Healthcare providers face a climate of increased investigation coupled with a quickly changing business environment. The Department of Justice has requested increases in its budget, including substantial increases in the DOJ’s 2011 budget for investigating and litigating healthcare fraud cases. There has also been a very substantial increase in False Claims and other whistleblower litigation aimed at hospitals and health systems. These developments create a recipe for serious legal challenges. Moreover, a quickly changing business environment has led to a variety of new and creative ways for hospitals, surgery centers and physicians to interact. The existence of these new and aggressive relationships combined with an ever-increasing investigative climate creates substantial risk of regulatory and legal exposure.
When a hospital or health system becomes aware of potential improper conduct either through an employee, an independent contractor or otherwise, the standard response is to commence an internal investigation. In conducting such investigations, there are several different issues and factors that come into play. This article briefly describes nine such considerations.
1. Plan and subject matter expertise. The internal investigation should start with a core work plan. This may include the scope of the investigation, what documents are going to be reviewed, who is going to be interviewed, and what is expected in terms of a final product. Generally, it is helpful to identify a list of questions that the company wants answered and often some of these questions will be open ended. Additionally, it is helpful to include in the plan the timing and sequencing of the activities that will be conducted. For example, before starting with interviews, it is helpful to review a substantial number of relevant documents to provide information that can be used in conducting the interviews. The interviews may start with an outline of 10-15 basic questions and then include additional questions as the interview evolves. Furthermore, it is helpful to interview the party on the opposite end of the relationship and not just the hospital official or other party who supervised or engineered the relationship for the hospital. For example, in certain situations a hospital supervisor may have an understanding of their risk and be very cautious in answering questions, such as “how did you decide on that person for providing funds to?” but the recipient of the funds may provide a clearer or more frank answer as to how they believe they were selected.
The investigative team should include lawyers or consultants with specific and deep knowledge of the areas under investigation, each by industry niche (e.g., hospital business practices, physician referral relationships, surgery centers, pharmaceutical or device marketing practices, etc.) and by legal statute (Anti Kickback, Stark, exempt organizations, FDA, etc). This is critical both from assuring the right questions are asked and the right focus is taken to the effort. It is also critical to help bring a level of efficiency to the investigation.
2. Who to report to? An internal investigation is typically conducted for the chief legal officer or general counsel if the company has such an officer. In companies without such an officer, internal investigations are often conducted for the president, chief executive officer or board. The persons responsible for conducting the internal investigation will generally provide his or her findings to the person that has requested and is responsible for the internal investigation. However, an exception arises where the person who has requested the investigation has a conflict or does not appear responsive to the findings of the internal investigation. In such situations, the general advice is that those persons responsible for the investigation should take their findings further up the corporate ladder until the investigation is properly responded to. This scenario presents a very interesting judgment call and will often require an analysis of the severity of the conduct under review and of the significance of any conflict that exists. It is critical to understand the chain of authority for internal investigations.
3. Constituents. In most internal investigations, there will be a mix of different perspectives on what the individual parties involved in the investigation are attempting to accomplish. The chief compliance officer or general counsel may have a perspective that the business people have acted too aggressively, improperly or simply not heeded their advice. In contrast, an executive may be looking for a report that provides them with a confirmation that they have performed properly. The persons responsible for conducting the internal investigation must have an understanding of each of these different constituents with a comprehensive view of what each expects, while at the same time being prepared and willing to record their true findings and to conduct an unbiased investigation. In essence, one party might want a report that essentially approves the conduct in question, whereas another party might be seeking a report identifying wrongdoers and suggesting appropriate redress. These divergent views can also affect the manner in which these constituents respond to and participate in the investigation. From an investigator’s standpoint, the goal is to provide the company with the most accurate and useful report possible without being persuaded by other persons’ objectives and agenda. Rather, the internal investigator must be willing to diligently investigate, to provide prophylactic guidance and advice on how to improve things on a going forward basis, and must consider whether affirmative next steps are required with respect to past conduct. For example, the investigator may need to evaluate whether there should be a self disclosure of the conduct to the government, whether current relationships should be terminated and whether other steps are necessary.
