OVERRATIONALIZING OVERRATIONALIZING COMPLIANCE: CHICKEN COMPLIANCE: CHICKEN

SOUP FOR THE SOUP FOR THE COMPLIANCE OFFICERCOMPLIANCE OFFICER

Anne Novick BrananAnne Novick Branan

Broad and CasselBroad and Cassel

500 East Broward Blvd500 East Broward Blvd

Suite 1130Suite 1130

Ft. Lauderdale, FL 33394Ft. Lauderdale, FL 33394

(954) 745-5212(954) 745-5212

abranan@broadandcassel.comabranan@broadandcassel.com

OVERRATIONALIZING COMPLIANCE:

CHICKEN SOUP FOR THE OFFICER

Anne Novick BrananBroad and Cassel

© 2000

Compliance Officers’ Compliance Officers’ Concern for Personal Concern for Personal LiabilityLiability

Scapegoat for corporate violationsScapegoat for corporate violations To some extent, concern as validTo some extent, concern as valid Purpose of government Purpose of government

enforcement is to instill fear of enforcement is to instill fear of personal liability to deter violationspersonal liability to deter violations

Compliance Compliance OfficerOfficer

The nature of the job entails The nature of the job entails inherent conflicts and risks.inherent conflicts and risks.

These conflicts and risks These conflicts and risks cancan and and mustmust be managed by those be managed by those assuming the responsibilities of assuming the responsibilities of Compliance Officers.Compliance Officers.

LiabilitiesLiabilities

Corporate vs. individualCorporate vs. individual Criminal vs. civilCriminal vs. civil Diverging interests of corporation Diverging interests of corporation

and employeeand employee• DefendantsDefendants• Cooperation with governmentCooperation with government• Consider option of resignationConsider option of resignation

Employee-Employer Employee-Employer LiabilitiesLiabilities

Respondeat Superior Doctrine Respondeat Superior Doctrine • ““Let the master answer”Let the master answer”

Employer accepts responsibility forEmployer accepts responsibility for• Actions of EmployeeActions of Employee• Acting within scope of Acting within scope of

employmentemployment

Defense IssuesDefense Issues

Joint defenseJoint defense Multiple representationMultiple representation Corporate policy on providing Corporate policy on providing

defense for employeesdefense for employees• Exception: Refusal to finance defense Exception: Refusal to finance defense

of employee who did not act in good of employee who did not act in good faith or had reason to believe his/her faith or had reason to believe his/her conduct was unlawful.conduct was unlawful.

Investigate before accepting the jobInvestigate before accepting the job Understand Job FunctionsUnderstand Job Functions Set ground rulesSet ground rules Be knowledgeableBe knowledgeable Understand the intangiblesUnderstand the intangibles Use outside consultantsUse outside consultants Be proactiveBe proactive Develop strong, clear compliance policiesDevelop strong, clear compliance policies

Compliance Officers:Managing the Risks

Investigate before accepting the Investigate before accepting the jobjob

Learn about the companyLearn about the company• Past historyPast history• Current mission/corporate cultureCurrent mission/corporate culture• Organizational structureOrganizational structure

-- managementmanagement

-- parent-subsidiaryparent-subsidiary

Investigate before accepting the Investigate before accepting the jobjob

• Reputation in communityReputation in community• Recent/anticipated business dealsRecent/anticipated business deals• Meet with Board of DirectorsMeet with Board of Directors• Corporate cultureCorporate culture

Understand Job FunctionsUnderstand Job Functions

To whom will you reportTo whom will you report• Financial/legal officer vs. Financial/legal officer vs.

operationsoperations• Direct access to governing body Direct access to governing body

and CEOand CEO• Assess commitment of Assess commitment of

“supervisor” to compliance“supervisor” to compliance

Understand Job FunctionsUnderstand Job Functions

Study job descriptionStudy job description• Duties consistent with compliance Duties consistent with compliance

objectivesobjectives• Realistic scope of dutiesRealistic scope of duties• Degree of independenceDegree of independence• Level of empowermentLevel of empowerment

Understand Job FunctionsUnderstand Job Functions

Is compliance program in place or Is compliance program in place or will you develop it will you develop it • Existing: get “feel” for existing Existing: get “feel” for existing

program and policiesprogram and policies• New program: dual role during New program: dual role during

developmentdevelopment

Understanding Job Understanding Job FunctionsFunctions

What staff/support will you haveWhat staff/support will you have• OIG recognizes need for sufficient OIG recognizes need for sufficient

funding and stafffunding and staff• Size and type of organizationSize and type of organization• Staffing needsStaffing needs

– clerical, compliance assistantsclerical, compliance assistants• Funding -Funding -

– education, hotline expenses, office, education, hotline expenses, office, consultantsconsultants

Understanding Job Understanding Job FunctionsFunctions

Full time/Part timeFull time/Part time• Job Functions consistentJob Functions consistent• Realistic time expectationsRealistic time expectations

