
  • Revising Documentation Related to the Delivery of Health Care Link
  • New OIG Civil Monetary Penalties for Grant Funding or Contracts
  • Revisions to the Site of Service Differential for Off-Campus Provider-Based Departments
  • Changes to Documentation Requirements to Facilitate Electronic Health Record Utilization

These are just of few of the new statutory provisions that were included in the Act.  We will continue to examine the legislation for items of significance, so be sure to check back to the Health Law Blog for more complete coverage of this important legislation.

 

US Attorney Manual Updated to Incorporate Yates Memorandum

November 1st, 2016

DOJ Directives Incorporating the Yates Principles

This is the third installment on our blog series covering the Yates memorandum and changes in Federal policy regarding prosecution of individuals for corporate wrongdoing.

In September of 2016, the DOJ issued revisions to its Manual used to provide guidance to U.S. Attorneys.  The revisions include the directives set forth in the Yates Memorandum together with subsequent clarification that was provided by the DOJ.  The revision to the Manual added a new section entitled “Focus on Individual Wrongdoers.”   The individual wrongdoer sections of the Manual cover the general principles that were set forth in the Yates Memorandum as well as revisions reflecting the new concepts regarding corporate cooperation credit, privilege assertion, and cooperation between criminal and civil enforcement authorities.

The Manual revisions should indicate the seriousness of this issue.  The Manuals are used as a primary reference by prosecutors across the country who are responsible for prosecuting corporate wrongdoing.  The revisions indicate that the DOJ is making the concepts included in the Yates memorandum into operational policy.  Agents will be judged and reviewed on their effectiveness complying with this policy.  This action is a clear indication that the Yates concepts are real.  We can expect a much higher degree of scrutiny on individual corporate wrongdoing.

As stressed in previous blog articles, companies must review their policies and procedures for investigating potential wrongdoing and implement changes that mitigate their risk in view of the new Federal policy.

Certification of Investigation of Individual Wrongdoing Under the Yates Memorandum

September 29th, 2016

Certification of Full Disclosure of Individual Wrongdoing

Certification of Investigation Individual WrongdoingIn early 2016, issues were reported that suggested that corporations may be asked by the DOJ to certify that they have disclosed all relevant information regarding potential individual liability.  According to the article, a DOJ spokesman noted that such a confirmation is necessary to ensure that companies understand that “investigations cannot end with a conclusion of corporate liability, while stopping short of identifying those who committed the underlying conduct.”  It has since been clarified by the DOJ that there is no such certification requirement though the DOJ has noted that in some cases they might request a company to clarify that all relevant facts have been disclosed as a condition of settlement.  The same statement indicates that the DOJ is not seeking perfection but rather a general attitude of cooperation when considering whether to credit the company with cooperation.

So what does this all mean?  Will a company that is under investigation be asked by Federal prosecutors to certify that they have disclosed all relevant information relating to individual liability before being able to settle with the DOJ or other enforcement agency?  The answer to that question is a definite…maybe.  DOJ is very artful in its public proclamations.  Its statement that there is no “requirement” for requesting a certification is correct.  Viewed from that angle, there is no “requirement” for the whole Federal policy reflected in the Yates Memorandum.  It is rather clearly going to be up to the specific prosecutor.  If a prosecutor feels that he or she needs a certification to assure that the company has established the basis for cooperation credit, you can expect to be asked for a certification.

My guess is that certifications will become standard operating procedure.  Just put yourself in the position of a prosecutor whose boss just came out with a new, very strict policy regarding individual responsibility.  This policy requires a company to investigate and disclose individual wrongdoing in order to receive some element of forgiveness in the process.  I think you are going to back that up with a certification from the company, don’t you.  You are going to want the company to put it clearly in writing; signed, sealed, delivered; maybe even notarized.  If it turns out to be wrong and you are catching a hard time from your boss, you are going to want to be able to seek recourse from the party that lied to you.  Don’t you think?

How Should Compliance Process Integrate the Yates Memorandum?

September 29th, 2016

Compliance Process and the Yates Memorandum?

Yates Memorandum Compliance Investigation ProcessThe controversial Yates memorandum is one of the most significant policy changes to ever come out of the Department of Justice.  Companies in virtually every industry should be examining their practices in view of the significant shift in emphasis of Federal prosecutors.

Here are a few points that suggest actions that should be taken by compliance officers and other corporate officers in reaction with the new Federal policy.

1.     The Yates memorandum is a “board-worthy” issue.  Board members and upper management must all be advised of the new DOJ position and the impact on their responsibilities and the compliance process.  The stakes involved in corporate wrongdoing have clearly been raised by Federal prosecutors.  This is serious business.

2.     Significant committees should be advised and integrate these principles into their activities.

3.     Internal investigation process must be amended in a number of ways, some specific to new steps that are required to be taken and to stress the importance of investigating individual wrongdoing.

4.     The process and flow of addressing internal investigations must be reviewed and in many cases revised to meet the new requirements.  A new triage step must be added to the analysis of the investigation process to determine whether there is any potential individual wrongdoing that should be investigated and disclosed.

5.     The dynamics between lower level wrongdoers and the company may be changed because of the increased probability of individual prosecution and the need for the company to disclose all information relating to individual liability.   This will require companies to investigate employees much more frequently.

6.     The need to assure that UpJohn warnings are provided to employees who may have individual liability is increased.  This should be reflected with specific provisions in the investigation process.   It is critical that evidence obtained through internal investigation not be “contaminated” by not giving proper notifications to subjects.  Contamination of evidence could have a negative impact on eligibility for cooperation credit from Federal prosecutors.

