DOJ Policy Memo Urges Prosecutors to Hold Individuals Accountable for Corporate Misdeeds

September 17, 2015 | Compliance Investigations & White Collar | Health Services

A policy memo issued on September 9, 2015 from Deputy Attorney General Sally Quillian Yates of the Department of Justice (DOJ) outlines a strategy for holding individuals in both civil and criminal enforcement actions accountable for misconduct by corporations and other business entities.  The memo was the product of a working group of senior DOJ attorneys that was convened to examine how DOJ approaches corporate investigations and make recommendations for amending policies and practices in order to more effectively pursue individuals responsible for corporate wrongdoing.  The policy memo emphasized the importance of such individual accountability as a means of deterrence, incentivizing changes in corporate culture, ensuring that proper parties are held responsible for their actions and promoting public confidence in the justice system.

The memo sets forth six guidelines intended to strengthen DOJ’s pursuit of individual corporate wrongdoing: (1) to obtain cooperation credit, corporations must provide all relevant facts relating to any individuals responsible for the misconduct under investigation; (2) criminal and civil corporate investigations should focus on individuals from the inception of the investigation; (3) criminal and civil DOJ attorneys handling corporate investigations should be in routine communication with one another and coordinate their actions as appropriate; (4) DOJ attorneys should not release culpable individuals from civil or criminal liability when resolving a matter with a corporation absent extraordinary circumstances or an approved departmental policy; (5) DOJ attorneys should not resolve matters with a corporation without a clear plan to resolve related individual cases and they should memorialize any declinations as to individuals in such cases; and (6) civil attorneys should consistently focus on individuals as well as the company and evaluate whether to bring suit against individuals based on considerations that go beyond an individual’s ability to pay, including the severity of the misconduct, whether it is actionable, whether admissible evidence will be sufficient to sustain a judgment and whether pursuing the lawsuit reflects an important federal interest.

The new policy became effective immediately and promises to create more peril for the employees of healthcare organizations as well as business entities in other industries which find themselves in the crosshairs of a DOJ civil and/or criminal investigation.  Previously, DOJ attorneys frequently resolved corporate investigations without concurrently resolving any civil or criminal charges against individuals within those companies who may have had a hand in furthering the misconduct under investigation.  Now, those same DOJ attorneys will be proceeding under different marching orders.

Yet, there are unique challenges to pursuing such individuals in a corporate environment.  As the policy memo recognizes, business responsibilities and decision-making authority within a corporation are frequently dispersed among multiple employees at different levels of the organization.  This makes it tricky to fix individual responsibility with the requisite degree of certitude to sustain a civil or, more difficult still, criminal charge, where the government must prove knowledge and intent beyond a reasonable doubt.  The complexity of the task rises further when pursuing high-level executives who are frequently removed from the day-to-day business activities that may have led to the misconduct at issue.  These evidentiary hurdles often lead to protracted investigations requiring the review of potentially millions of corporate records.  However, while all of these investigatory challenges remain the same, the new DOJ policy memo will inevitably create pressure on DOJ attorneys to find ways to charge individual corporate employees despite these challenges.  That, in turn, creates the serious potential for mistakes and overreaching in the exercise of prosecutorial discretion.  How DOJ actually implements this new policy going forward thus should be monitored very closely.

If you have any questions about the Alert discussed above, feel free to contact Geoffrey Kaiser at Geoffrey.Kaiser@rivkin.com.

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