On November 29, during the International Conference on the Foreign Corrupt Practices Act, Deputy Attorney General Rod Rosenstein delivered a speech announcing changes to the Department of Justice (DOJ) 2015 policy memorandum titled “Individual Accountability for Corporate Wrongdoing.” This policy issued by then-Deputy Attorney General Sally Yates, commonly known as the Yates Memo, focuses on prosecuting individuals involved in corporate misconduct and rewards companies with cooperation credit when they provide all relevant facts about the individuals involved. While the new policy revisions still reflect a continued focus on individual accountability, the revisions ease the burden for cooperation credit and provides more flexibility to DOJ attorneys in resolving these matters. Key changes are summarized below.
At the outset, Rosenstein made clear that the DOJ’s focus on pursuing individuals responsible for wrongdoing has not changed, which is still a top priority in every corporate investigation it conducts. Under the Yates Memo, companies must identify every employee involved in the alleged corporate misconduct regardless of relative culpability in order to receive cooperation credit from the government. This “all or nothing approach” was met with concerns of inefficiency because it impeded resolutions and wasted government resources. Rosenstein stated that DOJ investigations “should not be delayed merely to collect information about individuals whose involvement was not substantial, and who are not likely to be prosecuted.” As a result, the policy revisions are needed in order to “to work in the real world of limited investigative resources.”
The policy revisions impact criminal and civil investigations differently. For criminal matters, companies must identify those individuals who were substantially involved in or responsible for the criminal conduct in order to receive cooperation credit from the government. The DOJ seeks to refocus its prosecution efforts on “individuals who play significant roles in setting a company on a course of criminal conduct.”
For civil matters, companies are not expected to “admit the civil liability of every individual employee,” in order to qualify for cooperation credit – an expectation Rosenstein described as “inefficient and pointless in practice.” Instead, if a corporation wants to earn maximum credit, it must identify every individual person who was substantially involved in or responsible for the misconduct. To qualify for any credit, a company must identify all wrongdoing by senior officials, including members of senior management or the board of directors. In his speech, Rosenstein made clear that companies that conceal wrongdoing or otherwise demonstrates a lack of good faith in its representations will not be eligible for any cooperation credit.
DOJ attorneys now have discretion in resolving civil matters — they can offer less than maximum cooperation credit based on a company’s meaningful assistance, release individuals if no further investigation is warranted, and may consider an individual’s ability to pay when deciding whether to pursue judgement.
Rosenstein offered the following example to indicate how these policy changes would impact an investigation for violations of the False Claims Act:
“[A] company might make a voluntary disclosure and provide valuable assistance that justifies some credit even if the company is either unwilling to stipulate about which non-managerial employees are culpable, or eager to resolve the case without conducting a costly investigation to identify every individual who might face civil liability in theory, but in reality would not be sued personally. So our attorneys may reward cooperation that meaningfully assisted the government’s civil investigation, without the need to agree about every employee with potential individual liability.”
These policy developments reflect the government’s continued scrutiny of the actions of senior management and the board of directors. Thus, healthcare providers need to focus on building and maintaining a strong compliance culture from the top down.
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