Set Ground Rules with Set Ground Rules with EmployerEmployer

Written ContractWritten Contract To whom will you reportTo whom will you report Authority to hire outside counsel in Authority to hire outside counsel in

mattersmatters ConfidentialityConfidentiality Objectivity and independence respectedObjectivity and independence respected Authority to delegateAuthority to delegate Obtain indemnification/insurance Obtain indemnification/insurance

coveragecoverage

Be KnowledgeableBe Knowledgeable

Learn about company’s operations, Learn about company’s operations, “politics”“politics”

Know compliance program documentsKnow compliance program documents Study the applicable lawStudy the applicable law Obtain publicationsObtain publications Connect with other compliance officersConnect with other compliance officers Follow trends in government Follow trends in government

enforcementenforcement

Understand the Understand the IntangiblesIntangibles

A compliance officer’s most A compliance officer’s most valuable tools valuable tools • Sense of what’s rightSense of what’s right• Ability to “listen to your gut”Ability to “listen to your gut”• Common senseCommon sense• Tenacity Tenacity • ObjectivityObjectivity

Use outside consultantsUse outside consultants

Experts in specific areas of law or Experts in specific areas of law or businessbusiness• Establish list of reliable contactsEstablish list of reliable contacts

Outside counsel for investigationsOutside counsel for investigations• Attorney-client privilege issuesAttorney-client privilege issues• ObjectivityObjectivity• ExpertiseExpertise• Get legal opinionsGet legal opinions

““Sticky” internal political issuesSticky” internal political issues

Be ProactiveBe Proactive

vs. reactivevs. reactive Avoid complacencyAvoid complacency Justify company’s interpretation of new Justify company’s interpretation of new

or murky regulations/rules or murky regulations/rules Document compliance effortsDocument compliance efforts

Develop Strong, Clear Develop Strong, Clear Compliance PoliciesCompliance Policies

Essential to avoid being put between Essential to avoid being put between “a rock and a hard place” by senior “a rock and a hard place” by senior executivesexecutives

Policies on investigations, reporting, Policies on investigations, reporting, confidentiality are especially crucial confidentiality are especially crucial

Follow policies to avoid liabilityFollow policies to avoid liability Balance between flexibility and detailBalance between flexibility and detail

Confidentiality of Reports and Confidentiality of Reports and InvestigationsInvestigations• Breaches of trust breed suspicionBreaches of trust breed suspicion• Be sure employees know of limits on Be sure employees know of limits on

promises of confidentialitypromises of confidentiality• Resist pressure from senior Resist pressure from senior

executives to breach confidentialityexecutives to breach confidentiality

Tricky Compliance IssuesTricky Compliance Issues

Handling of internal whistleblowersHandling of internal whistleblowers• Keep identity confidentialKeep identity confidential

–Anonymous reportsAnonymous reports• Assure Report will be taken seriouslyAssure Report will be taken seriously• Recognize the difficulty of “coming Recognize the difficulty of “coming

forward”forward”–Fear of retaliation, isolation, Fear of retaliation, isolation, losing joblosing job

• Take quick actionTake quick action

Tricky Compliance IssuesTricky Compliance Issues

Senior Executives Refusal to Senior Executives Refusal to Cooperate with Compliance Cooperate with Compliance ObjectivesObjectives• Go to governing body Go to governing body • Document your effortsDocument your efforts

Tricky Compliance IssuesTricky Compliance Issues

Joy is the compliance officer for a home health agency. An audit reveals that a large volume of services were billed, but not performed. She learns that a group of nurses meets regularly to “fix patient records.” She advises the administrator that an internal investigation should be conducted, but is told to “ forget about it.”

DISCUSSION SCENARIOS

John is the compliance officer at a John is the compliance officer at a large medical practice. He large medical practice. He receives a report that one of the receives a report that one of the physicians has been accepting physicians has been accepting kickbacks from a DME company kickbacks from a DME company when he refers patients for when he refers patients for equipment. The physician equipment. The physician involved is the chairman of the involved is the chairman of the board and the well-established board and the well-established and respected physician who and respected physician who hired John.hired John.

DISCUSSION SCENARIOS

As the compliance officer for a As the compliance officer for a hospital, Bill receives a report that the hospital, Bill receives a report that the compensation formula used by the compensation formula used by the hospital to compensate Dr. Jones is hospital to compensate Dr. Jones is illegal. He looks at the independent illegal. He looks at the independent contractor agreement between the contractor agreement between the hospital and Dr. Jones and believes hospital and Dr. Jones and believes there is a problem also. However, Bill there is a problem also. However, Bill becomes uncomfortable when he becomes uncomfortable when he realizes that Ed in the hospital’s legal realizes that Ed in the hospital’s legal department drafted and approved the department drafted and approved the agreement for signing.agreement for signing.

DISCUSSION SCENARIOS

Risk Management Risk Management for Corporate Compliance for Corporate Compliance

OfficersOfficers

You You cancan manage the risks to avoid personal liability and still protect your company!