4. Independence. The internal investigation should almost always be handled by outside counsel that is independent of the company and the conduct in question. For example, to the extent that high-ranking officers were heavily involved in the conduct to begin with, such persons should not handle the investigation and it is imperative that the findings of the investigation go beyond the general counsel or such officers. Further, where outside counsel has been involved in or in any way provided advice relating to the conduct in question, serious consideration should be given as to that counsel not conducting or otherwise being involved in the investigation. Separating persons who are subjects of the investigation from the conduct of the investigation is imperative in ensuring a careful, reasoned investigation without interference by persons with a personal stake in the outcome. Moreover, independent investigators are more likely to consider each of the issues and to be unaffected by preconceived opinions regarding the subjects of the investigation.
5. Hold notices. At the start of an internal investigation, it is often helpful and important to send out a memorandum warning all persons who may have relevant information not to destroy any documents, e-mails or other correspondence relating to the facts at issue. A hold notice is particularly important if there has been any sort of government or litigation inquiry. A hold notice helps to ensure that the investigators are able to obtain and review all relevant documents and helps to avoid potential liability associated with the destruction of documents. Additionally, prior to the inception of an internal investigation it is also helpful for companies to have established document retention policies, which should be implemented and enforced.
6. E-mail records and discovery. Depending on the scope of the internal investigation, it can be very helpful to review e-mail records and other documents related to the parties involved. In a government investigation, all e-mails will almost certainly be subpoenaed and they often contain the types of information that can be particularly challenging in defending a company. It should be noted, however, that conducting such a comprehensive investigation of e-mails can become extremely expensive. For example, in one internal investigation there were approximately one million emails that were reviewed over the course of three weeks by lawyers working 24/7. This is an expensive undertaking. It will however ensure a thorough investigation and a complete understanding of the documentary evidence that exists and the challenges presented by such evidence.
7. Conducting interviews. When conducting interviews, it is helpful and advisable to have two persons present in addition to the interviewee. One of the individuals is then able to conduct the interview, while the other individual takes notes. This allows the person conducting the interview to really focus on the interview and on the responses being given, in order to ensure that appropriate and necessary follow-up questions are asked. The interviewer can also then focus on the body language and conduct of the interviewee. Additionally, the person who is actually taking notes is better able to focus on accurately recording the questions and responses without having to formulate follow-up questions or determine the course of the interview. It is often helpful to have the person responsible for note-taking provide a short, written memorandum after the interview articulating the issues that have been discovered and discussed through the interview. Having multiple persons present during an interview provides an additional and significant benefit by encouraging the interviewee to be accurate and by deterring interviewees from altering or amending their answers after the interview has concluded.
8. The Upjohn Warning. When conducting an internal investigation, a witness will often state that he or she does not want the investigator to repeat the witness’s statements. However, as the internal investigation is often intended to identify and remedy wrongdoing, it is often critical that the witness’s statements are included in the final investigative report. Moreover, the company may consider it beneficial to disclose those statements. Therefore, it is often not possible to fully protect the confidentiality of each witness and his or her statements. In this regard, each person should be warned that the attorney represents the company rather than the individual employee and, therefore, the attorney-client privilege on the communications belongs to the company and not the employee. This is called an Upjohn Warning after the seminal case of Upjohn Company v. United States. In Upjohn, the United States Supreme Court held that the attorney-client privilege is between the attorney and the company even where the attorney is communicating with employees of the company. Accordingly, the Upjohn opinion is very relevant in the context of internal investigations because it sets forth the ownership of the privilege and ensures that the employee cannot invoke the attorney-client privilege to prevent a disclosure that benefits the company or that the company intends to make. Accordingly, the investigator should be careful to provide an Upjohn Warning.
