‘Yates Memo’ on False Claims Still Guides Justice Investigations

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By Jeannie Baumann

An Obama-era policy to increase accountability for individuals accused of corporate wrongdoing still applies at the Department of Justice, an assistant U.S. attorney said June 6.

Margaret L. Hutchinson, who leads the civil division for the U.S. Attorney’s Office in the Eastern District of Pennsylvania, said the 2015 policy known as the “ Yates memo” has implications for how the DOJ assesses research noncompliance allegations under the False Claims Act.

“We must now follow the Yates memo,” Hutchinson said at a conference. “It’s still in place, and it’s still in effect.”

The memo is named after its author, former Acting Attorney General Sally Yates, whom President Donald Trump fired Jan. 30 after she advised Justice attorneys not to follow the president’s executive order on immigration. Yates issued the memo in September 2015 to describe steps the DOJ should take when investigating cases of corporate misconduct. The memo reflected a policy shift that said in part, “criminal and civil corporate investigations should focus on individuals from the inception of the investigation.”

Impact on Research Compliance

Hutchinson’s remarks, which she said were her own views and didn’t represent the DOJ, were in response to a question at the Health Care Compliance Association’s research compliance conference in Baltimore about how the DOJ assesses compliance programs in the research arena, especially as it dovetails with the Yates memo.

“We must now look at individuals and see if they also could be exposed to and liable under the False Claims Act in addition to looking at the institution,” Hutchinson said. “That has definitely affected our investigations—most definitely. We are not now as quick to resolve and settle cases with the institution.”

The Yates memo can serve as a valuable tool for research compliance officers, Hutchinson told the conference attendees, in making the case about the importance of a robust compliance program.

“You can say to your institutions, I’m not just [saying] this because the institution’s going to have exposure. I’m [saying it] because you individuals may have exposure,” she said.

False Claims Act Liability

The False Claims Act imposes liability on anyone who:

  •  knowingly presents or causes to be presented a false or fraudulent claim for payment or approval;
  •  knowingly makes, uses, or causes to be made or used, a false record or statement material to a false or fraudulent claim; or
  •  improperly avoids or decreases an obligation to pay or transmit money or property to the U.S.
A claim under the law includes loan applications and grant documents, including those associated with National Institutes of Health grants. Hutchinson added that any request for payment in those grants is subject to liability under the FCA.

“It’s extraordinarily broad,” she said, “It’s not just a fee for service, but it’s the actual draw down on the research grant itself. Each time there’s a draw down, that is perceived as a claim for False Claims Act liability purposes.”

Under an amendment implemented a few years ago, Hutchinson said, the scope of false claims now includes liability on improper retention of an overpayment.

Overpayment Retention

“In the 2017 version of the False Claims Act,” she said, there is “liability if you later determine that what you got, you shouldn’t have gotten, and you don’t refund it.”

In addition to directly submitting a false claim to the federal government, Hutchinson said causing the submission of a false claim also triggers liability under the statute. Most research-related FCA cases stem from the misuse of research that results in the submission of a false claim, she said.

“This kind of research fraud is what we work with often,” she said. These cases include misusing or misreporting research to justify approval of or payment for a medical device or pharmaceutical product that the government otherwise would not have authorized.

“We’re not scientists. We don’t play scientists on TV. We don’t pretend to be scientists. We use scientific information to improve our health care and to pay for our health care,” Hutchinson said. “And we need to be able to rely on the integrity of that science. And when we can’t, then the Department of Justice and the False Claims Act come into play.”

OIG Audit Plan

The DOJ pursues FCA cases via a number of avenues, including whistleblowers, state false-claims cases, class action lawsuits, and inspection reports. Hutchinson said she looks forward to the Work Plan the Health and Human Services Office of Inspector General releases every year.

“I love to see what they’re going to audit next. And I love to see what they’re going to find,” she said, noting the HHS inspector general makes findings but not conclusions.

“They find there was $5 million mispaid by [an institution], but they’re not saying it’s fraud,” Hutchinson said. “But then we come and say, ‘Yeah, but we’re saying it’s fraud.’”

The work of research compliance offices and other movements to increase the transparency of health care and research—such as the Open Payments program at the Centers for Medicare & Medicaid Services that requires institutions to disclose payments to doctors from drug and device companies—are working, she said.

“We are seeing an improvement,” Hutchinson said, “but I think we still have a lot to do.”

To contact the reporter on this story: Jeannie Baumann in Washington at jbaumann@bna.com

To contact the editor responsible for this story: Randy Kubetin at RKubetin@bna.com

For More Information

More information about the HCCA research compliance conference is available at http://src.bna.com/pFQ.The Yates memo is available at http://src.bna.com/pCG.

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