Compliance. TODAY November A strong moral compass. an interview with Leslie Caldwell. See page 16

Transcription

1 Compliance TODAY November 2017 a publication of the health care compliance association A strong moral compass an interview with Leslie Caldwell Partner, Latham & Watkins, LLP San Francisco, CA Former Assistant Attorney General, Criminal Division U.S. Department of Justice See page Monitoring and auditing the quality reporting process Eric Lowy and Divya Moolchandani Planning the unexpected: CMS emergency preparedness requirements Tricia R. Owsley Addressing medical transportation supplier audits and investigations through robust compliance Raymond J. Lindholm and Janice A. Anderson Embracing patient payment preferences, Part 1: Understanding terms and regulations Rozanne M. Andersen This article, published in Compliance Today, appears here with permission from the Health Care Compliance Association. Call HCCA at with reprint requests.

2 Meet Leslie Caldwell Partner, Latham & Watkins, LLP San Francisco, CA Former Assistant Attorney General, Criminal Division U.S. Department of Justice an interview by Gabriel L. Imperato Meet Leslie Caldwell This interview with Leslie Caldwell was conducted in early September 2017 by Gabriel L. Imperato Managing Partner at the Fort Lauderdale offices of Broad and Cassel LLP and member of the SCCE/HCCA Board of Directors. Leslie Caldwell has had a distinguished legal career in the public and private sector and has been an important architect of the basis for corporate crime and individual accountability for organizational non-compliance. Ms. Caldwell s contributions as the Enron Prosecutor and with the evolution and application of the Federal Principles of Prosecution of Business Organizations, in addition to her role as Assistant Attorney General for the Criminal Division of the Department of Justice in creating the position of Compliance Counsel, have defined the parameters of accountability for corporate compliance. Her experience in both the international and domestic enforcement arena and with representation of private clients has shaped the substance of prosecutions under the Foreign Corrupt Practices Act, the Health Care Fraud Statutes, the Sarbanes-Oxley law, and the overall scope of fraud enforcement at the Department of Justice. Ms. Caldwell has been a frequent speaker at SCCE/HCCA programs and we are grateful for her availability to complete this interview for Compliance Today. Gabriel L. Imperato, Esq., CHC GI: What can you tell us about the evolution of Department of Justice (DOJ) enforcement policy and its effect on organizational compliance? LC: The Department s enforcement efforts have increased dramatically over the last 15 years, both in terms of types of

3 cases being pursued and the different federal prosecutors offices involved. Before the early 2000s, criminal prosecution of corporate fraud was limited and handled mainly by a handful of U.S. Attorney s Offices. Now, many more districts and the Fraud Section of Main Justice are fully committed to investigating and prosecuting corporate fraud. In my view, this increased government enforcement focus is a major reason why most corporations now have far more robust, better-resourced, and empowered compliance programs. GI: Was the Enron prosecution a watershed for corporate liability and, if so, why was that the case? LC: Enron s collapse certainly was unprecedented. Never before had a major company imploded so quickly and completely Enron was listed as Fortune No. 7 in the summer of 2011 and was in bankruptcy and out of business by December. The Department s response also was unprecedented for the first time, a task force was assembled to focus on the company s collapse and identify those who were criminally responsible. As director of the task force during the investigation and charging phase, part of my job was to make sure that the team had the expertise and resources needed to keep a tight focus on those individuals and entities whose conduct actually led to the company s demise. That was quite challenging, given the company s size and the breadth of its business operations. In my opinion, the task force approach worked and was warranted in the Enron case. But I don t think task forces should or will be the norm in corporate criminal cases. GI: What impact did the enforcement actions against corporations in the early 2000s have on the evolution of policy at the DOJ and the promotion of corporate compliance? LC: I think that the early 2000s cases, such as Enron, Worldcom, and others, had a huge effect inside the DOJ and in corporate boardrooms. First, prosecutors across the country recognized that, in appropriate cases, criminal prosecution can play an important role in deterring corporate fraud. Those early cases also helped eliminate the intimidation factor DOJ prosecutors realized that even the most complex cases could be handled in a manageable and timely fashion. However, the DOJ also plainly saw that a strong corporate compliance culture was far more effective than prosecution in encouraging good corporate citizenship. Hence the increased DOJ emphasis on compliance as a mitigating factor in charging decisions. And of course, Congress enacted the Sarbanes-Oxley reforms, which greatly affected internal corporate compliance processes. GI: How would you characterize the DOJ s commitment to corporate compliance during your tenure as Assistant Attorney General (AAG) for the Criminal Division? LC: A corporate culture that truly emphasizes and values compliance, rather than the prospect of criminal prosecution, is the best deterrent to corporate criminal wrongdoing. Most employees who engage in misconduct do so, at least in part, because they think it will benefit their employer. If the corporation lets its employees know in clear and consistent terms that misconduct truly will not be tolerated, they will be far less likely to cross legal and ethical lines. As AAG, I made it a priority to communicate to corporate leaders general counsels, chief compliance officers, and other C-level executives that the DOJ

