. Memorandum TO: FROM: General Counsel Chief Compliance Officer Joshua Berman and Gil Soffer DATE: June 15, 2010 SUBJECT: Crisis Management Initial Response Checklist The subpoena and communications you received last week from the Assistant United States Attorney raises an important issue for you: responding to possible government inquiries and situations where the government comes knocking. 1 The new Health Care Reform Bill, as well as other recent legislation over the past several years, demonstrates that the government has shown no hesitation to use the various weapons in its investigative arsenal in combating health care fraud and abuse. Given this aggressive posture, I believe that an ounce of prevention may be worth a pound of cure. Health care fraud and abuse investigations and prosecutions are at an all-time high. United States Attorneys, Main Justice Department trial attorneys, State Attorneys General, District Attorneys and a number of administrative agencies are aggressively targeting all sectors of the health care industry. No sector of the industry has been left alone and certainly not hospitals and health systems. While there are various scenarios in which the government may arrive on your doorstep, this Memorandum focuses on the most common: (1) the (unannounced) search warrant; (2) the request for witness interview; and (3) the document subpoena. In addition to addressing each of these particular forms of governmental process, this Memorandum summarizes the most important points in the form of checklists for the two most time sensitive forms of possible government approaches, an unannounced search warrant or an unannounced request for an interview. I. Establishing Internal Communications If an FBI agent, Department of Justice official or any other law enforcement investigator shows up at your headquarters, other offices or facilities, or off-site location with a search warrant or subpoena asking to be let on to the premises, or if a federal investigator shows up at an employee's home or the headquarters parking lot poking around and asking questions, the consequences of failing to handle such situations properly can be serious. To protect yourself, 1 The contact from government agents can come in different forms: subpoenas, search warrants, on-site visits, inspections, Civil Investigative Demands, arrest warrants for individuals, or telephone calls, just to name a few.
employees, executives, independent contractors and others individuals affiliated with your hospital or health system, it is critical to define in advance how your team will handle these scenarios and ensure that its employees and staff understand their duties and rights and your specific procedures. It is important to identify in advance the control group /crisis management team who will be notified, subject to modification based on the nature, extent, location, timing and substance of the legal challenge. A senior manager in each location should be designated as the local internal contact person, along with a corporate counsel contact. You should consider developing simple policies in this area to include in your general workforce training. Counsel should be the first call and should coordinate initial communications. Office, home and cell phone numbers should be available. No statements should be made to outside persons or entities (e.g. press, reporters, regulators, creditors, analysts), or internally to other employees, other than as approved by the control group, and other than by the designated spokesperson(s). To the extent possible, outside counsel should be consulted before any communications are made. Additionally, document preservation policies (including e-mail policies) and back up procedures (for critical documents, hard drives, servers) should be reviewed in advance, revised if necessary, and disseminated internally with current, state-of-the-art instructions. II. Responding to Search Warrants On Site (Unannounced) Before discussing how to respond to a search warrant, it may be useful to understand some fundamental information about search warrants. A search warrant is a court order granting a law enforcement agent the right to enter a location to search for and seize certain items. It is generally issued only after a court or magistrate has made a determination that "probable cause" exists that some criminal activity has occurred and that the location to be searched may contain evidence of such criminal activity. Often, the search warrant will be accompanied by an affidavit, which will detail the facts that support the investigation. Unless the affidavit is "sealed," you have a right to see the document, and should ask for a copy regardless of whether it is presented. (It is worth noting that in most instances, prosecutors and/or law enforcement agents will in fact seal such documents, making them initially inaccessible.) Once a search warrant has been obtained by law enforcement, there is very little you can do at the time the search warrant is executed. Indeed, it is virtually impossible to resist the execution of the search warrant at that time. (You may have the opportunity to raise objections to the search warrant, the way it was obtained, items that were searched or seized and/or the conduct of the agents at a later date.) While it certainly cannot hurt to make certain requests of the law enforcement agents executing the search warrants, it is safe to say that you generally are not negotiating from a position of strength -- and therefore, you cannot force them to comply. What you are entitled to is a copy of the search warrant and an inventory and receipt for all items seized. As noted above, you can attempt to get access to the accompanying affidavit, if it has not been sealed. You should request that the agents delay beginning the search until counsel arrives. However, they are not obligated to do so. - 2 -
