SCOPE AND ACCOUNTABILITY OF INTERNAL INVESTIGATION
The most important initial consideration to be taken into account when directing and conducting an internal investigation of an organization involves a clear understanding regarding the scope, method and accountability and reporting between the law firm directing the investigation, the consultants conducting the investigation and the client organization which is authorizing the internal investigation. This is particularly important since those conducting an internal investigation will not be the most popular visitors with members of the organization nor will their task necessarily result in positive findings and recommendations for the organization and/or key individuals in the organization. The issues which should be raised in discussing the scope of the internal investigation should include, not only the subject matter to be addressed, but also the law firm and investigative team that will be accountable the client organization. The reporting responsibility for the investigative team could be to a special committee of the Board of Directors or the in-house counsel for the organization, and /or selective members of the management team. This assessment will necessarily require a determination of the degree of independence/control which will be exerted by management over the internal investigation. This obviously has implications for the credibility and effectiveness of the internal investigation. The degree of credibility of the internal investigation also could have an extremely important impact on the level of cooperation and credibility which the organization may have with the government entities investigating the potential violations of the health care fraud and abuse laws.
An additional issue, which should be discussed at the outset with the organization, is the extent to which the internal investigative team will develop the facts and proffer conclusions based on the facts. An investigation, at a minimum, must collect the relevant facts associated with the issues within the scope of the investigation. The next question will be whether conclusions of law should be drawn from those facts or whether they should be left to other parties and, perhaps, even other outside or inside counsel and/or management of the organization. This issue can be tricky and not without risks, especially as it relates to a strategy with the federal or state government law enforcement authorities. It should be carefully considered at the outset and constantly reassessed during the course of the internal investigation.
MATTERS OF PRIVILEGE
The law firm directing the internal investigation needs to set up and document the investigative process to maximize the application of the attorney-client, work product and self-evaluative privileges to the facts gathered during the investigation. This does not mean that the conduct of the internal investigation is utilized to otherwise attempt to cloak documents which were previously not privileged, but it does mean carefully tracking what new information is gathered by the investigative team and ensuring that it will be privileged and confidential. An internal investigation of this kind also has to take into account the very real possibility that findings and conclusions may be disclosed to the government at a later date in the context of resolution of issues concerning potential violations of the health care fraud and abuse laws. The very fact that such a disclosure may be contemplated requires realization that information gathered during the internal investigation may, ultimately, be shared with a third-party which could result in waiver of the attorney-client and work product privilege in other parallel civil or criminal proceedings. This can be a particular problem when parallel civil litigation arises, which is often the case when publicly traded companies are involved.
This issue also is implicated when individuals related to the organization may also have individual exposure for culpability for their own actions involving allegations of violations of the health care fraud and abuse laws. A decision may have to be made at an early stage of the investigation regarding whether or not to enter into joint defense arrangements between the organization and such individuals. This decision should also consider how a joint defense agreement may limit discretion on the part of the organization regarding potential disclosure of information gathered during the internal investigation to the government authorities and also how a joint defense agreement may be viewed by those government authorities.
MANAGING THE INVESTIGATION
Another critical aspect of any internal investigation is defining the organization's expectations and managing those expectations as the investigation continues. There should be an understanding between the investigative team and the organization about the time frame for completion of the investigation and the resources necessary to do so within that time frame. There should also be an understanding about what types of experts may be needed to be brought in during the course of the investigation both for gathering the facts and/or analysis of facts relevant to any potential violations of the health care fraud and abuse laws. Obviously, there should be continual updates on the progress of the investigation and some assurances that the client understands what will unfold as the investigation continues.
The investigative team should have a good handle on the potential scope of the problems to be addressed and whether it may include criminal, as well as civil and administrative liability under the health care fraud and abuse laws. If the internal investigation is being undertaken parallel to the government's investigation, it is often useful to communicate with the government what the intentions of the organization are in this self-evaluative internal investigation, and, also to seek cooperation from the government in either delaying or completing their own investigation in as orderly a manner as possible and with as little disruption to the day-to-day business affairs of the organization. This is not only an important reason for conducting an internal investigation to begin with, but depending on the credibility and persuasiveness of your investigative team it is possible to obtain a level of cooperation from the government authorities who are presumably interested in the same issues which the investigative team may be reviewing within the organization. The level of law enforcement interest in the issues which will be addressed during the internal investigation will play a large part in the strategy of the internal investigation and potentially the ultimate issue of self-reporting and voluntary disclosure of the information obtained by the organization in the context of achieving a resolution of the issues with law enforcement authorities.
