Biden’s DOJ will prioritize fighting white-collar crime, top official says

Cracking down on white-collar crime will be a priority in the Biden administration’s Justice Department, a top official said Thursday.

Attorneys said healthcare companies ought to pay close attention to the remarks from Deputy Attorney General Lisa Monaco—the DOJ’s second highest ranked official—as they represent a stark change from the Trump administration DOJ’s emphasis on street crime over corporate crime.

“Although we understand the costs that enforcement actions can place on shareholders and others, our responsibility is to incentivize responsible corporate citizenship, a culture of compliance and a sense of accountability,” Monaco said during a virtual keynote speech at an American Bar Association event. “So, the department will not hesitate to take action when necessary to combat corporate wrongdoing.”

Healthcare is likely to be more impacted by the department’s new stance than other industries because it’s much more heavily regulated. The stakes are also higher in healthcare because companies often depend on revenue from government-sponsored programs like Medicare more so than in other sectors.

Thursday’s speech should push healthcare companies to perform a “self-examination” of their compliance and auditing protocols, said John Carney, co-leader of BakerHostetler’s White Collar Enforcement team and DOJ’s former securities fraud chief.

“It’s time for your annual physical,” he said. “It’s time for a checkup for these companies.”

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Monaco outlined three new actions her department is taking to strengthen its enforcement of corporate crime. Overall, attorneys described it as a return to Obama administration priorities, which were rolled back during the Trump administration.

One major change announced Thursday is that when the DOJ investigates companies for possible crimes, it will consider any previous civil and regulatory enforcement actions against that company, not just criminal ones. That’s significant because until now, a company that operated under a corporate integrity agreement because of a non-criminal matter would still have a clean slate in the DOJ’s eyes for purposes of a criminal resolution, said Ben Singer, a partner with O’Melveny. Healthcare companies tend to have more civil and regulatory enforcement actions in their histories than other types of companies because they operate in such a heavily regulated environment, he said. It’s also because healthcare companies face a disproportionate amount of False Claims Act enforcement because of government funding for healthcare, Singer said.

The DOJ also plans to revive the use of independent monitors when it finds evidence of wrongdoing, a practice that was generally discouraged during the Trump administration. Monitors are a big deal because they’re afforded broad access to companies’ operations for years. What’s more, companies are required to pay for their services, which Singer said can run tens of millions of dollars annually. He said they tend to stay for two to three years, but can stay longer.

“It’s costly, it’s disruptive to business, “Singer said. “A lot of companies view that as one of the worst results you can have in a corporate resolution with the government, and she’s basically reinvigorating that program.”

Most companies would rather pay a fine than have a monitor in place, which makes it difficult to operate as freely as they’d prefer, Carney said.

The final change Monaco announced Thursday was a revived focus on holding individuals accountable for corporate wrongdoing, an idea her Obama-era predecessor, Sally Yates, unveiled in a 2015 memo. To that end, companies must provide the DOJ with information on all individuals involved in or responsible for misconduct, regardless of their position, status or seniority.

“It will no longer be sufficient for companies to limit disclosures to those they assess to be substantially involved in the misconduct,” Monaco said. “Such distinctions are confusing in practice and afford companies too much discretion in deciding who should and should not be disclosed to the government.”

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