The search warrant must identify with specificity: (a) the location/premises to be searched; and (b) the items to be seized. For example, if the warrant only permits the search of a particular location or office within a location, then law enforcement is limited to those areas. Likewise, if the warrant fails to specify a certain type of item to be seized (i.e., clinical trial records; product samples), then law enforcement cannot remove it. That being said, most warrants try to contain certain catch-all language that permits the seizure of a broad range of items. If your filing and or computer system is set up in such a way that the items to be seized are separate from other business documents or materials, you should clearly make that point to the agents. While you cannot prohibit them from searching for or seizing items not contained in the search warrant, prior notice that the area or item is non-responsive may be important in a later court proceeding. If this situation occurs, outside counsel should be notified immediately. If the offices have documents which you believe are covered by the attorney-client privilege (or some other privilege), tell the agents that you object to their searching for and seizing such documents and the reasons for your objections. However, do not attempt to interfere with the agents if they still want to seize these records. Do not volunteer information to the investigators. You are not required to authenticate documents seized or otherwise respond to any questions except as to the location of documents described in the warrant. Keep in mind that you will not be able to talk the agents out of performing the search or whatever views they may have about the conduct of the industry and/or the company and that there is something worth investigating. They already think this because they have the search warrant, and talking to the agents (other than as to the location of property) may only make things worse. Finally, obstruction of a search can itself be a criminal offense. What constitutes obstruction can be in the eyes and discretion of the agents conducting the search. It can be considered obstruction if you refuse permission to enter the premises and make the search. It can also be considered obstruction to impede or interfere with the searcher or to destroy or remove any property before, during, or after the search, in order to prevent seizure of the property. Here are several specific recommendations on how to best respond to a search warrant: First, identify the lead officer or prosecutor. Ask for credentials/id and business card. Request copy of the search warrant and any affidavits. Review the warrant and any other papers to ascertain the content, scope and limitations on the warrant or subpoena. Request that, as a courtesy, the agents hold off the search until the employee on site has an opportunity to call counsel. Whatever the law enforcement response, be courteous, and do not obstruct the search. Employees should not interfere -- physically or verbally -- with the law enforcement agents. Regardless of law enforcement response, employees should contact local contact person and corporate counsel immediately. As discussed in detail below, agents may seek to conduct interviews. Notify the agents that corporate counsel wish to be present during any interviews of present or former corporate employees. - 3 -
If you are asked to consent to the search or any portion thereof, decline consent, and request time to speak with counsel regarding this issue. While you certainly want to be cooperative and to create the appearance of cooperation, declining a consent search is reasonable and should not offend a reasonable law enforcement agent. Keep notes as to what is searched and seized, or photographed/copied. Keep track of law enforcement questions given that they may help to identify the investigative focus. Request a detailed inventory of all items seized, including documents, electronic files, hardware and software and (to the extent relevant) samples (i.e., blank clinical trial forms). Attached to this Memorandum is a Checklist for you to consider in the event of a search warrant at one of your premises. III. Requests for Interviews (Unannounced) In the course of such investigations, agents or investigators may attempt to contact you and/or your employees, executives, contractors or others either by telephone or in person. Frequently, they will contact individuals at home, at other facilities or even in a parking lot outside of work to obtain information that might not be readily offered in the work place or to intimidate the potential interviewee. Often times, these requests for interviews will be coupled with the service of a subpoena or the execution of a search warrant. Indeed, when law enforcement officers serve a search warrant or a document subpoena on a facility or individual, or otherwise appear unannounced at a publishing plant or employee s office or home, it is routine for them to seek to interview corporate officers and employees to gather information. Thus, it is worthwhile that your employees and executives understand the following, and that you understand your rights in such situations. The investigator has a right to contact and to request to speak with any individual. Correspondingly, the individual has the right to speak with the investigator as well as a right to refuse to speak with the investigator. Employees should identify the lead officer or prosecutor. Ask for credentials/id and business card. Employees should appear friendly and courteous and express their interest in cooperating with the government, but (1) are not required to speak