On Monday, November 16, 2015, Deputy Attorney General (DAG) Sally Quillian Yates addressed the American Bankers Association/American Bar Association Annual Money Laundering Enforcement Conference and discussed the recently issued “Yates Memorandum” relating to individual accountability for corporate wrongdoing. While DAG Yates was speaking at a money laundering conference, her remarks today should also be of interest to companies in the healthcare industry.
DAG Yates noted that the new policy, which has been in effect for two months, is being incorporated into the United States Attorney’s Manual – a set of policies that guide and regulate Justice Department lawyers in civil and criminal enforcement actions. She noted that the Filip factors, a reference to a prior memorandum issued by then Deputy Attorney General Mark Filip relating to corporate prosecutions, would be changed to incorporate the policies relating to accountability for individual wrongdoing.
Specifically, DAG Yates noted that the revised U.S. Attorney’s Manual:
- Emphasizes “the primacy in any corporate case of holding individual wrongdoers accountable and list a variety of steps that prosecutors are expected to take to maximize the opportunity to achieve that goal.”
- Discusses corporate cooperation making clear that, contrary to past practice, “if a company wants credit for cooperating – any credit at all – it must provide all non-privileged information about individual wrongdoing” to the government.
- Requires companies seeking cooperation credit to conduct investigations that are “timely, appropriately thorough and independent and report to the government all relevant facts about individuals involved no matter where they fall in the corporate hierarchy.”
- Separates into two categories of credit a corporation’s voluntary disclosure and its willingness to cooperate, noting each of these is independently important in evaluating a corporation’s response to misconduct.
- Adds a new section relating to civil enforcement of claims against individuals which stresses that, like in criminal investigations, civil enforcement actions should focus on individual wrongdoing at the outset. The new section applies the same rules to civil cooperation credit requiring full disclosure of individual involvement. This section also emphasizes that in certain civil cases it is appropriate to sue culpable individuals even where those individuals are judgment-proof in order to ensure that they do not escape accountability for their conduct.
- Modifies the long-standing policy on parallel proceedings by laying out specific steps that criminal and civil attorneys handling corporate investigations should take with respect to communication and referral of matters from “one side of the house to the other” in order to ensure “the fullest and most appropriate use of all the tools in [the Justice Department’s] toolbox” when seeking to hold individuals responsible.
Notably, in closing the DAG addressed the compliance officers attending the meeting and emphasized the importance of their roles in seeking to prevent corporate misconduct before it occurs, calling them “a crucial partner in the fight against white-collar crime” and stressing the need for “strong compliance programs.”
While many of these pronouncements do not fundamentally change the Justice Department’s focus or approach when bringing criminal and civil actions against corporations, in some areas, the changes are substantial and wide-ranging. One example of this is the change relating to when a corporation receives cooperation credit. The new policy codifies a requirement that, in order to earn such credit, the corporation must provide facts relating to individual participation in any misconduct. Failure to do so will mean that a corporation’s efforts towards cooperating will not be creditable. Another example is the new requirement that civil enforcement actions include a focus on culpable individuals. This is likely to mean that in addition to healthcare companies being defendants in False Claims Act cases, it is more likely than ever that individuals, including corporate executives, may be made parties in these cases. These are only initial observations and we anticipate providing additional analysis of the Yates Memorandum and its impact in upcoming posts.