4 got this. Our goal was not to eliminate corporate fraud through prosecution (an impossible task), but to prevent fraud from happening in the first place, thanks to strong compliance efforts within corporations themselves. GI: Tell us about the creation of the position of Compliance Counsel at the DOJ and the objectives associated with creating that position? LC: Most government prosecutors understandably lack the expertise to evaluate the effectiveness of corporate compliance programs. They also generally do not have the practical business expertise to determine what remedial measures might best help avoid recurrences of wrongdoing. So we created the position of Compliance Counsel and hired an expert with significant industry experience. We hoped to achieve several goals. First, we wanted to send a message about how much the DOJ values a genuine commitment to corporate compliance. We also wanted someone who could help our prosecutors kick the tires on corporate compliance programs of companies under investigation and see whether they were effective on an operational, as opposed to paper, level. And we wanted to do a better review of existing or proposed remediation and make more informed suggestions about future oversight and remediation. I think that the Compliance Counsel brought a tremendous benefit not only to our prosecutors, but also to companies who generally welcomed having the expertise across the table. GI: What is the present status of the Compliance Counsel position and the document, 1 entitled The Evaluation of Corporate Compliance Programs, published by the DOJ on February 8, 2017? LC: The DOJ posted an opening for the Compliance Counsel position in June I am not aware of the process beyond that. As for the February 2017 publication, while it is not meant to be a prescriptive checklist and must be read in conjunction with other DOJ publications, it is a must read for anyone who wants to understand how the DOJ looks at corporate compliance. This means compliance professionals, in-house counsel, executives and, of course, outside counsel advising clients on related issues. GI: What do you foresee for healthcare fraud enforcement in the new administration and beyond? LC: Healthcare fraud is and will remain a very high DOJ enforcement priority, regardless which party is in power. Sadly, the amount of money lost to Medicare and other healthcare fraud is in the billions every year. Fortunately, the Department has in recent years had increasing access to real time data that has sharpened its early detection capability so that frauds can be identified and stopped earlier. And, the DOJ has used that data to deploy teams of prosecutors and other resources to cities where Medicare fraud is most rampant. That said, wherever there is money to be made, fraudsters will follow. GI: Does the DOJ still follow the individual accountability policy developed by Deputy Attorney General Sally Yates? What does the future hold for this policy? LC: As far as I know, the individual accountability policy is still in effect. But even if some updated policy is issued, the fact is that most criminal prosecutors handling corporate fraud cases always have sought to bring charges against individuals when supported by the evidence

