While no health care provider wants to believe it has done anything to warrant investigation by the government, the reality is that most hospitals and other health care organizations will at some point, be faced with a government investigation or whistleblower lawsuit. In light of this reality, it is important to know how to respond if you suspect or know that your organization is under investigation.

The questions of what your organization needs to do and when can be a tricky one. This Bricker & Eckler Bulletin offers some tips to ensure that your organization’s response to a government investigation is appropriate and does not result in additional problems.

Responding to Subpoenas

If your organization is served with a subpoena by the government, your first step should be to immediately notify your legal counsel. Your legal counsel will help you through the process, including evaluating whether the subpoena is overly broad, burdensome, or requests privileged information and can assist you in collecting and reviewing documents that are responsive to the subpoena. Your attorney also may be able to negotiate a delayed due date or rolling deadline for delivery of the requested documents.

Clients who are served with a subpoena are advised to work closely with their attorneys as soon as possible in order to thoroughly evaluate the burdensomeness of the request as soon as possible so that objections can be formulated and negotiations and/or motions can be brought in a timely manner.

Preservation of Evidence – The “Litigation Hold”

When faced with a potential investigation or lawsuit, one of the first considerations must be to ensure that potential relevant evidence (i.e., emails, documents) are not discarded or destroyed. The general rule is that the duty to preserve potentially relevant evidence is triggered at the point in which a party “reasonably anticipates litigation.” In other words, when an organization is on notice of a credible threat it will become involved in litigation or anticipates taking action to initiate litigation. While in many cases a party may not have reasonably anticipated litigation until it is served with a complaint, pre-suit notice can trigger the preservation obligation. For health care providers, that could come in the form of a government subpoena or search warrant, an administrative demand letter, or even a personal visit from a government agent at your organization’s place of business. All of these, depending on the circumstances, may trigger the duty to preserve relevant information.

The first thing health care providers should do upon becoming aware that they may be the subject of a government investigation is to get competent legal counsel involved. The consequences of potentially destroying relevant evidence or not preserving evidence properly can be dire.

In determining the scope of information that should be preserved, relevant factors to consider include the nature of the issues raised in the matter, experience in similar circumstances and the amount in controversy. Also relevant is consideration of whether or not the relevant information is “reasonably accessible.” Logically, the process entails the following:

  1. Determine the scope of relevant information;  
  2. Identify each data source potentially containing the information;  
  3. Determine the ease by which the data can be searched and retrieved from each source;  
  4. Determine if substantially similar copies can be obtained from more readily accessible sources; and  
  5. Perform a cost / burden analysis on the potential preservation of the data, weighing the degree of relevance and potential value of the information to the litigation against the cost or burden to preserve it.

Your attorney will assist you in drafting an appropriate written communication to your employees having knowledge of the operative facts and to those who are otherwise the custodians of relevant information. This communication, often referred to as a “litigation hold” notice, should:

  1. Identify the persons who are likely to have relevant information;
  2. Communicate the requirement to preserve information;
  3. Be in writing;
  4. Clearly define what information is to be preserved and how the preservation is to be undertaken; and
  5. Be periodically reviewed and, when necessary, reissued in either its original or an amended form to remind your employees of the continuing need to retain all relevant documents.

The “litigation hold” process will require involvement of your IT staff in order to suspend automatic routines and processes that could lead to the destruction of relevant information. IT staff also may need to investigate whether the sole copy of some relevant information may be found only on disaster recovery back-up tapes. If this is the case, then the IT staff should be instructed to refrain from the normal recycling of the tapes so that this data may be preserved.

A January 15, 2010, New York federal district court decision defined “contemporary standards” for adequate preservation of evidence, stating that the failure to meet these standards supports a finding of gross negligence. Specifically, the court held that “the following failures support a finding of gross negligence, when the duty to preserve has attached:

  • To issue a written litigation hold;
  • To identify the key players and to ensure that their electronic and paper records are preserved;
  • To cease the deletion of email or to preserve the records of former employees that are in a party’s possession, custody or control; and
  • To preserve backup tapes when they are the sole source of relevant information or when they relate to key players, if the relevant information maintained by those players is not obtainable from readily accessible sources.”

Reasonable efforts to preserve relevant information once a party reasonably anticipates litigation is now the expectation of most if not all courts nationwide. Given the clarity of the recent New York court decision, health care organizations now have clearer instructions of what is required of them once they become aware that a government investigation (or any other type of litigation) may be anticipated. So what happens if your organization inadvertently destroys relevant electronic information? The federal rules and many state rules contain a “safe harbor” that provides that sanctions may not be levied against an organization that destroys discoverable information due to the “the routine, good-faith operation of an electronic information system.” To qualify for this provision, federal case law clarifies that parties must take active measures to preserve information (i.e., put in place the “litigation hold” described above) once litigation is reasonably anticipated. Courts will look at a number of factors to determine whether your organization is protected, including:

  1. Whether and when any obligation to preserve the information was triggered;  
  2. Whether the information was lost as a result of the routine alteration or deletion of information that attends the ordinary use of the system in issue;  
  3. Whether the party intervened in a timely fashion to prevent the loss of information;  
  4. Any steps taken to comply with any court order or party agreement requiring preservation of specific information; and  
  5. Any other facts relevant to its determination under this division.

Hospitals and other health care providers should work with their legal counsel to ensure that their preservation efforts are well-documented. Your counsel can assist you in ensuring that the documentation sufficiently demonstrates your organization’s efforts to comply with its obligation to preserve relevant electronic evidence.

Forensic Imaging Of Your Organization’s Computer May Not Be Necessary

Responding to a government investigation or other litigation can be very expensive, especially if your organization is required to forensically image its computers in order to preserve all of the information on them. Forensic imaging is not uncommon in the course of civil discovery, and district courts have been willing to compel the forensic imaging and production of opposing party’s computers. However, courts have held that forensic imaging is not an automatic requirement to satisfy preservation obligations. The Sixth Circuit has provided guidance on when forensic imaging may be a necessary step in meeting the duty to preserve relevant evidence. (In re Goetz, Case No. 07-6373 (6th Cir. June 26, 2008)) Imaging may be required, for example, where the computer hard drive itself plays a critical evidentiary role in the case, such as theft of trade secrets. Also, where there are serious allegations of deletion of relevant information, imaging might be required as an attempt to locate that deleted data.

In light of the expense associated with forensic imaging and the Sixth Circuit’s position that forensic imaging is not always required, health care providers should consult with their legal counsel before undertaking or agreeing to undertake forensic preservation and/or recovery efforts when responding to the government’s request for documents .