7.     Investigation process and procedures need to be reviewed and made air tight.  Detailed investigation steps should be laid out in the investigation policy and supporting documents.  The UpJohn process should be memorialized in investigation policies and procedures to reflect the need for companies to take more intense actions to investigate employees.  No specific changes are required in the UpJohn process, but the process must be well defined and systematized.  Many companies do not specifically address the need to give UpJohn warnings in their investigation policies.

8.     Investigation reports must cover each and every potential subject of the investigation and all relevant information should be disclosed in the report.   The investigation of each potential subject must be taken to a conclusion regarding potential individual wrongdoing.

9.    Yates requires a complicated privilege analysis which should also be considered for inclusion in policies and procedures.  Clarification provided by Federal prosecutors following issuance of the initial Yates Memorandum provides a degree of guidance about what information can be privileged and what cannot.

10.     Broad knowledge of the new Federal focus on individual accountability should be provided within the organization.  Employees and contractors should be advised of the new investigation policies and processes that will apply if an investigation is necessary.  All should understand what will occur if they become the subject of a Federal or internal investigation.

11.    Corporate liability will be influenced by the compliance process, tone from the top, effectiveness of the compliance process and other indications of an effective compliance program.  Individual liability will be largely based on the elements of the potential infraction.  Investigation process must include an analysis of the elements of the potential infraction with respect to each potential subject of an investigation.  Investigation reports and forms should be adjusted to assure that these standards are consistently maintained.  Evidence should be organized and attributed to each applicable subject in support of investigative conclusions.

12.    Compliance officers must educate individuals within the organization regarding the seriousness of these developments.  The best outcome is that individuals will take their role in preventing wrongdoing more seriously and will proactively operate in a manner that makes it unlikely that wrongdoing will ever occur.

For more information regarding the Yates Memorandum and other compliance and health law issues, stay tuned to our blog.

New Federal Prosecution Standards Require Revisions to Investigation Policies

September 27th, 2016

Impact of the Yates Memorandum on Civil Enforcement Liability

Yate Investigation Policy RevisionThe infamous Yates Memorandum revised Federal prosecutorial policy to place more of a focus on individual wrongdoing. Federal prosecutors now have clear directions from the top of the DOJ to consider individual liability prior to resolving any investigation or reaching settlement with respect to corporate wrongdoing. The Yates memorandum extends beyond federal agents who are considering criminal charges against companys or individuals. The Memorandum specifically states that the concept of consideration of individual liability should extend to governmental subdivisions that are responsible for assessing potential civil liability, monetary penalties, program exclusion and other remedies short of criminal prosecution. Government actors are compelled to consider individual monetary responsibility regardless of whether or not the individual has the ability to satisfy the potential award.

Clearly the stakes have gone up for individuals who are involved in companies that commit wrongdoing. In order to receive benefits of having cooperated with governmental investigators, a company must provide all information relevant to individual liability. This requires the company to conduct a robust internal investigation of all potential subjects and to bring the investigation to resolution with respect to each such individual. As a practical matter, when allegations of wrondoing are made, a company investigation will need to broadly consider potential wrongdoing of any employee for which there is any reasonable basis to believe may have been involved in wrongdoing. The incentive of the company will be to be overly broad in its consideration of potential investigatory subjects. This means that corporate employees are exposed to a much higher risk of coming onto the radar of a possible internal investigation. If the individual raises to the level of being a possible “subject,” the investigation will go even further.

In effect, Federal policy regarding prosecution and civil remedies has placed the company’s compliance program in the position of having to broadly consider potential wrongdoing of its employees whenever issues are identified. This is not only to avoid potential criminal exposure, but also to mitigate potential claims for civil liability under the False Claims Act, monetary penalty regulations and other possible civil exposure. This change in Federal policy has a number of impacts on the compliance and ethics program of the company. Of primary importance is the process that is used by the company to investigate employees and contractors who are potential individual wrongdoers. In the past, corporate employees could normally rely on not being the target of criminal or civil liability because the focus was largely on corporate liability. Investigation policies were naturally geared toward gathering information from employees who were more or less alligned with the interests of the company. This dynamic has now changed. A company will much more frequently be in a position of having to hunt for individual wrongdoing and disclosing that wrongdoing to governmental investigators as a condition of receiving cooperation benefits.

This makes it significantly more important for the compliance program to include detailed and standardized processes for conducting internal investigations and reporting the results. Frankly, most compliance investigation policies are not adequately robust to mitigate risk under the new Federal enforcement regimen. Company compliance officers should be reviewing their investigation policies now to bring them up to the standards that are required under the new Federal policy. The standardized investigation process should be defined in detail. There should be detailed requirements for providing corporate “Upjohn” warnings to employees who are questioned. Guidelines for maintaining privilege should also be considered among other items.

Perhaps most importantly, companies should not be lulled into thinking that nothing has changed. The change in federal enforcement policy is an issue that must be brought to corporate management, compliance committees, and the board of directors. In short, this is a “board-worthy” issue that requires action to be taken to at least review, and in most cases make significant revisions, to investigation policies and perhaps other aspects of the corporation’s compliance program.

John Fisher, CHC, CCEP

John H. Fisher

Health Care Counsel
Ruder Ware, L.L.S.C.
500 First Street, Suite 8000
P.O. Box 8050
Wausau, WI 54402-8050

Tel 715.845.4336
Fax 715.845.2718

Ruder Ware is a member of Meritas Law Firms Worldwide

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