Advanced Investigations, Privileges and Disclosures

Michael KendallMcDermott, Will & EmeryMichael KendallMcDermott, Will & Emery

HCCAApril 22, 2002

Advanced Investigations, Privileges and Disclosures

Advanced Investigations, Privileges and Disclosures

Doug LanklerPfizer Corp.Doug LanklerPfizer Corp.

McDermott, Will & Emery

What Is an Internal Investigation?What Is an Internal Investigation?

• Factual/legal review of possible problem

• By outside counsel, in-house counsel, compliance office and/or internal audit

• Independent of government

• Factual/legal review of possible problem

• By outside counsel, in-house counsel, compliance office and/or internal audit

• Independent of government



What Should the Provider Expect From an Internal Investigation?

What Should the Provider Expect From an Internal Investigation?

Stop possible wrongdoing immediately

Implement remedial action

Prepare legal defense

Disclose to government?

Stop possible wrongdoing immediately

Implement remedial action

Prepare legal defense

Disclose to government?


Elements of anInternal Investigation

Elements of anInternal Investigation

Goal

Strategy

Implementation

Goal

Strategy

Implementation


��

��

��

Start Investigation ImmediatelyStart Investigation Immediately

1. Discover all legal problems before the

government does.

2. Gather all facts before the government does.

3. Fully analyze applicable law before the government does.

4. Stop all violations before the government does.

5. Tell the government before the government does. Maybe.

6. Don’t obstruct justice.

1. Discover all legal problems before the

government does.

2. Gather all facts before the government does.

3. Fully analyze applicable law before the government does.

4. Stop all violations before the government does.

5. Tell the government before the government does. Maybe.

6. Don’t obstruct justice.


Attorney - Client PrivilegeAttorney - Client Privilege

1. Retain Consultant Through Attorney.

2. Meet Requirements of Privilege:Confidential CommunicationFor Legal AdviceBetween Client and Attorney.

3. If Provider Shares Privileged Information With Government, Civil Litigants Will Claim General Waiver

1. Retain Consultant Through Attorney.

2. Meet Requirements of Privilege:Confidential CommunicationFor Legal AdviceBetween Client and Attorney.

3. If Provider Shares Privileged Information With Government, Civil Litigants Will Claim General Waiver


Employee Interviews and PrivilegeEmployee Interviews and Privilege

• Interview ASAP

• Affidavits

• Corporate Miranda:

• You represent their employer and are not their personal attorney

• Employer can waive privilege

• Interview ASAP

• Affidavits

• Corporate Miranda:

• You represent their employer and are not their personal attorney

• Employer can waive privilege


Provide Counsel to EmployeesProvide Counsel to Employees

• Governed by indemnification agreement, corporate by-laws, state law

• Recommend experienced defense counsel

• Provide counsel for present and former employees

• Governed by indemnification agreement, corporate by-laws, state law

• Recommend experienced defense counsel

• Provide counsel for present and former employees


Exit InterviewsExit Interviews

• Affidavits

• Can you ask for assignment of qui tam award at hiring or departure?

• Affidavits

• Can you ask for assignment of qui tam award at hiring or departure?


“Should I Talk to the Government?”“Should I Talk to the Government?”

• “I’m not your lawyer.”

• Get personal counsel

• Never answer, “No”

• “I’m not your lawyer.”

• Get personal counsel

• Never answer, “No”


Contacts with Represented PartiesContacts with Represented Parties

• State ethical rules frequently prohibit a lawyer from interviewing a person the lawyer knows to be represented by another lawyer without the permission of the person’s lawyer

• State ethical rules frequently prohibit a lawyer from interviewing a person the lawyer knows to be represented by another lawyer without the permission of the person’s lawyer


Contacts with Represented Parties (2)Contacts with Represented Parties (2)

• Do not circumvent rule with proxies.

• When learning of government investigation, inform government IMMEDIATELY that you represent provider, and its former and present employees.

• Telephone immediately and follow-up with letter.

• Do not circumvent rule with proxies.

• When learning of government investigation, inform government IMMEDIATELY that you represent provider, and its former and present employees.

• Telephone immediately and follow-up with letter.


Control DocumentsControl Documents

• Preserve

• Review

• Produce

• Don’t Play Games

• Preserve

• Review

• Produce

• Don’t Play Games


Document PreservationDocument Preservation

• Review pre-existing retention policy

• Stop destruction of all documents, tangible evidence, electronic data

• Send written memo

• Review pre-existing retention policy

• Stop destruction of all documents, tangible evidence, electronic data

• Send written memo


ENRONENRON


Altering/Updating RecordsAltering/Updating Records

• Ask why?

• Prevent any deceptive impact

• Correctly record date of supplemental notes

• Use different color ink

• Ask why?

• Prevent any deceptive impact

• Correctly record date of supplemental notes

• Use different color ink


Compliance PornographyCompliance Pornography


Reviewing DocumentsReviewing Documents

• Documents drive government and internal investigations

• Bates number

• Protect your work product/Hubble

• Documents drive government and internal investigations

• Bates number

• Protect your work product/Hubble


Organizational TipsOrganizational Tips

• Factual chronology

• Witness folders

• Factual chronology

• Witness folders


Strategic ConcernsStrategic Concerns

Should you cooperate with the government?

• Government’s discretion– Criminal v. civil v. administrative.

