DOJ Issues New Guidance On The Evaluation Of Corporate Compliance Programs In Federal Fraud Investigations

Author:Mr Ken Yood
Profession:Sheppard Mullin Richter & Hampton

On February 8th, the U.S. Department of Justice (DOJ) quietly issued new guidance on how the agency evaluates corporate compliance programs during fraud investigations. The guidance, published on the agency's website as the "Evaluation of Corporate Compliance Programs," lists 119 "sample questions" that the DOJ's Fraud Section has frequently found relevant in determining whether to bring charges or negotiate plea and other agreements. The February 8th issuance is the agency's first formal guidance under the new presidential administration, and the latest effort by the DOJ's "compliance initiative," which launched at the hiring of compliance counsel expert Hui Chen in November 2015. The new guidance is particularly valuable for healthcare organizations in light of the agency's heightened efforts to prosecute Medicare Advantage plans for fraudulent reporting under the False Claims Act.

Principles of Federal Prosecution in Corporate Fraud Cases

The "Principles of Federal Prosecution of Business Organizations," first published by the DOJ in 1999, articulates the principles that federal prosecutors consider when assessing cases involving corporate fraud. For example, prosecutors will look to "the existence and effectiveness of the corporation's pre-existing compliance program," as well as the corporation's remedial efforts "to implement an effective corporate compliance program or to improve an existing one." The DOJ last updated the principles, or "Filip Factors," in November 2015 to require companies to turn over all information about individuals' conduct to earn cooperation credit during an investigation.

The February 8th guidance draws from existing federal sentencing guidelines as well as best practices published by the Organization for Economic Cooperation and Development (OECD) and the Securities and Exchange Commission (SEC). The document's 119 sample questions are organized into eleven topics that the DOJ adapted from the "Ten Hallmarks of an Effective Compliance Program," a set of principles published by the DOJ and SEC in the Foreign Corrupt Practices Act (FCPA) Resource Guide (2012), an international best practices guide of the FCPA's anti-bribery and accounting transparency provisions under the Securities Exchange Act of 1934.

Sample questions are organized into the following topics:

Analysis and Remediation of Underlying Conduct Senior and Middle Management Autonomy and Resources Policies and Procedures Risk Assessment Training and Communications...

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