Healthcare organizations have a new ally—or foe, depending on the strength of their compliance programs—in the U.S. Justice Department.
Longtime compliance lawyer Hui Chen this week joined the Justice Department's Criminal Division Fraud Section. As compliance counsel, Chen will evaluate the quality and effectiveness of companies' compliance programs, which prosecutors consider when deciding whether to bring criminal fraud charges against a company. She will also help guide prosecutors when they seek remedial compliance measures against organizations.
The hiring comes as criminal investigations and charges in big Medicare and Medicaid fraud cases are becoming increasingly common. Earlier this year, the Justice Department said it would make sure its Civil and Criminal Divisions shared all new whistle-blower complaints, so the departments can conduct parallel investigations.
Healthcare organizations will undoubtedly feel the effects of the added scrutiny, experts say.
Tenet Healthcare Corp. disclosed earlier this year that the Justice Department is investigating allegations that it paid kickbacks for maternity referrals—accusations Tenet has challenged in court documents. Last month, drugmaker Warner Chilcott agreed to plead guilty to healthcare fraud and pay the government $125 million to resolve civil and criminal allegations.
“This certainly will raise the stakes for healthcare organizations to ensure that they have effective compliance programs, because it will make more and more of a difference down the road,” said Gabriel Imperato, a managing partner at Broad and Cassel, and executive board president of the Health Care Compliance Association, although he was not speaking on behalf of the association.
Chen's position will be one of the most authoritative in the federal government relative to determining the effectiveness of compliance programs, Imperato said. “That position should have a collateral impact on what are the measurements of an effective compliance program,” he said.
In a speech this week, Assistant Attorney General Leslie Caldwell explained how Chen will examine compliance programs.
For example, Chen will consider how strictly an institution's directors and senior managers support corporate compliance policies; whether those responsible for compliance have stature within a company; and whether compliance policies are effectively communicated to employees, among other factors.
“As much as full-throated compliance programs are essential to preventing fraud and corruption, the quality and effectiveness of a compliance program is also an important factor that prosecutors consider in determining whether to bring charges against a business entity that has engaged in some form of criminal conduct,” Caldwell said.
Caldwell said the Criminal Division has gotten better at evaluating compliance programs over the years, but the division's employees are ultimately prosecutors, not compliance professionals. She said Chen will provide a “reality check.”
Roy Snell, CEO of the Health Care Compliance Association, said Chen's expertise should be good for healthcare and other companies with strong compliance programs and bad for those with weak ones.
“People who aren't trying should be concerned, because she is going to be astute at evaluating compliance programs,” Snell said. “Conversely, people who are making a grand effort should have a better outcome.”
He called her hire “good news” for healthcare, because no other industry has more resources dedicated to compliance.
“She will probably be impressed,” Snell said.
Before starting at the Justice Department, Chen served as global head for anti-bribery and corruption at Standard Chartered Bank. Before that, she worked as assistant general counsel in Pfizer's compliance division, and for Microsoft Corp.