Commentary: Raising the bar on 'cooperating fully' with the government

With the publication last year of a policy memo that called on prosecutors to consider individual liability in all corporate misconduct cases, the U.S. Justice Department immediately accomplished one goal: The memo from Deputy Attorney General Sally Quillian Yates made everyone sit up and take notice.

While the Yates memo has far-reaching impact, it did not come out of the blue. It was less a new position in corporate healthcare fraud enforcement than a warning: Policy that long predated the release of the Yates memo in September 2015 now would be more strictly enforced. Holding individuals more accountable was a shift in degree rather than in kind, and parallel civil and criminal investigations have been the government's operating procedure for at least two decades, dating to Justice Department guidelines for healthcare fraud prosecutors issued in 1997.

What is new, taking the Yates memo and other Obama administration directives as a whole, is a narrower, more difficult path for healthcare organizations hoping to earn “cooperation credit” when providing information to the government. Reviewing these directives to prosecutors will help healthcare organizations better understand the risks they face and suggest some corporate best practices to mitigate the risks.

A memo from then-Attorney General Eric Holder in January 2012 gave clear direction for civil and criminal prosecutors to coordinate together and work closely with agency attorneys, such as HHS' Office of Inspector General, and to use all fraud remedies at the government's disposal. The Holder memo also made clear this approach starts with the intake of a case, and continues through the investigation and ultimate resolution of the case.

Additionally, Assistant Attorney General Leslie Caldwell indicated in 2014 that the Justice Department's Civil Division would begin referring all qui tam (whistleblower) cases to the Criminal Division immediately upon intake. If prosecutors open a criminal investigation, the fraud enforcers must coordinate their parallel investigations, utilizing all available resources at the government's disposal.

The Yates memo, additionally, instructs all components of the DOJ family to focus on individual culpability for wrongful corporate misconduct at the beginning of their investigations, and directs the Civil Division to consider civil action against individuals as well as organizations. A recent example is the $1 million settlement entered into by Tuomey Healthcare's former CEO for his role in claimed Stark and False Claims Act violations, which had previously led to a separate corporate settlement. And, perhaps the memo's biggest impact is in the more stringent conditions it sets for companies to earn cooperation credit.

The Yates memo has made cooperation an all-or-nothing proposition: Either reveal all relevant information in the organization's possession proactively obtained or forego any cooperation credit or leniency. There is no government consideration for some “degree of cooperation” or a sliding scale for providing some information. Coupled with the strengthened focus on parallel civil and criminal actions, an organization faces perilous consequences of newly increased civil penalties, and the threat of criminal proceedings against itself, its employees, and its corporate leadership.

The policy embodied in these gradual, sharpened government policies and announcements—building upon two decades of policy and practice—suggests three best practices for healthcare executives to keep in mind.

As always, the best practice of all is a robust compliance program that helps an organization avoid conduct, whether intended or not, that could trigger government scrutiny. Devising the program is just the first step. The program must be implemented, and regularly evaluated and tested to ensure it is effective, and updated for an ever-evolving healthcare regulatory environment.

Conducting prompt, thorough internal investigations has taken on even greater importance with the need for the organization to determine what the risks are and what information needs to be disclosed to the government. This includes, crucially, the identification of any individuals who may be held responsible for problematic conduct. The new requirements for cooperation credit suggest healthcare organizations must consider how the interests of the company may diverge during the investigation from the interests of its employees and executives. Will managers and employees be forthcoming in an internal investigation if they fear they may be targets in a criminal probe or individually responsible for civil recoveries and penalties?

Finally, the organization's in-house and outside attorneys involved in a government investigation must constantly consider the ramifications of any action on all potential enforcement fronts. Information identified in the internal investigation becomes the currency for resolution and, in egregious cases, perhaps even survival, with consequences spreading all the way to the C-suite.

Lisa S. Rivera is a former civil and criminal assistant U.S. attorney for the Middle District of Tennessee and now is a partner in the litigation and healthcare fraud and abuse practice group of Bass Berry & Sims in Nashville. Jeff H. Gibson also has extensive experience representing clients in complex civil and criminal litigation and government investigations and is an attorney in the litigation and healthcare fraud and abuse practice group at Bass Berry & Sims.