INVESTIGATIVE METHODOLOGY
The investigative techniques and methodology should be discussed thoroughly with the client organization so a clear understanding can be achieved concerning how the investigation will impac5t the organization and what level of cooperation can be expected from the organization. The following issues should be addressed before the investigation begins:
- How many current or former employee interviews are likely? Who will be interviewed and where will they be conducted? Who will conduct the interviews? Do the employees to be interviewed have any legal exposure for their own actions and is the client willing to provide them with an attorney at a cost to the organization? What will happen if an employee refuses to cooperate?
- What documents have to be reviewed? Where are the documents and have they been secured? How will they be categorized and organized? Who will review these documents?
- Do any computers have to be downloaded and searched? Is there a local area network? A wide area network? Electronic mail? Where are the servers? Can the hardware and software be secured?
- Will offices have to be secured and searched? How many and where and will the client be cooperative in such a search?
- Does your client's company currently have a compliance program? A compliance officer? Has any investigation been conducted prior to the initiation of the internal investigation? If so, what were the findings and was any corrective action taken?
This should not be the last time that you visit the question concerning your client's compliance program, because if there is an eventual settlement of issues with the government it will be likely mandate the imposition of an "effective" compliance program. The organization will be far better off in many respects by ensuring that its compliance program is "effective" before the government defines its effectiveness through the onerous requirements which have appeared in recent health care fraud and abuse settlement agreements. Furthermore, an effective compliance program can mitigate the fines, penalties and sanctions that your client organization may be subject to in any settlement negotiations with the government. Regardless of your client's line of business, an effective compliance program should mirror the recommended guidelines set forth by the United States Sentencing Commission in the Federal Sentencing Guidelines for Organizations.
DIRECTING, CONDUCTING AND DOCUMENTING THE RESULTS OF THE INVESTIGATION
An important part of an internal investigation is preserving the attorney-client privilege. Accordingly, it is advisable that the legal team receive periodic (daily is recommended for large investigative matters) updates so that the client organization can be kept abreast of the status of the investigation. A formal presentation of facts to the client can be made while the investigation is in progress or an informal approach can be utilized depending on the preference of the parties. If updates on progress are to be in writing or whether they will merely be orally presented may depend on the extent to which such documents are potentially discoverable by third party litigants.
The legal team must also make certain decisions for the investigative team such as whether to have one or two people present during interviews, who should take notes and whether those notes should be memorialized in written interview memoranda. If the results of the interviews are to be put into written form, a decision must be made whether the investigative team should retain their original notes or dispose of them after the write-ups are finalized. Furthermore, a standard preamble should be used prior to interview which states that the information gathered is to assist the law firm in providing legal advice to the client (the organization) and that the memoranda are not verbatim transcripts of the interview. Additionally, the legal team should brief the investigators who will be conducting the interviews as to how the interviewees should be approached and what procedures should be followed to ensure that the interviewee understands that the investigation is being conducted by the organization and use of information provided during the course of the interview will be determined solely (i.e. waiver of privilege and disclosure to third party). An individual who is a potential subject or target of a parallel government investigation should be advised of their right to consult with counsel prior to cooperating with the organization's internal investigation and of the consequences of failing to cooperate with the internal investigation.
If the client has made a decision to cooperate with the government, or if the results of the investigation may be turned over to the government at some point in time, a decision must be made as to whether there will be a written or oral presentation of findings and what impact this may have upon waiver of the attorney/client and work product privileges.
CONCLUSION
The completion of the internal investigation will then move the engagement into a phase of determining the extent of culpability for the organization and any current or former employees and what type of negotiations (if any) should be conducted with government representatives regarding resolution of culpability for the organization or these individuals. The organization, along with the attorneys directing the investigation and the investigative team, should consider whether to make a presentation of the facts to the government. However, it may be more useful for other counsel to negotiate any resolution of issues with the government based on the facts disclosed from the internal investigation. This not only preserves the objectivity of the investigative findings, but also bolsters the credibility of those findings as a basis to negotiate a settlement with the government. There is nothing completely identical from one internal investigation to the other and the scope, methodology and strategy behind internal investigations will differ from client to client and case to case. However, it is an increasingly useful and necessary tool to deal with the onslaught of government scrutiny and investigations and potential liability associated with violations of the health care fraud and abuse laws. If used in an appropriate manner, it can be utilized successfully in resolving issues which otherwise could cause considerable disruption and/or destruction of a health care organization.