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The Fraud Section of the U.S. Department of Justice’s (“DOJ’s”) Criminal Division recently released new compliance policy guidance for use by its attorneys and investigators when “conducting an investigation of a corporate entity, determining whether to bring charges, and negotiating plea or other agreements.”
The Evaluation of Corporate Compliance Programs (“Compliance Guidance”) provides additional substance to the factors commonly known as the Filip Factors, which guide federal investigations of business organizations. While the Compliance Guidance purports to be “neither a checklist nor a formula,” for health care providers developing or evaluating their own compliance programs, it can serve as an informative rubric against which to judge their own policies and practices. It can also provide health care providers who become the subject of federal enforcement activity with a road map to the critical questions that should be addressed internally in order to successfully defend themselves.
The Compliance Guidance recognizes that each organization has unique needs when it comes to compliance with federal laws and regulations. As such, the Compliance Guidance directs federal attorneys and investigators to ask pointed questions regarding how the organization prepared for, investigated and responded to the non-compliant practices in light of its unique circumstances. The Compliance Guidance’s questions prompt investigators to consider the following aspects of a compliance program.
• Analysis and Remediation of Underlying Misconduct. Questions focus on the organization’s specific response to the identified issue, including earlier opportunities to mitigate the issue, root cause identification and what changes have been made.
• Senior and Middle Management. Questions focus on how governance and senior and middle management demonstrate a culture of compliance, including how senior leaders’ compliance efforts are monitored and what compliance resources are available to the Board of Directors.
• Autonomy and Resources. Questions focus on the involvement of the compliance program after issues were identified, the empowerment to address concerns independently, the sufficiency of mission resources, the nature of access to governance and the ways similar concerns were reported and handled.
• Policies and Procedures. Questions focus on what controls could have prevented the conduct, policies adopted applicable to the conduct at issue, what business units were involved in the design of those policies, policy incorporation and policy accessibility to impacted personnel.
• Risk Assessment. Questions focus on how the organization assessed its risk profile, what metrics it collected to assess the conduct in question and how the organization’s assessment process accounted for manifested risks.
• Training and Communications. Questions focus on whether the organization’s training program targets high-risk areas and whether the training is delivered in an appropriate format (e.g., whether explanations are delivered at an appropriate level and in a language understood by impacted employees). Additionally, the Compliance Guidance asks whether senior management has communicated with employees regarding the specific compliance concern at issue.
• Confidential Reporting and Investigation. Questions focus on the effectiveness of reporting mechanisms, whether the appropriate personnel investigated reports and organizational practice adaptation to investigations.
• Incentives and Disciplinary Measures. Questions focus on positive and negative incentives within the organization including whether compliance is a key concern and whether the organization undertook disciplinary actions in response to the identified issue.
• Continuous Improvement, Periodic Testing and Review. Questions focus on the regularity of audits (both internal and external), evaluations of the effectiveness of its internal controls and responses to information from the audits.
• Third-Party Management. Questions ask the organization to identify the reasons for which it contracted with any third-party providers impacted by the identified issue, whether appropriate controls were in place to mitigate risks associated with engaging third-party vendors and whether the third-party vendors’ payment structures created incentives for noncompliance.
• Mergers and Acquisitions. Questions focus on whether compliance concerns are appropriately identified during due diligence and if issues identified through due diligence are remediated upon closing of the deal.
It is the government’s expectation that health care providers must have an effective compliance program – one that shows clear accountability and is supported by senior leadership. Hospital leaders are encouraged to ensure that they establish a culture of compliance within their organizations and model behavior that reflects a true commitment to compliance.
The focus on the compliance program’s autonomy and resources teaches that a capable, autonomous compliance program, appropriate in light of the organization’s size and scope, can be a bulwark against harsh punishments. The broad focus of the questions reveals that the DOJ considers compliance to be a key concern at all levels of an organization. Leaders should seek to create nimble structures that are able to detect and respond to potential compliance concerns in a timely, appropriate manner, no matter where or at what level within the organization the concern arose.
The publication of the Compliance Guidance is a prime opportunity for health care providers to reevaluate the effectiveness of their existing compliance programs. For those with a strong compliance program, the Compliance Guidance acts as an additional benchmark to assess compliance programs and ensure the programs are structured to minimize the risks inherent in participating in federal health care programs. Entities with pending compliance concerns can use the Compliance Guidance as a road map for responding to those concerns to maximize the likelihood that they will receive cooperation credit during any federal investigation.
This article is educational in nature and is not intended as legal advice. Always consult your legal counsel with specific legal matters. If you have any questions or would like additional information about this topic, please contact:
• Scott W. Taebel at (414) 721-0445 or firstname.lastname@example.org;
• Katherine A. Kuchan at (414) 721-0479 or email@example.com;
• Leia C. Olsen at (414) 721-0466 or firstname.lastname@example.org;
• T. James Junger at (414) 721-0922 or email@example.com.
Scott Taebel, Katherine Kuchan, Leia Olsen and James Junger are attorneys with Hall, Render, Killian, Heath & Lyman, P.C., the largest health care-focused law firm in the country. Please visit the Hall Render Blog at http://blogs.hallrender.com/ for more information on topics related to health care law.