Compliance Process and the Yates Memorandum?
The 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.