getting real: real-life compliance issues...getting real: real-life compliance issues brian flood...

© 2014 Husch Blackwell LLP. All Rights Reserved.1

Getting Real:Real-Life Compliance Issues

Brian Flood512.370.3443

[email protected]

Kevin McCart202.378.2386

[email protected]

Agenda

Audits: Obtaining a Fair Conclusion

Investigations: How to Respond and Control Risk

Effective Communications


3

Proactive Review and Monitoring

Reactive Audit and Investigation

Institutional Recovery

Negotiationand Settlement

Data Analysis

1 2

4 3

Healthcare RegulatoryCycle of Compliance

4

The Core

Corporate Compliance Readiness in the current regulatoryand enforcement environment:

Evaluate the corporate compliance program Effectiveness Readiness Do you have a plan for when it rains?

Risks: Knowing what you do or don’t know Annual risks reviews/surveys Third party reviews/surveys Active auditing and monitoring program

1 2


5

Review of Audit Requestand Monitoring the Audit

Process reviews

Understanding causes of issues or findingsby examining the underlying processesand control flows

Continuous monitoring of affected policy

Standardized reviews to identify payment or documentation issues on a recurring basis during the audit

Review of documentation requested and supplied

Documentation sampling with follow up review or correction or education as necessary

1

Data Analysis

1

4 3

2

6

Event Solution Models: Data is Critical

What does our information and data say?

What does their datapoint to?

What is the same?

What is different?

Why?


Event Solution Models continued

Develop event and audit solution models What does our policy/procedure say to do?

What does timely or contemporaneous regulatory guidance say we should do?

What does the regulatory auditor now say we should have done in the past?

What is the same?

What is different?

Why?

Are there informal but agreed policies and procedures?

Who has knowledge or documentation of them?

Event Solution Models continued

Develop situation solution models

Negotiations and settlement:

What are the audit drivers?

What are the industry drivers?

What are the absolutes?

What is in the grey area?

What is in the red?

What is in the black?3


Getting Around the Wheel

Develop event solution models Event Review Corporate Communications Planning for Recurrence Protections Market Message Event Resolution Maintain Integrity

Do you have a plan for when it rains or do you scramble and get wet?

4

Remember…

Compliance feedback Gap analysis Know your risks Trend data analytics for audit or regulatory interest Plan for rain: Can you parallel the review, audit or investigation?

Can you readily access documentation to assist with resolving potential events or findings?

Can you assemble the subject matter experts within a reasonable time to coordinate the institutions activities, strategy and resolution options?


Government Reaps Significant Rewards from Its Enforcement Efforts

In the last 5 years, the federal government has recovered more than $19 billion from health care fraud enforcement

Recovered $4.3 billion in FY 2013 alone

According to the government’s statistics, it recovers more than $8 for every $1 it spends on enforcement


Early Warning

Signs that an investigation is underway Contact by Special Agent Vendor/customer/employee contact Unusual question from usual regulator

Will you be notified? Do you have a notification process for visits by

regulators? Is there a protocol for contact by government agents?

Including phone calls? What happens to civil subpoenas? Separate process for Investigative Demands/Attorney

General or Grand Jury Subpoenas?

Why Prepare?

The government has a significant advantage when it executes a search warrant What happens during the search can

significantly impact the entire investigation Companies fail to gather important

information regarding investigation Companies and employees often

inadvertently waive important rights


What to Do Before the Agents Show Up with a Warrant

Craft a formal written plan

Designate an on-site company representative who is authorized to speak and act

Train on plan

– Inform employees of rights

– Educate on impact of statements

Back up all electronically stored data and hard copy-only materials

Immediate Response

1. ID and the warrant

2. Initiate notifications

3. Meet with Lead Agent

4. Review warrant

5. Employee interviews – Advice to company employees

6. Dismissal of non-essential employees

7. Monitoring the search

8. Do not consent (without speaking with counsel)

9. Privileged/Trade Secret documents

10. Inventory of records/things seized

11. Media?


What to Do with Employees

Employees should be notified of search and advised of their rights as soon as possible

Consider sending employees home and advising employees that have not yet arrived not to report

Advise employees not to discuss the search with each other

After the Agents Have Gone

Debrief Counsel find out everything that was observed,

heard and said

Employees should not discuss with each other

Assess Legality of search/remedies for impropriety

Status of company in investigation

Information obtained by government

Government’s theory/legal exposure

Has word gotten out?

Preserve and Suspend

Investigate


If the Government Is On Line One:

Establish ONE point person for internal contact

Ask questions to identify the person’s agency Indicate a firm intent to “cooperate” But, don’t agree to even seemingly innocuous

requests without consultation Clarify the scope of request Create transparency in the process if not in

the content Do not give any statement about the facts

Civil Investigative Demand

Can cover: Production of documents Interrogatories Sworn testimony

Response time frame typically negotiated

Becoming more common


OIG Subpoenas

From Assistant Inspector General for Legal Affairs (AIG) or Special Agent in Charge (SAC)

May seek documents or be a testimonial subpoena

Response usually due in 30 days but often negotiated

What Next?

Company should structure its internal investigation to preserve attorney-client privilege and work product protections

Speed is key. You are likely several months behind the government. You need to get up to speed quickly

Counsel can work with government to establish dialogue and attempt to obtain information about the investigation


What Next?