– Range of civil penalties

– Exclusion

• Aggressive Unethical

• Ethical Ineffective

Should you cooperate with the government?

• Government’s discretion– Criminal v. civil v. administrative.

– Range of civil penalties

– Exclusion

• Aggressive Unethical

• Ethical Ineffective

=

=


Prepare for TrialPrepare for Trial

• Even if you will settle

• Even if the government will never know about the matter

• Even if you will settle

• Even if the government will never know about the matter


How Will This Evidence/Issue Fit Into Your Closing Argument

How Will This Evidence/Issue Fit Into Your Closing Argument

• Analyze facts and law to develop a “theory of the case”, a consistent theme that explains the situation.

• Offer a more reasonable explanation than the government’s theory.

• Analyze facts and law to develop a “theory of the case”, a consistent theme that explains the situation.

• Offer a more reasonable explanation than the government’s theory.


How Will You Use This Evidence at TrialHow Will You Use This Evidence at Trial

• Corroborate your witnesses

• Impeach hostile witnesses

• Corroborate your witnesses

• Impeach hostile witnesses


Managing the ProblemManaging the Problem

• Establish reporting protocol

• Report to CEO/Board on serious matters

• Senior management must be involved

• Oral v. written report

• Establish reporting protocol

• Report to CEO/Board on serious matters

• Senior management must be involved

• Oral v. written report ��

��

��

��

��

��

��

��

��

��

��

��

��

��

��

��

��

��

��

��

��

��

��

��

��

��

��

��

��

��

��

��

��

��

��

��

��

��

��

��

��

��

��

��

��

��

��

��

��

��

��

��

��

��

��

��

��

��

��

��

��

��

��

��

��

��

��

��

��

��

��

��

��

��

��

��

��

��

��

��

��

��

��

��

��

��

��

��

��

��

��

��

��

��

��

��

��

��

��

��

��

��

��

��

��

��

��

��

��

��

��

��

��

��

��


What Do You Tell EmployeesWhat Do You Tell Employees

• Watercooler gossip

• Written guidance on search warrants and contacts by government

• Availability of counsel

• All access to company assets must go through counsel/compliance officer

• Watercooler gossip

• Written guidance on search warrants and contacts by government

• Availability of counsel

• All access to company assets must go through counsel/compliance officer ��

��

��

��

��

��

��

��

��

��

��

��

��

��

��

��

��

��

��

��

��

��

��

��

��

��

��

��

��

��

��

��

��

��

��

��

��

��

��

��

��

��

��

��

��

��

��

��

��

��

��

��

��

��

��

��

��

��

��

��

��

��

��

��

��

��

��

��

��

��

��

��

��


What Do You Tell PressWhat Do You Tell Press

• Publicly traded company has no obligation to inform public about investigation

• If public disclosure is inevitable, securities lawyer should review press release

• Publicly traded company has no obligation to inform public about investigation

• If public disclosure is inevitable, securities lawyer should review press release


Correction v. Cover-UpCorrection v. Cover-Up

1. Refund $$ - Yes

2. Stop Improper Practice - Immediately

3. Avoid Compliance Pornography - Yes

4. Rewrite Contract - Yes, but…

1. Refund $$ - Yes

2. Stop Improper Practice - Immediately

3. Avoid Compliance Pornography - Yes

4. Rewrite Contract - Yes, but…


Correction v. Cover-Up (2)Correction v. Cover-Up (2)

5. Attorney-Client Privilege - Yes, but ...

6. Destroy Documents - No

7. Alter Records - No

8. Mislead Government Interviewer - Get New Lawyer

5. Attorney-Client Privilege - Yes, but ...

6. Destroy Documents - No

7. Alter Records - No

8. Mislead Government Interviewer - Get New Lawyer


Self-DisclosureSelf-Disclosure

Art or Alchemy?Art or Alchemy?


Laws That Require Providers To Make Self-Disclosures:

Laws That Require Providers To Make Self-Disclosures:


Additional Laws That Require Providers To Make Self-Disclosures:

Additional Laws That Require Providers To Make Self-Disclosures:


Formal vs. Informal Self-DisclosureFormal vs. Informal Self-Disclosure

Intermediary/Carrier

Office of Inspector General

Department of Justice

Intermediary/Carrier

Office of Inspector General

Department of Justice


OIG Self-Disclosure ProgramOIG Self-Disclosure Program

In Writing

Complete Statement of Facts

Identify Provider

In Writing

Complete Statement of Facts

Identify Provider


ProblemsProblems

No Concrete Standards

OIG Cannot Bind DOJ

Qui Tam Exposure

No Concrete Standards

OIG Cannot Bind DOJ

Qui Tam Exposure


DOJ/FCA Self-DisclosureDOJ/FCA Self-Disclosure

30 Days From Learning Of False Claim

Full Cooperation

No Existing Action, Nor Knowledge Of Investigation

Double Damages or More

30 Days From Learning Of False Claim

Full Cooperation

No Existing Action, Nor Knowledge Of Investigation

Double Damages or More


SettlementSettlement

FCA/CMP Penalties

Mantra of Double Damages

Learn the Regulations

Corporate Integrity Agreements

FCA/CMP Penalties

Mantra of Double Damages

Learn the Regulations

Corporate Integrity Agreements


Michael Kendall, Esq.McDermott, Will & Emery28 State StreetBoston, MA 02109(617) [email protected]

1277389