By Lisa Noller, Partner, Foley & Lardner LLP
Investigations are not generic; how they proceed depends heavily on facts, witnesses, and the lines of business involved. The government's approach to any particular investigation is also shaped by other considerations, including, at a minimum: whether there is a parallel civil investigation ongoing; whether there are confidential informants involved; whether (and what) evidence has been gathered from, e.g., data mining; and, the nature of the company's past interactions with law enforcement. In other words, the following Top Ten is not meant to be a hard and fast template for responding to a government investigation. Rather, this Top Ten is designed to assist companies to gather as much information as possible and to be as prepared as possible to face the government if and when the need arises.
1. Contact the Agent
A target's first interaction with law enforcement is often with the investigating agent. Though agents have no professional obligation to truthfully explain the nature and scope of an investigation, they are usually well-versed in the case and are eager to bring it to a close. Often, an agent will provide his own views of the matter. Since he is closest to the facts, a robust dialogue will often yield information you can use to determine who is cooperating, the age of the investigation, the agent's opinion about the quality of the evidence, the agent's relationship with the prosecutor, and sometimes, who the targets are. The agent will also often disclose if the matter is civil, criminal or both. This discussion with the agent should be initiated by outside counsel only, as anything a company employee or an individual says may later be deemed an admission against that party.
2. Engage the Prosecuting Attorney in Meaningful Dialogue
It is important to let a prosecutor know your client is represented by counsel, which prohibits the prosecutor from further covert interviews. Reaching out to the prosecutor also provides counsel with an opportunity to explain conduct, put the prosecutor's mind at ease, or timely cooperate against others. Often, a prosecutor will provide information that lets counsel know certain employees are targets, certain actions are under investigation, and certain evidence already has been gathered. The initial contact should be meaningful, and should be conducted by an attorney who understands the facts of the matter, and also understands the language used by prosecutors. Counsel should:
- press the prosecutor for information on his client's status (i.e., target, subject or witness), ask about cooperating witnesses, volunteer to assist the government with any requests it may have (to avoid searches and subpoenas), and determine the nature, scope, and age of the matter.
All of these facts will help you determine whether the government is merely requesting information, or if the client has a target on its back.
3. Decide Whether to Conduct an Internal Investigation
Not every matter requires a thorough review of documents and conversations with witnesses. However, if you are a subject or a target of a government investigation, you need to determine why, or you will always be catching up to the government and its ample resources. If you merely suspect that the government is investigating, all the better reason to get ahead of the matter. Prior to confirmation of an actual open government matter, the information you glean may enable you to approach the government proactively, and obtain the potential benefits from self-disclosure (or self-denial, as the facts dictate).
4. Properly Staff the Investigation and Response
The most efficient way to handle an investigation is for counsel to work directly with the client to obtain information. For example, a company's billing department will have the most accurate data about Medicare reimbursement, while the compliance group will know whether complaints were promptly acted upon. In most instances, the target should immediately obtain outside counsel to conduct the investigation and negotiate with the government. As noted above, any statement by the target is recorded by the government, and may later be used against the company or individual. Counsel can investigate in a privileged manner, and its statements are in most instances not imputed against the client. Where applicable, appropriate staffing should include a discussion about individuals' needs for counsel, an arrangement for payment, and an agreement to repay fees and expenses if an individual is found guilty.
5. Gather Exculpatory Evidence
The government often assumes “based on incomplete evidence“ that where there's smoke, there's fire. It is therefore up to the target and his counsel to find exculpatory evidence. This can take many forms, but is most often factual, rather than legal. For example, in an anti-kickback investigation, the target may be able to argue that an exception applies. But that is only possible if the facts support the argument. Moreover, "intent" can only be proven by evidence or a course of dealing. Obtain as much evidence indicating good intentions as possible; you are likely to need it to negotiate a favorable (or less unfavorable) outcome.
6. Take Care Not To Destroy Evidence, Even Inadvertently
As soon as you learn of a government investigation, take precautions to preserve evidence. Immediately issue a memo to all relevant employees “including your IT department“ requiring them to preserve documentary and electronic records. If any evidence is destroyed, the government likely will assume you eliminated the smoking gun because it was harmful. Worse, you may face criminal charges for obstruction of justice. On the other hand, documents are often favorable to the target, and you will want to review anything relevant to develop your best defense. If you no longer have something, you cannot study it.
7. Remediate Any Issues You Discover
If you uncover wrongdoing, immediately address it. Any credit the government grants is premised on the target learning from its mistakes and operating with clean hands. Moreover, if you discover a red flag, or that things are not what they seem, yet you deliberately ignore the warning signs, the law is that you have "knowingly" acted, the level of scienter necessary for criminal prosecution. Another practical reason to take corrective action is to minimize damages or take advantage of benefits from self-disclosure.
8. Document Your Efforts
In gathering evidence to support your defense, you should always think ahead to a possible trial, plea, sentencing or other evidentiary hearing. Be sure to document the source of all information, and your efforts to obtain it. In this way, you can credibly provide the evidence to the government, or introduce it in court or at another hearing. Also, document all witness interviews, including that you explained to all witnesses exactly who you represent and the scope of any attorney-client or work product privilege. It is also wise (and often legally required) to inform shareholders, board members and others about the nature of the government's inquiry. Disclosure is often based on a materiality threshold; be prepared to explain why an investigation matters (or does not).
9. Adopt (Or Remind Employees About) a Policy Regarding Government Interviews
You cannot direct employees not to cooperate with the government; that direction obstructs justice. However, you can inform potential interviewees that they have the right to have counsel present during any interview, and it is their right to be interviewed or not. Employees also may want counsel during government interviews. Your company should know in advance whether it will provide (and pay for) that service. Agents do not have to provide Miranda warnings to interviewees who are not in custody. They will often approach a witness in a non-confrontational setting to catch them off guard. If the person knows their rights in advance, they will be better protected in case of an interview.
10. Prepare Now
The government has greatly increased resources applied to health care fraud investigations, and it is a mistake to assume you are immune from scrutiny. Update (or implement) your compliance plan. Treat potential whistleblowers with respect. Mine your own data for outliers. And act on all material complaints. If the government later investigates you, this preparation will permit you to take advantage of safe harbors and other remedies that will lessen the impact of close scrutiny.