Often search warrant will be followed by grand jury subpoena

Counsel can work with government to negotiate scope and timing of response

Requests provide insight into government’s focus and theory of the case

Professional, timely responses set the tone for the remainder of the investigation

Working with a Federal Prosecutoror Agent

Start fixing any internal problems as soon as you know about them

Never go above a line attorney or case agent to their supervisor

Negotiating a limited production is easier if some of the requested documents are on the way

Consider talking about past experiences

The attorney or agent will always feel severely short-staffed

Use the government’s pace to your advantage


Narrowing a Government Request

Negotiate for: Rolling productions Limiting the time period of responsive information Limiting the custodians Offering interviews in lieu of documents or vice versa Changing “all documents” to “documents sufficient to

show” Providing charts or summaries rather than source

documents Using agreed-upon search terms Using attorney proffers Redacting business-related information Getting an agreement that a privilege log can be delayed

Protecting Confidential Communications in Advance of a Government Investigation


The Attorney-Client Privilege:What is it? When Does it Apply?

Protects activity associated with legal advice Fact-finding, including interviews with any

necessary employee Legal advice given to any necessary employee

Requires that the communication be confidential Communicating with the client No third parties No disclosure, outside of the attorney-client

relationship BUT it does not protect the underlying facts

In-House Counsel’s Challenge in Maintaining the Privilege

Although the privilege applies equally to outside and inside counsel, there will be greater scrutiny of in-house communications because counsel fills multiple roles

Burden is typically to “clearly demonstrate” the role for the specific communication In-house counsel has become involved in wide range of corporate

activities and must make clear showing that they are acting in legal capacity

Position or title alone is not sufficient to establish the privilege


Keys to Protecting the Privilege

1. Segregate privileged and non-privileged material

2. Make clear that you are providing advice in your capacity as an attorney

3. Educate business people and the Board on the attorney-client privilege

4. Maintain electronic data pursuant to a document retention policy

Protecting the PrivilegeDuring Internal Investigations


Scoping the Investigation

Have written policies and procedures for investigations

Implement reporting mechanism Triage – best practice by lawyers Decide whether to conduct a privileged

investigation Think about the end result Prepare for the possibility Company will

ultimately waive privilege

Beginning the Investigation

Staff the investigation – In-house vs. outside counsel

Non-lawyers may participate so long as clear that they are acting as agents of lawyers

Preserve documents

Identify the people you are likely to interview

Who does counsel represent?


Involving Outside Counsel

Most likely not needed for routine, discrete internal matters

Often not needed if simply responding to a 3rd party document request

Some events should immediately trigger a call to outside counsel: A request for information that is not about a routine matter

A request for information about an event for which there was an internal investigation

Any investigation potentially involving the conduct of corporate officers or the Board of Directors

Any investigation involving high-profile Administration priorities

Any investigation involving search warrant or grand jury subpoena

The Privilege and Organizational Clients

Entire organization is client, NOT individual officers, employees, Board members

Watch for conflicts as investigation proceeds Individuals may change roles throughout

representation so keep their roles straight Constituents speak on behalf of organization so

privilege can apply if kept confidential Privilege applies to organization, NOT individuals Organization can waive privilege, individual cannot

“Organization as Client” (MRPC 1.13)


Corporate Miranda Warning:

WHO YOU REPRESENT: I am a lawyer for X Corp. I represent only X Corp., and I don’t represent you personally. But, as you know, the only way I can talk to the corporation is to talk to its employees, which is why I am here today.

WHAT IS HAPPENING: I am conducting this interviewto gather facts in order to provide legal advice for the company. This interview is part of an investigation to determine the facts and circumstances of __ so I can advise the company how best to proceed.

WHAT IS PRIVILEGED: Your communications with me are protected by the attorney-client privilege. But the attorney-client privilege belongs solely to the company, not you. That means that the company alone may elect to waive the attorney-client privilege and reveal our discussion to third parties. And it may do so without notifying you.

WHAT INFORMATION MAY BE DISCLOSED: NON-LAW ENFORCEMENT: In order for this discussion to be

subject to the privilege, it must be kept in confidence. In other words, you may not disclose the substance of this interview to anyone, including other employees or anyone outside of the company. As an employee you have a duty to the company to maintain this confidence.

LAW ENFORCEMENT: This duty does not prevent you from discussing the underlying facts with government investigators. But even with government investigators you may not share information about our discussions. That information is privileged.

“Do you understand? Do you have any questions?”

Corporate Miranda Warning:


Interview Notes

Verbatim recitations disfavored

Summaries better practice

Weave in mental impressions and opinions

Sometimes only oral reports

Remember once waived, almost everything discoverable

To Write or Not to Write

Interview summaries

Reports to: In-house counsel

Officers

Boards

Board Committee

Internal communications

Communications among lawyers


Threats to Privilege

In-house counsel is acting in a capacity other than lawyer, i.e. business advisor

Investigations conducted in the normal ordinary course of business

Overbroad claims of privilege, In re Google Inc., 462 Fed. Appx. 975, 978 (Fed. Cir. 2012)

Failure to designate as privileged

Threats to Privilege

Auditors and regulators seeking information

Suitors, joint venture partners or investors desirous of information regarding risks

Audit or other special committees of Board

Managing resources

Non-lawyer investigators

In-house investigations

Resolution of the case


Protecting the Privilege

Draw clear lines of distinction between business and legal advice

Avoid inadvertent disclosure

Avoid over-labeling

Maintain “need to know” on privileged documents

Preserve as much as possible when disclosure is required

Questions?

Thank youWe will send you an email with the CLE certificate of attendance.

Illinois 1.0 hour Missouri 1.2 hours Nebraska1.0 hour (Activity No. 98107) Tennessee 1.0 hour (ID No. 158933) Texas 1.0 hour (Course No. 901302327)

Brian Flood512.370.3443

[email protected]

Kevin McCart202.378.2386

[email protected]

getting real: real-life compliance issues...getting real: real-life compliance issues brian flood...

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