5 While it may make sense in some circumstances also to prosecute a corporate entity, prosecutors recognize that prosecution of individuals generally has a greater deterrent effect than prosecution of corporations. GI: What do you foresee for the future in connection with DOJ policy and organizational compliance? Will compliance in the healthcare industry still be important? LC: I think that the DOJ has learned to distinguish between situations where corporate misconduct occurs in a company with a weak compliance culture, versus misconduct that occurs despite a strong compliance culture. The DOJ understands that even the best compliance program cannot prevent all wrongdoing. So, when something goes wrong in spite of a strong program and culture, I would expect the DOJ s charging decisions to be calibrated accordingly. GI: What is the best advice you can give compliance professionals to assist their organizations in managing risk and ensuring corporate compliance? LC: To quote the posters in the New York City subway, If you see something, say something. You are a gatekeeper, and you must be vigilant. You also should not be shy: Seek resources. Speak up. Have a backbone. GI: Tell us about the whistleblower provisions in the False Claims Act (FCA) and its impact on healthcare fraud enforcement historically. What do you see for the future? LC: The FCA is an incredibly important tool in the fight against government program fraud, especially healthcare fraud. As you know, the FCA allows whistleblowers to file claims alleging fraud in connection with government program funds. DOJ attorneys review most, if not all, FCA filings that allege healthcare fraud. The government decides whether to seek to intervene in particular cases, effectively taking control of the matter if they do so. Although the government intervenes in only a tiny fraction of FCA lawsuits, many of the largest criminal and civil healthcare fraud enforcement actions brought in the past decade started as whistleblower suits under the FCA. I am confident that the FCA will continue to be a critical tool for prosecutors. GI: What impact do you think an effective compliance program can have on charging and enforcement decisions by the DOJ and resolution of criminal and civil healthcare fraud matters? LC: As in other types of corporate fraud cases, the effectiveness of a compliance program will have a huge impact on the DOJ s charging decisions. In the future, it will only get harder to defend corporations that have inadequate programs. At the same time, I hope that it will be a bit easier to defend companies where something has gone wrong in spite of a strong compliance culture. GI: What do you think are the measures or earmarks of an effective compliance program? LC: Clarity, transparency, and operational effectiveness are key. Resources and empowerment also are critical, especially when short-term business pressures might tempt employees to cross ethical or legal lines. And the importance of tone from the top cannot be overstated. Employees from the C-suite to the ground level need to buy in and need to believe that the company truly values compliance. GI: What do you think are the most important qualifications for a compliance officer in an organization? LC: A strong moral compass and an ability to speak truth to power, whether it is in a boardroom or on a trading floor

6 Responsiveness and the ability to communicate clearly both up and down the corporate ladder are incredibly important. GI: What do you consider the most important highlights of your career at the Department of Justice? LC: There have been many, ranging from the violent gang cases I tried as an Assistant U.S. Attorney in Brooklyn, to working for Bob Mueller in San Francisco, to leading the Enron task force. Most recently, it was my great privilege and honor to have led the employees of the Criminal Division. Criminal Division attorneys are on the leading edge of so many different types of matters, ranging from the most sophisticated cybercrime and fraud, to international organized crime and kleptocracy, to global child exploitation and human trafficking networks. Every day, I was impressed by their energy, passion, work ethic, and commitment to justice and fairness. GI: What do you consider to be the most important highlights of your career in private practice? LC: When you have a successful white collar practice, there is not a lot you can say about the highlights since, by definition, you may have helped your clients avoid public consequences. That said, private practice gave me a sense of perspective and proportionality that I perhaps did not always have as a prosecutor. I think that I was a far better AAG as a result. GI: What kinds of activities do you see yourself involved in now that you have joined Latham & Watkins in San Francisco? LC: I am incredibly excited to be joining such a great firm, where I have many friends. And I am really looking forward to getting back to advising and helping clients with their most challenging problems. GI: Thank you, Ms. Caldwell, for taking the time to share your insights. 1. U.S. Department of Justice, Criminal Division, Fraud Section: Evaluation of Corporate Compliance Programs Available at HC or non