2/13/2012
PRIVILEGE, DISCLOSURE AND RISK
ANALYSIS
Presented by:
Gary P. Harrell, Esq.
Sutter Health
Mary A. Nester, Esq.
Avalon Health Care
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One Purpose for an Effective
Compliance Program
• When a corporation is indicted and
ultimately settles with the government, the
extent of its punishment can be significantly
reduced with the existence of an internal
compliance program.
• Punishment is calculated based upon a
“culpability score” that is based, in part, on
the effectiveness of the defendant’s
compliance program.
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2/13/2012
To Disclose or Not to Disclose?
• In order to mitigate the punishment, the
compliance program must have detected
the offense before discovery by an outside
organization AND the organization must
promptly report the offense.
• The government will enhance the
punishment if the organization failed to
report.
• But it is not always in the organization’s
best interest to self-report misconduct.
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The CO Role in Dealing with
Privileged Information
• CO is less concerned with the release of
privileged information than the RM
or GC because the OIG’s measure of
effective compliance includes the
willingness to cooperate and release
privileged information.
• CO must be able to recognize what is
privileged information and weigh the
release, and the scope of the release with
the benefit and harm associated with the
release.
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Self-Reporting and Privilege
• Privilege arises out of the 5th Amendment
right against self-incrimination. [Legally, you
aren’t required to admit wrongdoing. Rather,
the burden is on the prosecutor to prove
wrongdoing.]
• Additional privileges in law that protects the
person or company from opening the door to
subsequent litigations or claims.
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Disclosure and the Concept of
“Privileged Information”
• Privileged Information: An exchange of information
within a confidential relationship that is kept
confidential. Even if the information is relevant to
a case, it cannot be used as evidence in a court.
Privileged information is controversial because it
acts to exclude relevant facts from the truth-seeking
process.
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Disclosure and the Concept of
“Privileged Information”
• Disclosure: full disclosure requirements
are set out in F.R. 58399 and is “based
on a belief by the OIG that health care
providers must be willing to police
themselves, correct underlying problems
and work with the government to resolve
these matters.”
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Disclosure as a Means for the
Government to Gauge a
Corporation’s Cooperation
• How much disclosure is enough?
• Thompson Memorandum [2003]:
mandated prosecutors to consider
whether the corporation under
investigation assisted the government’s
investigation by waiving attorney-client
privilege/work product protections and
whether the corporation advanced legal
fees to culpable employees.
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Disclosure as a Means for the
Government to Gauge a
Corporation’s Cooperation
• McNulty Memorandum [2006]:
mandates that prosecutors may only
request a waiver of attorney-client
privilege/work product protections
when there is a legitimate need for
privileged information to fulfill their
law enforcement obligations.
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When is Waiver of Privilege a
Legitimate Need?
• Legitimate need:
– Likelihood and degree that the privileged information
will benefit the government’s investigation;
– Whether the information can be obtained by using
means that don’t require waiver;
– The completeness of the voluntary disclosure
materials provided;
– The collateral consequences to the corporation of
a waiver.
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2/13/2012
Still Left Up in the Air…
• McNulty Memorandum:
– Does not address how the government will treat a
corporation’s payment of legal fees for a culpable
employee;
– Requires the corporation to put forth a justification for
maintaining privilege/work product protection;
– Does not do away with the perception of prosecutor
coercion, especially between co-defendants who may
disagree on the extent to waive privilege/work product
protection.
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When Does the Privilege
Clock Start
• Involvement of attorney and reasonable
likelihood of litigation or government action;
• Soliciting a legal opinion, advice, or confidential
communication;
• Activities, discussions, reports, document
preparation/review at the direction of an attorney
• Certain statutory or common law exceptions to
document disclosure/discovery specifically
carved out – for instance Peer Review, QA,
Patient Safety Work Product…
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Internal Reporting Conflicts When
Wrongdoing is Discovered?
•
•
•
•
•
•
CO reports to CFO
CO reports to Risk Management
CO reports to General Counsel
CO is instructed by the Board not to disclose the wrongdoing
CO is instructed by the CEO not to disclose the wrongdoing
CO assesses risk/benefit of self-disclosure and the risks to
organization out-weighs the benefits
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With All This in Mind, Let’s Get
into Some Case Studies [#1]:
Nurse at your hospital reports that that your cardiac
services physician group are implanting unnecessary
cardiac stents, ordering unnecessary tests and making
false entries in patient medical records. Same group is
billing Medicare, Medicaid and private insurers. Your
hospital recently has invested a lot of money in getting
this cardiac services program up and running. Your
internal audit supports the nurse’s allegation.
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A Different Twist: Case Study[#2]
Facility gets sued along with physician for an
implantable automatic defibrillator (IAD) that
became infected. Facility’s expert witness opines
to facility counsel that the IAD was unnecessary in
the first place. Counsel tells RM. RM’s investigation
finds OR nurses who matter-of-factly say that
this physician does unnecessary IADs all the
time. Further investigation corroborates that this
physician has done many unnecessary IADs, almost
all on Medicare patients.
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Case Study #3
You’re the compliance officer for a large multi-site
home health agency company. In doing a routine
audit you discover that one of the offices that has
billed nearly a million dollars to government health
programs has been unlicensed for the past two
years. The senior manager of this region had
instructed the billers to bill activities as if they were
from another licensed office.
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Case Study #4
Your therapy company has been trying very hard
to break into the market and become a preferred
provider for a large health plan. To make them
more appealing to the health plan, they have been
waiving co-payments for the health plan network
beneficiaries who otherwise would have to pay the
out-of-network co-payment rate. Because your
company is losing money with this arrangement,
senior management doesn’t see any potential fraud
or kickback issue.
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Case Study #5
QA audit of your hospice patients pain
management suggests that pain is inadequately
managed on one particular RN’s rotation. RM
investigates and substantiates that RN has been
diverting the hospice patients’ morphine for
personal use.
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2/13/2012
Take Home Considerations
• Important for the CO to discuss risks and benefits
of disclosure with senior management and Board
before a problem arises and as part of your
overall training program
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Take Home Considerations
• Work with your counsel in
determining extent of disclosure;
when and how privilege applies
• Always a need to balance
transparency with minimizing harm
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