Inside the Prosecutor’s Mind: DOJ’s New Guidance on the Evaluation of Corporate Compliance Programs

March 15, 2017

The Fraud Section of the U.S. Department of Justice’s Criminal Division recently released new guidance to assist prosecutors when evaluating corporate compliance programs. Though not specific to health care providers, it does provide valuable insight into how prosecutors will judge the effectiveness of compliance programs. Health care providers should also know that this new guidance does not supersede OIG’s recommendations to health care providers regarding effective compliance programs. Instead, the new DOJ guidance offers a parallel metric for evaluating compliance.

The guidance is an extension of the “Filip Factors,” which are ten factors that prosecutors use to determine whether or not to charge a corporation.1 Specifically, Filip Factors five and seven instruct prosecutors to consider: “the existence and effectiveness of the corporation’s pre-existing compliance program;” and “the corporation’s remedial actions, including any efforts to implement an effective corporate compliance program or to improve an existing one, to replace responsible management, to discipline or terminate wrongdoers, to pay restitution, and to cooperate with the relevant government agencies.”

The new guidance from DOJ helps prosecutors define “effective compliance” by identifying eleven priority compliance topics. The topics are:

  1. Analysis and Remediation of Underlying Misconduct;
  2. Senior and Middle Management;
  3. Autonomy and Resources;
  4. Policies and Procedures;
  5. Risk Assessment;
  6. Training and Communications;
  7. Confidential Reporting and Investigations;
  8. Incentives and Disciplinary Measures;
  9. Continuous Improvement, Periodic Testing and Review;
  10. Third Party Management; and
  11. Mergers and Acquisitions.

While many of these topics have appeared in various documents before, this is the first time they have been compiled into a single authoritative resource. Importantly, this is also the first time that these factors have been articulated in this level of detail by DOJ. This is a clear indication that corporate compliance is a top priority for DOJ. Simultaneously, the new guidance will assist health care providers when developing new compliance programs or strengthening existing programs.

DOJ’s guidance takes the form of questions that government attorneys should ask when evaluating the effectiveness of a provider’s compliance program. For instance, when reviewing whether a provider has a true compliance officer rather than a figurehead only, DOJ will analyze:

  • How the compliance function compared with other strategic functions in the company in terms of stature, compensation levels, rank/title, reporting line, resources, and access to key decision makers;
  • Whether compliance personnel has direct reporting lines to anyone on the board of directors; and
  • Whether the compliance officials have reporting lines to the organization’s headquarters.

These questions explore the same areas raised in OIG’s guidance to health care providers recommending that a provider’s compliance officer be a member of the “high level personnel” of the organization, that is, an individual who has substantial control over the operating organization or who has a substantial policy-making role within the operating organization.2

DOJ’s guidance indicates that prosecutors will also explore whether an organization had an effective process for overseeing vendor relationships and monitoring vendor compliance. The guidance confirms that prosecutors will probe the effectiveness of compliance training, by exploring whether compliance resources have been made available to employees and whether the organization is regularly assessing whether its employees know when to seek advice and whether they would be willing to do so.

If you have any questions about DOJ’s new guidance or need assistance assessing your organization’s compliance program, please contact Mary Malone or a member of Hancock Daniel’s Compliance team.

1. United States Attorney’s Manual, 9-28.300 – Factors to Be Considered.
2. See 42 C.F.R. § 483.85.

The information contained in this advisory is for general educational purposes only. It is presented with the understanding that neither the author nor Hancock, Daniel & Johnson, P.C., PC, is offering any legal or other professional services. Since the law in many areas is complex and can change rapidly, this information may not apply to a given factual situation and can become outdated. Individuals desiring legal advice should consult legal counsel for up-to-date and fact-specific advice. Under no circumstances will the author or Hancock, Daniel & Johnson, P.C., PC be liable for any direct, indirect, or consequential damages resulting from the use of this material.

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