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By Sara Merken
The Department of Justice is planning a review of prosecution policies that will likely create a clearer road map for federal prosecutors looking into health-care fraud, attorneys told Bloomberg Law.
A review of the Yates Memo, which set out guidance for prioritizing prosecution of individuals in corporate misconduct investigations, may provide clarity for attorneys about attorney-client privilege. The memo, named for former Deputy Attorney General Sally Yates, has implications for how the department assesses health-care fraud and similar allegations under the False Claims Act.
The Justice Department is aiming to formally incorporate existing instructions and policy guidance into official policy where appropriate, Deputy Attorney General Rod Rosenstein said.
DOJ policies should be accessible to those who are required to follow them, and enforcing policy through different memos is inefficient and ineffective, Rosenstein said at a New York University program on corporate compliance and enforcement Oct. 6.
The Justice Department is signaling its desire to implement a more holistic approach to white-collar crime policy, which could foster more consistent outcomes for individuals and companies in different districts, Gejaa Gobena, a former deputy chief of the DOJ criminal division’s fraud section and a Washington-based partner at Hogan Lovells, said
Harmonization of guideposts and memoranda would result in more comprehensive policy, he told Bloomberg BNA.
The DOJ is taking “concrete steps” to enhance federal prosecutions and civil actions for corporate fraud, using the guidelines published by Yates in September 2015, Rosenstein said at the conference.
There will likely be a nuanced shift to guideposts laid out in the Yates memo rather than a direct or complete repeal or revision, Michael Peregrine, a Chicago-based partner at McDermott, Will and Emery LLP, told Bloomberg Law. Peregrine is a member of a Bloomberg Law advisory board.
Discussion of the memo could be “one administration reacting against something that was put in place by another administration” that may not lead to significant differences in the enforcement posture, New York-based counsel Eric Fader, who represents health-care providers at Day Pitney LLP, told Bloomberg Law.
The DOJ’s review should resolve some of the “unintended consequences” of the Yates memo, Melissa Jampol, former assistant attorney in the U.S. attorney’s office for the District of New Jersey, told Bloomberg BNA. Jampol is a member of Epstein Becker Green’s health-care and life sciences and litigation practices in New York and Newark, N.J.
How corporations should respond to DOJ investigative inquiries for information on executives and individuals “remains a gray area for attorney client privilege” and deserves particular attention in a memo review, Jampol said.
The memo mandates full company cooperation in disclosing information about individuals allegedly involved in fraud if the organization expects to receive any cooperation credit for resolving investigations.
Companies and attorneys trying to understand the process would benefit from a more explicit breakdown of cooperation credit requirements, like that under the Foreign Corrupt Practices Act (FCPA) enforcement process, which lays out how much credit a company will receive in a settlement by a setting a percentage reduction, Jampol said.
Companies are concerned about whether withholding privileged client information results in forfeiting cooperation credit. A review of the memo should clarify the suggestion that the department alone makes the decision as to whether all relevant facts were provided in the investigation, Jampol added.
The clear and standardized metrics for conduct under the FCPA allow attorneys who represent corporate clients to have a better sense of the outcome of a case, Gobena said. The vague information disclosure requirements in the Yates memo created “more confusion than clarity” for defense attorneys, who would benefit from guideposts to help clients understand what to do from a compliance standpoint, Gobena said.
However, easing up on this aspect of the memo could potentially allow individuals to “hide behind the cloak of a corporation,” which would in effect “eviscerate the whole thrust of the Yates memo” of holding individuals accountable, Fader said.
The $155 million False Claims Act settlement ( United States ex rel. Delaney v. eClinicalWorks, LLC, D. Vt., No. 15-cv-95, settlement announced 5/31/17) with electronic health records vendor eClinicalWorks, which resolved allegations that the company and its three founders misrepresented the company’s software capabilities, “embodies the Yates memo,” Jampol said. A developer and a project manager also settled for $50,000 and $15,000, respectively, representing the attempt to hold all involved individuals accountable, she said.
The focus on individual accountability is likely to continue, while any changes to the Yates memo may soften the government’s regulation of corporations, Fader said.
The DOJ, which has recovered $60 million in actions against individuals under the False Claims Act in fiscal year 2017, is “trumpeting” the prosecution of individuals, Jampol said.
Rosenstein’s remarks on individual culpability match those of U.S. Attorney General Jeff Sessions at an ethics conference in April, and “the traditional Republican position of looking out for corporations” may continue in this administration, Fader said.
Any lenience in corporate regulation could cause companies and executives to “take advantage of the extra latitude,” he added.
Peregrine recommended that corporate boards develop strategies ahead of the potential that “executives will misperceive the message” of any DOJ policy modification and relax on compliance spending and diligence.
Boards should take the extra step to promote legal compliance programs amid the impending nuanced policy shift to signal to executives the necessity to maintain robust compliance programs and rigorous reviews of potential business risks, he said.
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