with the agent, and (2) should not as a general matter speak with the agent about anything substantive without corporate counsel present. Employees should tell the agent they are pleased to speak with them but wish to have counsel present. Employees, executives and others do not have to let agents inside their residences or into the building (unless there is a search warrant). Even if there is a search warrant, it does not give agents a right to compel interviews. Employees, executives and others should be advised that the company will make an attorney available to be present during any such interview. Indeed, employees can be advised that the company requests that a company lawyer be present at any interview. In the event that an employee does speak with law enforcement officers outside the presence of company counsel, it is reasonable for the company to be de-briefed by the employee as to what questions were asked and what answers were given. This Q&A should give - 4 -
you some sense of the scope and focus of the government investigation. This information may be critical for you down the road. The investigator may indicate that if the individual does not agree to an informal interview, he or she can be subpoenaed to testify before a grand jury. While the investigator does not have subpoena power, the federal prosecutor (Assistant United States Attorney) does have the power to require attendance at a grand jury, but only if the matter is part of a grand jury investigation rather than merely an agency investigation. (Now, as of March 24, 2010, prosecutors also have significantly broadened Civil Investigative Demand authority.) Similarly, state authorities (such as the state Attorney General) may also have certain subpoena power. However, by agreeing to an informal interview, one cannot eliminate the possibility of a grand jury subpoena, and an individual might well be subpoenaed to testify before the grand jury about the matters discussed in the informal interview. If an individual decides that he or she is willing to submit to an informal interview, the person has the right to have the interview at the time and place of his or her own choosing, as well as the right to insist that any such interview be conducted only in the presence of counsel. Under any circumstances, if an individual agrees to be interviewed, he or she should tell the truth, and should be aware that failure to do so may in itself be a violation of law. The recent high-profile convictions of Martha Stewart, I. Scooter Libby and Senator Ted Stevens make clear that prosecutors will not hesitate to charge individuals with false statements, perjury and/or obstruction of justice. Under no circumstances should anyone destroy or alter any documents which might be relevant to the investigation. This too may be a violation of the law. It is crucial that you and your employees fully understand that the well-established maxim is true: the cover-up is often worse than the crime. Under no circumstances should employees make misrepresentations or lies or destroy evidence or documents inconsistent with normal business practices or the document hold. In a separate document, we have provided you with certain document retention guidelines. If an individual grants an interview, he or she also has the right to request, prior to and as a condition of the interview, a copy of the investigator's notes when the interview is completed. The agent, however, is not obligated to provide these notes. Indeed, it is the rare case where the agent will comply. If an individual decides to grant an interview without any counsel present at the interview, he or she still has the right to advise the company or its counsel before and/or after the interview of the interview request, the questions asked and the responses given. Attached to this Memorandum is a Checklist for you to consider in the event of a Request for Interview by law enforcement. IV. Responding to Subpoenas Federal investigators are not shy with serving subpoenas -- regardless of whether the recipient is a Target, Subject or merely a third party witness in an investigation. And, under new Department of Justice authority, Assistant United States Attorneys have broadened powers to issue Civil Investigative Demands. Although the issuance of a subpoena may require hospitals - 5 -
and health systems to take a large chunk of time and expense to comply with the subpoena, a failure to comply could result in serious penalties for contempt of court. Unless there are valid legal grounds to object, comply with the subpoena. There are ways, however, to minimize the time (and costs) involved in responding to a subpoena while ensuring that the corporation fully satisfies its legal obligations and protects itself to the extent possible. Subpoenas served on hospitals, health systems, corporations or other business entities typically request the production of certain documents by a specific date either because the company is being investigated or because the investigators believe the documents might be relevant to another investigation. The first step when a business is served with a subpoena should be to forward it to the responsible attorney (whether in-house or outside counsel) for review. It is imperative that the response to the subpoena be coordinated and supervised by counsel. The lead attorney should contact the government agency that issued the subpoena to discuss its scope. A request can be made for appropriate modifications that, if accepted, would lessen the burden and cost while still providing the government with the documents it seeks. For instance, if the subpoena requests a voluminous amount of documents that would fill hundreds of boxes and require an enormous amount of time to assemble, it would be perfectly