Earlier this week, Deputy Attorney General (AG) Sally Quillian Yates issued a memorandum to Department of Justice (DOJ) attorneys discussing the need to hold individuals accountable for corporate wrongdoing in both civil and criminal enforcement actions. Deputy AG Yates further discussed the memo in a speech yesterday at the New York University of Law, emphasizing that “it is our obligation at the Justice Department to ensure that we are holding lawbreakers accountable regardless of whether they commit their crimes on the street corner or in the boardroom.”
The memo outlines 6 key steps for pursuing individual enforcement actions:
- To be eligible for anv cooperation credit, corporations must provide to the DOJ all relevant facts about the individuals involved in corporate misconduct. The memo makes it clear that companies seeking credit for cooperation will not be eligible until they satisfy the “threshold requirement” of “identify[ing] all individuals involved in or responsible for the misconduct at issue, regardless of their position, status or seniority”, and provide all facts related to that misconduct.
- Both criminal and civil corporate investigations should focus on individuals from the inception of the investigation. In doing so, the DOJ “maximize[s] the chances that the final resolution of an investigation uncovering the misconduct will include civil or criminal charges against” both the corporation and culpable individuals.
- Criminal and civil attorneys handling corporate investigations should be in routine communication with one another. The memo highlights the importance of regular communication between criminal and civil DOJ attorneys to ensure that parallel civil and criminal proceedings are pursued, when appropriate, against both corporations and individuals.
- Absent extraordinary circumstances, no corporate resolution will provide protection from criminal or civil liability for any individuals. Any such release of individual liability must be personally approved in writing by the relevant Assistant Attorney General or United States Attorney.
- Corporate cases should not be resolved without a clear plan to resolve related individual cases before the statute of limitations expires and declinations as to individuals in such cases must be memorialized. Any such declination must be approved by the United States Attorney or Assistant Attorney General whose office handled the investigation, or their designees.
- Civil attorneys should consistently focus on individuals as well as the company and evaluate whether to bring suit against an individual based on considerations beyond that individual’s ability to pay. Acknowledging the dual interest in returning funds to the public fisc and deterring future misconduct, the memo emphasizes that individuals suits should be considered regardless of the individual’s ability to pay any settlement amounts because such actions “will result in significant long-term deterrence” and “minimize losses to the public fisc through fraud” over time.
The memo states that these process changes apply to all future civil and criminal investigations, as well as any current investigations to the extent practicable.
Public statements regarding the need for increased individual enforcement are not new. By way of example, see statements by DOJ officials here, here, and here). However, health care and life sciences companies need to recognize that the Yates memo represents a key shift in the DOJ by putting into place a specific framework for ensuring that DOJ civil and criminal investigators actively pursue individual enforcement actions in parallel with investigations of corporate misconduct.