On September 15, 2022, Lisa Monaco, Deputy Attorney General of the United States, issued a Memorandum focused on “further revisions to corporate criminal enforcement policies following discussions with Corporate Crime Advisory Group.” This Memorandum builds on the establishment of the Corporate Crime Advisory Group and an October 28, 2021, Memorandum, “Corporate Crime Advisory Groups and Initial Revisions to Corporate Criminal Enforcement Policies.”
The Memo announced additional revisions to the DOJ’s existing corporate criminal enforcement policies and practices and provides guidance for prosecutors on how to ensure individual and corporate accountability. Some of the considerations for accountability include: the corporation’s history of misconduct; self-disclosure and cooperation by the corporate; the strength of the corporation’s existing compliance program; and the use of monitors, including their selection and appropriate scope of work.
Individual Accountability
Monaco notes that the DOJ’s “first priority in corporate criminal matters is to hold accountable the individuals who commit and profit from corporate crime,” in an attempt to deter future illegal activity and incentivize changes in individual and corporate behavior. To that end, she emphasized that to be eligible for any cooperation credit, the corporation must disclose all relevant, non-privileged facts about individual misconduct to the DOJ. The mere disclosure of records is not enough, though, and if they disclosures come too far after the misconduct, they reduce the likelihood that the DOJ will be able to investigate the matter in time to seek appropriate criminal charges.
For example, prosecutors may now consider whether a company promptly notified the DOJ of relevant information once it was discovered, or if the company delayed the disclosure in a manner that inhibited the government’ s investigation. In situations where prosecutors identify an undue or intentional delay in the production of information or documents – particularly with respect to documents that impact the government’ s ability to assess individual culpability – cooperation credit will be reduced or eliminated.
Corporate Accountability
The DOJ will continue to consider a company’s historical misconduct, but not all instances of prior misconduct are “equally relevant or probative.” Instead, prosecutors will consider the way the prior misconduct was resolve and the associated sanctions or penalties, in addition to the time that elapsed between the instant misconduct, the prior resolution, and the conduct underlying the prior resolution.
Prosecutors will likely assign the greatest significance to recent United States criminal resolutions and to prior misconduct that involved the same employees or management. Conduct addressed by prior criminal resolutions from more than 10 years before the current conduct and civil/regulatory resolutions finalized more than 5 years before the current conduct will be given less weight. Even still, the DOJ notes that “repeated misconduct may be indicative of a corporation that operates without an appropriate compliance culture or institutional safeguards.”
Further, the Memo directs each DOJ component that prosecutes corporate crime to review its policies on corporate voluntary self-disclosure. If the component lacks a formal (and written) policy to incentivize self-disclosure, it must draft and share such a policy, which sets forth the component’s expectations of what constitutes a voluntary self-disclosure. The policy should also include the benefits that corporations can receive if they meet the standards for voluntary self-disclosure under the component’s policy.
Independent Compliance Monitorships
Monaco notes that DOJ prosecutors will not apply a presumption against (or in favor of) imposing an independent compliance monitor as part of a corporate criminal resolution. Instead, whether an independent compliance monitor is required must “depend on the facts and circumstances of the particular case.” The Memo then goes on to provide a ten-factor, non-exhaustive list of potentially relevant considerations.
In the Memo, Monaco notes the importance of independent and robust compliance functions. It also emphasizes the DOJ’s focus on “fostering a strong culture of compliance at all levels of the corporation – not just within the compliance department.”
DOJ also said it will issue further guidance about the preservation and use of devices and apps by company executives and employees.
Revision to Corporate Integrity Agreement Language
Shortly before the release of the September 2022 Memorandum, the United States Department of Health and Human Services Office of Inspector General (HHS OIG) changed the language describing a compliance officer’s role in relation to other responsibilities they may have within the company when under a Corporate Integrity Agreement (CIA).
Historically, CIAs said that a compliance officer’s non-compliance responsibilities “shall be limited and must not interfere with the compliance officer’s ability to perform the duties” required of them in the CIA. However, more recent CIAs (such as the Biotronik CIA and the Vision Quest CIA from August 2022) have changed that language to instead read, “the compliance officer shall not have any noncompliance job responsibilities that, in OIG’s discretion, may interfere or conflict” with the duties required of them in the CIA.
This changed language is likely a larger burden on smaller companies where employees tend to perform several different roles.
Conclusion
With the DOJ and HHS OIG both seeming to come down harder on compliance, we will likely see voluntary compliance programs also shift as this indicates how DOJ and HHS OIG believe an effective compliance program should operate.