9. A written policy. Companies ideally should implement a written policy setting forth with specificity the guidelines and parameters of their internal investigative process. The existence of a written policy governing internal investigations helps to ensure that any such investigations are conducted in an orderly fashion and also serves to deter any employees from engaging in improper conduct during an investigation, as the policy will set forth what is expected and required. This written policy should be communicated to employees to ensure that they are aware of the existence of the policy and of its provisions.
When a hospital or health system becomes aware of potential improper conduct either through an employee, an independent contractor or otherwise, the standard response is to commence an internal investigation. In conducting such investigations, there are several different issues and factors that come into play. This article briefly describes nine such considerations.
1. Plan and subject matter expertise. The internal investigation should start with a core work plan. This may include the scope of the investigation, what documents are going to be reviewed, who is going to be interviewed, and what is expected in terms of a final product. Generally, it is helpful to identify a list of questions that the company wants answered and often some of these questions will be open ended. Additionally, it is helpful to include in the plan the timing and sequencing of the activities that will be conducted. For example, before starting with interviews, it is helpful to review a substantial number of relevant documents to provide information that can be used in conducting the interviews. The interviews may start with an outline of 10-15 basic questions and then include additional questions as the interview evolves. Furthermore, it is helpful to interview the party on the opposite end of the relationship and not just the hospital official or other party who supervised or engineered the relationship for the hospital. For example, in certain situations a hospital supervisor may have an understanding of their risk and be very cautious in answering questions, such as “how did you decide on that person for providing funds to?” but the recipient of the funds may provide a clearer or more frank answer as to how they believe they were selected.
The investigative team should include lawyers or consultants with specific and deep knowledge of the areas under investigation, each by industry niche (e.g., hospital business practices, physician referral relationships, surgery centers, pharmaceutical or device marketing practices, etc.) and by legal statute (Anti Kickback, Stark, exempt organizations, FDA, etc). This is critical both from assuring the right questions are asked and the right focus is taken to the effort. It is also critical to help bring a level of efficiency to the investigation.
2. Who to report to? An internal investigation is typically conducted for the chief legal officer or general counsel if the company has such an officer. In companies without such an officer, internal investigations are often conducted for the president, chief executive officer or board. The persons responsible for conducting the internal investigation will generally provide his or her findings to the person that has requested and is responsible for the internal investigation. However, an exception arises where the person who has requested the investigation has a conflict or does not appear responsive to the findings of the internal investigation. In such situations, the general advice is that those persons responsible for the investigation should take their findings further up the corporate ladder until the investigation is properly responded to. This scenario presents a very interesting judgment call and will often require an analysis of the severity of the conduct under review and of the significance of any conflict that exists. It is critical to understand the chain of authority for internal investigations.
3. Constituents. In most internal investigations, there will be a mix of different perspectives on what the individual parties involved in the investigation are attempting to accomplish. The chief compliance officer or general counsel may have a perspective that the business people have acted too aggressively, improperly or simply not heeded their advice. In contrast, an executive may be looking for a report that provides them with a confirmation that they have performed properly. The persons responsible for conducting the internal investigation must have an understanding of each of these different constituents with a comprehensive view of what each expects, while at the same time being prepared and willing to record their true findings and to conduct an unbiased investigation. In essence, one party might want a report that essentially approves the conduct in question, whereas another party might be seeking a report identifying wrongdoers and suggesting appropriate redress. These divergent views can also affect the manner in which these constituents respond to and participate in the investigation. From an investigator’s standpoint, the goal is to provide the company with the most accurate and useful report possible without being persuaded by other persons’ objectives and agenda. Rather, the internal investigator must be willing to diligently investigate, to provide prophylactic guidance and advice on how to improve things on a going forward basis, and must consider whether affirmative next steps are required with respect to past conduct. For example, the investigator may need to evaluate whether there should be a self disclosure of the conduct to the government, whether current relationships should be terminated and whether other steps are necessary.