appropriate to offer to provide the same information on computer disk or microfiche. Such requests are common and the government official, while not always accommodating, will nevertheless expect such requests and, if they are reasonable, often agree to them as long as they don't hinder the investigation. Once there is an understanding between the business and the government agency about the documents that must be produced, counsel should take the time to review the subpoena with the employees, explain any modifications and inform them of the process by which they are to review, collect and transmit their documents. Counsel should also make themselves freely available to answer the inevitable questions that will arise from employees and to ensure that the employees understand their legal obligations and responsibilities. The corporation is now ready to begin collecting the documents. A written set of procedures should be circulated to employees explaining how, when and to whom documents should be sent. To ensure that deadlines are satisfied, the instructions should also include a timeline indicating when the documents must be turned over to the corporation's counsel for review. It bears noting that it is now routine for government agencies to request the production of e-mail and voice mail. Typically, the production of such information is accomplished by reviewing employees' e-mails and voicemails as well as any backup files the corporation may possess. The key to a successful document collection is oversight by counsel and the installation of checks and balances to ensure that each source of relevant documents within the corporation has been explored. The company can safeguard itself against subsequent allegations concerning the thoroughness of its search and production by carefully monitoring and tracking the employees possessing relevant documents and the documents themselves. Each employee should be asked to fill out tracking sheets describing in general terms the types of documents being - 6 -
produced. Employees should also be required to sign a declaration that they conducted thorough searches of their files, e-mail, computer disks, storage areas and other locations. Because the company's attorney will be reviewing all documents produced by the employees for scope and privilege, the employees should be advised that the rule of thumb in identifying documents that are responsive to the subpoena is "when in doubt, produce it." Indeed, it is better to be safe than sorry. It is also far better to produce an irrelevant document than to withhold, unintentionally, a document that the government may deem relevant. Again, it is critical to be honest and responsive, and to avoid any potential claims of obstruction of justice. Unlike search warrant and unannounced interview requests, subpoenas allow for time to adequately prepare and respond. - 7 -
SEARCH WARRANT CHECKLIST A search warrant is a court order granting a law enforcement agent the right to enter a location to search for and seize certain items. If a law enforcement agent attempts to execute a search warrant, the following Checklist should be consulted: Call [Lead Counsel] immediately at [Telephone Number]. If you are unable to reach [Lead Counsel], please call [Secondary Counsel] at [Telephone Number]. Ask the agents to wait until corporate or outside counsel arrives or is reached by telephone, but understand that they may decline and that you may not obstruct a duly authorized search. Closely examine the search warrant, noting what kind of judicial officer authorized it, the area to be searched, and the records authorized to be seized. Note the area to be searched and try to direct the agents accordingly. Obtain and keep a copy of the warrant and the receipt for items seized. Record the identity of every agent involved in the search and his/her agency. Ask for a copy of the affidavit. Politely ask questions about the purpose of the search. Ask to accompany the agents to help identify the areas described in the warrant. Attempt to maintain your own inventory of the seized documents seized. Request that a copy be made on the premises of all documents before they are removed. Do not volunteer information to the investigators and provide only truthful information to any investigator. Do not do anything which may be interpreted as obstruction. Be courteous and cooperative.
REQUEST FOR INTERVIEW CHECKLIST Agents or investigators may attempt to contact you and/or your employees, executives, contractors or others either by telephone or in person. The investigator has a right to contact and to request to speak with any individual. Correspondingly, the individual has the right to speak with the investigator as well as a right to refuse to speak with the investigator. If a law enforcement agent attempts to interview individuals, the following Checklist should be consulted: eb If a government agent contacts you or any employee requesting to speak to you or that employee, please call [Lead Counsel] immediately at [Telephone Number]. If you are unable to reach [Lead Counsel], please call [Secondary Counsel] at [Telephone Number]. It is your right not to speak to the government agent. You are free to do so. The hospital, health system or entity requests that corporate or outside counsel be present for any discussions with government agents. Please be polite and courteous whether you are agreeing or declining to speak to the government agent. You have the right to have any interview take place at a time and place of your choosing, as well as conditioning any interview on counsel being present. In any conversations with government agents, whether as part of an interview or not, always tell the truth. Do not do anything which may be interpreted as obstruction.