1. CONDUCTING INTERNAL INVESTIGATIONS
Health Care Corporate Compliance Certificate Program
George Washington University
January 10, 2017
Larry S. Gondelman
Powers Pyles Sutter & Verville PC
Powers Pyles Sutter & Verville, PC M Street, NW, Seventh Floor Washington, DC
Telephone: (202) Fax: (202)

2. WHAT IS AN INTERNAL INVESTIGATION?
Factual/legal investigation by an organization of suspected illegal activity or misconduct by officers or employees
Critical component of any compliance program
Nuanced component with many pitfalls and judgment calls

3. PURPOSE OF AN INTERNAL INVESTIGATION
Uncover the facts, whatever they may be
Stop any ongoing violations
Remedies to prevent future violations
Disciplinary actions
Self-disclosure to government?

4. WHETHER AND WHO? WHETHER: Depends on Context
Existing government investigation or civil case
Internal allegations of wrongdoing

5. WHETHER AND WHO? Existing government investigation or civil case
Receipt of subpoena/possible FCA case
Time can be of the essence

6. WHETHER AND WHO? Internal (whistleblower) allegations
One academic study in 2011 involving 83 experienced audit committee members found whistleblower reports received through anonymous channel were given less credibility and allocated fewer investigative resources than those from an identified source.

7. WHETHER AND WHO?
A 2010 benchmarking report revealed that 50% of all whistleblower calls are anonymous.
Under-investigating ½ of all allegations could leave companies exposed. Who will management blame if a reported allegation does not get investigated?

8. WHETHER AND WHO? WHO? In-house Counsel versus Outside Counsel
In either event, generally preferable to have an attorney conduct investigation to handle privilege and litigation issues

9. WHETHER AND WHO? In-house purely self-regulatory
if no compelling need to involve an outside party to buttress appearance of objectivity
key question is whether in-house counsel possesses necessary objectivity to conduct the investigation

10. WHETHER AND WHO? Outside Counsel
prudent choice if any potential to garner interest from government enforcement agencies
widespread activity
high-level employees involved
adverse publicity

11. WHETHER AND WHO?
Regular outside counsel versus firm with no prior involvement with matters at issue.
Adjunct “Who” Question—Who is client?
independent of management
independent committee, e.g. audit
special committee of independent directors

12. THE INVESTIGATION Define the Scope Investigative Team Fact Gathering
Documents
Interviews
Review, assess, and report findings
Corrective, remedial, and disciplinary actions (if necessary)

13. THE SCOPE Identify the issues May need to revisit as investigation
unfolds
Identify the documents
Identify the witnesses

14. THE INVESTIGATIVE TEAM
Establish lines of reporting and supervision
Identify primary corporate contact for collecting documents, scheduling interviews
Determine if consultants are required.

15. FACTS—THE DOCUMENTS Importance of documents
Documents drive government and internal investigations
Litigation Hold
Preservation of documents/Document Hold
Consider whether to put document hold in writing
Review/Suspend document retention policy; retain everything until further notice
Cease destruction of documents in normal course of document retention policy and practices
Helps to ensure availability of documents for review
Prevents potential obstruction of justice issues should the Government later audit, investigate or otherwise get involved

16. FACTS—THE DOCUMENTS Document Gathering
Use of IT specialists for electronic retention and gathering of electronic documents
Document Review

17. FACTS—THE WITNESSES Joint Representation Issues
Usually, only represent entity, not officers or directors
Counsel for Employees
Not usually an issue if not in response to government investigation
If so, issues of separate representation and indemnification

18. FACTS—THE WITNESSES Rules for Interviewing
Individual in-person interviews, not groups
Third person should always be present (note taker)
Take notes, do not tape
In general, don’t discuss one witness’s interview with another witness
Prepare memo of interview as soon as practicable after interview—not verbatim.

19. FACTS—THE WITNESSES
Tell the witness the general reason for the interview, giving limited information—only what is necessary
Communicate ground rules, especially that the employee should not discuss the interview with anyone
You can say you will try to keep the interview confidential, but you cannot guarantee; also may have to note that there are no secrets from management
You can remind employee that refusal to cooperate with an internal investigation may lead to discipline

20. FACTS—THE WITNESSES My typical spiel:
Who I am (a lawyer)—don’t hold it against me
Who I represent, making it clear that company is client, not the individual
Confidentiality of interview, but privilege of company, not employee, and it can be waived only by the company
The reluctant witness example
The lying witness example

21. PRIVILEGE ISSUES
Typically, there is no privilege for routine compliance investigations and related materials
However: The investigative process and findings may be protected from disclosure to third parties pursuant to attorney-client privilege where the investigation is directed by counsel in anticipation of potential litigation, or counsel is consulted and engaged for the purpose of providing legal advice on the subject being investigated

22. PRIVILEGE ISSUES Attorney Client Privilege
Protects communications between attorney and client for purpose of obtaining legal advice
Current employees, former employees, management
Protects direct communications with in-house or outside legal counsel for legal (not business) advice
Attorney can retain agents (accountants, experts, etc.) to assist
Communications between agents and client, or between agent and attorney, can be covered by privilege, but must be at the direction of counsel for the ultimate purpose of providing legal advice

23. PRIVILEGE ISSUES Attorney-directed investigations or audits
Can be privileged
But again, fact gathering or audit results must be for purpose of providing legal advice
To preserve the privilege, investigative steps should be undertaken by counsel or at the request of counsel
When feasible, requests by counsel should be documented, e.g., interviews by non-lawyers
The “figurehead attorney” is unlikely to be sufficient to preserve the privilege

24. PRIVILEGE ISSUES Documentation of attorney-client relationship
Engagement Agreement or memo at start of investigation establishing attorney-client relationship
Request from attorney for information, or written investigative plan
Evidence that legal advice was delivered
Identification of privileged documents
Attorney-client privileged markings
Avoid “mystery” documents

25. PRIVILEGE ISSUES Work-Product Doctrine
protects an attorney’s mental impressions, conclusions, opinions, and legal theories
only applies to materials created “in anticipation of litigation”
prospect of litigation must be “identifiable”
investigations by regulatory agencies provide reasonable grounds for anticipating litigation

26. REPORT FINDINGS Written or oral report Written documentation:
Summary of investigative actions and conclusions
Basis for factual conclusions, evidence (documentary, testimonial), credibility of witnesses, and whether there is corroboration
Keep in mind that report may someday be disclosed to government or other third parties during the course of litigation (if privilege does not shield its disclosure)
Consider whether to report the findings and/or conclusions to complainants or government