4. Independence. The internal investigation should almost always be handled by outside counsel that is independent of the company and the conduct in question. For example, to the extent that high-ranking officers were heavily involved in the conduct to begin with, such persons should not handle the investigation and it is imperative that the findings of the investigation go beyond the general counsel or such officers. Further, where outside counsel has been involved in or in any way provided advice relating to the conduct in question, serious consideration should be given as to that counsel not conducting or otherwise being involved in the investigation. Separating persons who are subjects of the investigation from the conduct of the investigation is imperative in ensuring a careful, reasoned investigation without interference by persons with a personal stake in the outcome. Moreover, independent investigators are more likely to consider each of the issues and to be unaffected by preconceived opinions regarding the subjects of the investigation.
5. Hold notices. At the start of an internal investigation, it is often helpful and important to send out a memorandum warning all persons who may have relevant information not to destroy any documents, e-mails or other correspondence relating to the facts at issue. A hold notice is particularly important if there has been any sort of government or litigation inquiry. A hold notice helps to ensure that the investigators are able to obtain and review all relevant documents and helps to avoid potential liability associated with the destruction of documents. Additionally, prior to the inception of an internal investigation it is also helpful for companies to have established document retention policies, which should be implemented and enforced.
6. E-mail records and discovery. Depending on the scope of the internal investigation, it can be very helpful to review e-mail records and other documents related to the parties involved. In a government investigation, all e-mails will almost certainly be subpoenaed and they often contain the types of information that can be particularly challenging in defending a company. It should be noted, however, that conducting such a comprehensive investigation of e-mails can become extremely expensive. For example, in one internal investigation there were approximately one million emails that were reviewed over the course of three weeks by lawyers working 24/7. This is an expensive undertaking. It will however ensure a thorough investigation and a complete understanding of the documentary evidence that exists and the challenges presented by such evidence.
7. Conducting interviews. When conducting interviews, it is helpful and advisable to have two persons present in addition to the interviewee. One of the individuals is then able to conduct the interview, while the other individual takes notes. This allows the person conducting the interview to really focus on the interview and on the responses being given, in order to ensure that appropriate and necessary follow-up questions are asked. The interviewer can also then focus on the body language and conduct of the interviewee. Additionally, the person who is actually taking notes is better able to focus on accurately recording the questions and responses without having to formulate follow-up questions or determine the course of the interview. It is often helpful to have the person responsible for note-taking provide a short, written memorandum after the interview articulating the issues that have been discovered and discussed through the interview. Having multiple persons present during an interview provides an additional and significant benefit by encouraging the interviewee to be accurate and by deterring interviewees from altering or amending their answers after the interview has concluded.
8. The Upjohn Warning. When conducting an internal investigation, a witness will often state that he or she does not want the investigator to repeat the witness’s statements. However, as the internal investigation is often intended to identify and remedy wrongdoing, it is often critical that the witness’s statements are included in the final investigative report. Moreover, the company may consider it beneficial to disclose those statements. Therefore, it is often not possible to fully protect the confidentiality of each witness and his or her statements. In this regard, each person should be warned that the attorney represents the company rather than the individual employee and, therefore, the attorney-client privilege on the communications belongs to the company and not the employee. This is called an Upjohn Warning after the seminal case of Upjohn Company v. United States. In Upjohn, the United States Supreme Court held that the attorney-client privilege is between the attorney and the company even where the attorney is communicating with employees of the company. Accordingly, the Upjohn opinion is very relevant in the context of internal investigations because it sets forth the ownership of the privilege and ensures that the employee cannot invoke the attorney-client privilege to prevent a disclosure that benefits the company or that the company intends to make. Accordingly, the investigator should be careful to provide an Upjohn Warning.
9. A written policy. Companies ideally should implement a written policy setting forth with specificity the guidelines and parameters of their internal investigative process. The existence of a written policy governing internal investigations helps to ensure that any such investigations are conducted in an orderly fashion and also serves to deter any employees from engaging in improper conduct during an investigation, as the policy will set forth what is expected and required. This written policy should be communicated to employees to ensure that they are aware of the existence of the policy and of its provisions.