Eight factors that affect an incorporated practice's risk of criminal charges

2. Pervasiveness of wrongdoing within a corporation. The next factor prosecutors must consider is the extent of the wrongdoing within a corporation.

"If one lower-level employee is mostly responsible for the problem, the corporation is much less likely to face criminal charges than if the company's upper management knew [about] or condoned what was going on," says Kupferberg. "But if the upper management directed the illegal behavior or turned a blind eye to it, the chances the corporation will face criminal charges skyrocket," he says.

The people in charge of your corporation must be committed to full compliance and must convince their employees of that commitment. If you always look for a way to bend a rule to make an extra buck, your employees will pick up on that, making them more likely to engage in behavior that may get you into trouble.

3. Past history. If your corporation (or its officers) have been in trouble before, you're less likely to catch a break if you're investigated again, Kupferberg says. The DOJ expects corporations to learn from their mistakes and believes that a history of similar conduct may prove that the corporate culture encourages-or at least condones-such conduct. Awareness of this stance is important because it shows that prosecutors will look behind the façade to see how the corporation actually operates when deciding whether to bring charges. If you've been in trouble before, the guidance memo says you've lost the benefit of the doubt, Kupferberg stresses.

4. Cooperation and voluntary disclosure. It's a fixture of every TV police show-the bad guy is told that if he cooperates and spills the beans, he'll get off easier. That's also the official government policy when dealing with corporations, according to the DOJ. A corporation that is willing to help investigators by making witnesses available, identifying culprits within the corporation, and even reporting wrongdoing before the government realizes a problem exists may have a better chance of avoiding criminal charges, Kupferberg says. However, statements by the DOJ indicate that cooperation includes a corporation's willingness to waive two important legal rights: attorney-client privilege and work product privilege. These privileges protect the confidences you reveal to your attorney, keep private the advice the attorney gives you, and keep secret any documents your attorney prepares when he or she works for you.

Kupferberg is concerned that this provision means that candid conversations between attorneys and clients-and documents that explain to clients what their attorneys are doing for them and why-may have to be shared with the government in exchange for avoiding criminal charges. Requiring organizations to waive usually recognized privileges to avoid criminal charges is "draconian," he says. There are few circumstances in which waiver of those privileges would be a viable option, he adds.

5. Corporate compliance programs. The DOJ has also said that even if a corporation has a compliance plan, there still may be circumstances in which criminal charges are appropriate. Although a compliance plan that's designed well and implemented effectively can be a big help, it's definitely not a cure-all.

"A compliance program helps identify problems before they merit criminal charges, and if the compliance plan is generally effective, it may lessen any criminal penalties," Kupferberg says. But be aware that the DOJ has also made it clear that a compliance program that's only for show is worse than no program at all.

- Warn everyone that noncompliance won't be tolerated and stick to your guns. If that means you have to fire an employee who insists on bending the rules, so be it.

- Communicate your compliance plan's policies and the compliance records of managers' subordinates during their annual reviews.

- Keep the lines of communication open to all employees-make sure they're comfortable reporting noncompliance.

- Adequately investigate all noncompliance reports and correct any problems.

- Give the compliance officer enough authority to solve problems that arise. The compliance officer should be a high-level person within your practice.

6. Repayment and other remedies. The DOJ asks prosecutors to review whether the corporation has repaid any money it wrongfully received and whether it has fixed the problem that led to the noncompliance.

7. Consequences for innocent parties. DOJ prosecutors must evaluate the effect a corporation's criminal conviction would have on innocent third parties (e.g., patients or employees who did nothing wrong) before proceeding with criminal charges. Prosecutors must also take into account other consequences that follow criminal charges, such as a physician's loss of medical license or a practice's exclusion from the Medicare and Medicaid programs, says Kupferberg.

8. Noncriminal alternatives. It's usually quicker, easier, and cheaper for the DOJ to settle matters without bringing criminal charges, so it won't prosecute a corporation if there are noncriminal alternatives that would lead to an appropriate result.

"The point of criminal prosecution is supposedly to deter, punish, and rehabilitate," says Kupferberg. If there are alternatives that will accomplish those ends, the DOJ is likely to go along, he says. Prosecutors want to save their resources for cases in which the noncriminal alternatives are inadequate, Kupferberg says.

Insider source

Matthew Kupferberg, Esq., Arent Fox, PLLC, 1615 Broadway, New York, NY 10019.