The proposed amendments serve as a reminder that the Federal Sentencing Guidelines' "effective compliance plan" criteria remain living, breathing and subject to periodic modification.

General counsel and compliance officers of hospitals and health systems, and other health care companies, should note the January 21, 2010, proposed amendments to the Federal Sentencing Guidelines, as promulgated by the U.S. Sentencing Commission. As most compliance professionals are aware, the provisions of Section 8B2.1 of the Guidelines (Effective Compliance and Ethics Program) are generally regarded as the template from which effective corporate compliance plans are based.

The proposed new amendments would make several subtle but key changes to the construct of an "effective compliance plan," focusing in particular on the increasingly important role document retention policies must play in an organization's compliance program. Specifically, the amendments serve to:

  • Revise the seventh "effectiveness criteria" to include what the Commission considers to be an appropriate organizational response after criminal conduct has been detected, including but not limited to self reporting, cooperation with authorities and, where there is an identifiable victim, remedying the harm to the victim and the payment of restitution
  • Clarify that management and the board should be aware of the organization's document retention policies and should make sure that such policies are designed to meet the goals of an effective compliance plan, as provided under the Guidelines In addition, as part of periodic compliance plan assessment activity, the organization should verify that all employees are aware of the organization's document retention policies, and that such policies conform to the goals of an effective compliance plan.

Finally, the proposed guidelines raise for comment the question of whether an organization should receive specific credit for an effective compliance plan even when senior leadership is involved in the offense, where (A) the compliance officer has a direct reporting relationship to the board (or board committee), (B) the compliance program successfully detected the offense before it was uncovered outside of the organization, and (C) the organization promptly reported the violation to the appropriate authorities.

In a Nutshell

The significance of the proposed amendments is thus threefold:

  • They serve as a reminder that the Guidelines' "effective compliance plan" criteria remain living, breathing and subject to periodic modification.
  • The organization's document retention policies should be included both in the compliance plan materials and in the employee handbook.
  • The Commission continues to focus on the compliance plan awareness obligations of the board and executive management, and on the value of effective internal compliance reporting relationships.

The proposed amendments were posted in the Federal Register on January 21, 2010. The 60-day public comment period runs through mid-March 2010, and a public hearing on the proposed amendments is scheduled in Washington, D.C., for March 18, 2010.