Compliance Program Effectiveness: Fraud Division of the Department of Justice
A series of media interviews with the outgoing “compliance counsel” to the Fraud Division of the Department of Justice offers several meaningful, practical observations about demonstrating compliance program effectiveness that can be shared by the general counsel and the chief compliance officer with the board’s audit and compliance committee.
In these interviews, the former compliance counsel made a series of practical observations based on her interaction with companies that were being investigated by the Fraud Division. She stressed the need to properly interpret the new DOJ compliance program effectiveness guidelines; in other words, to understand that they are intended for use by prosecutors (i.e., they are framed in the context of questions prosecutors might ask). Thus, the company’s ultimate effectiveness focus should be on matching compliance program practices to specific allegations, and on providing examples of the robust nature of the company’s program. In this regard, it may be useful to offer examples of circumstances in which the program had deficiencies (e.g., what went wrong, how the problem was addressed and what lessons were learned from the process). Significant value is attributed to a company’s ability to identify the root causes of particular compliance failures and demonstrate good faith corporate efforts to remedy compliance program failures. She also stressed the application of an ongoing risk assessment process as a fundamental indication of a good faith program.
An overarching theme from the former counsel's comments is that in order to demonstrate compliance program effectiveness, the focus should not be on the substance/detail of the actual written policies, but rather on the ability to demonstrate examples of how the program works in practical manner.
To be sure, the tenure (and especially the departure) of this compliance counsel has been a subject of significant public controversy. Nevertheless, her comments on how best to demonstrate compliance program effectiveness are of value to health system leadership seeking to satisfy their Caremark obligations.