Although it is difficult to predict the outcome of health care reform, and whether we will have wholesale change or more focused refinements, it is easy to predict that there will be increased health care regulation and enforcement in 2010 and beyond. The return on investment for government enforcement agencies is simply too strong to ignore. Consider that in 2008, the United States Department of Justice, Civil Fraud Division, reported false claims recoveries of $1.54 billion in total, of which $1.12 billion were in the health care sector. In 2009, the health care recoveries surpassed the entire 2008 figure, with $1.6 billion of a total of $2.4 billion attributable to health care. Perhaps even more significant is the fact that $2 billion (or approximately 83 percent) was recovered in suits filed under the Federal False Claims Act qui tam provisions.
An organization’s effective corporate compliance program, and its robust relationship with specialty compliance counsel, are essential to operating effectively while decreasing compliance and enforcement risks. Indeed, this is true of all heavily regulated industries, whether health care, manufacturing or environmental services. Ideally, this attorney-client relationship will be proactive as an organization assesses (or reassesses) the effectiveness of its corporate compliance and ethics program, as opposed to reactive where the attorney is called in only after problems have been identified. Developing a strong relationship with counsel not only can help minimize the likelihood of problems from the outset, but will be invaluable if/when problems arise.
As specialty health care compliance counsel for numerous health systems and hospitals across the country, we have identified four areas common to our successful client partnerships.
Shared commitment to compliance and ethics. All organizations and attorneys are not created equal. Those organizations that see compliance as an obstacle to maximizing business opportunities often find themselves at a serious disadvantage when problems arise, or worse yet, when problems are brought to their attention via the government or a whistleblower. Embracing a culture of compliance and ethics—beginning with a “top down” leadership message—infuses employees with the freedom to exercise judgment and helps raise issues before they grow into enormous and costly business distractions. Partnering with counsel who values ethical approaches to business problems means a critical alignment of thinking that will serve the organization’s best interests.
Understanding of the industry. This requires not only an understanding of the laws at issue, but also how those laws are interpreted and applied throughout an industry. In essence, there is a difference between providing straight legal advice that sets forth the minimum that the law requires, and providing a more thoughtful response that not only sets forth a statement of the law, but assists a client in benchmarking its practices or reaching a practical solution that it can actually implement. This understanding comes not only from practicing in an area for years, but from being a leader in industry initiatives that influence government policy and from extensive networking with clients and colleagues. Often times the “right answer” is not in a regulation or preamble. Rather, it is in a widely-held interpretation of a regulation that may be judged only by those who know the industry well enough to know if this interpretation is supportable or not. In addition, those who are plugged into a sector see enforcement initiatives make their way across the industry, and they may use this insight to forewarn clients to evaluate certain practices and correct issues before being called to task by those in an enforcement capacity.
Understanding the client’s business goals and assessing the roads to reach them. The best way to understand the business goal is to understand the client and how its people think. This may only be achieved by an investment from both the client and counsel. Our most productive relationships come from investing time, including on-site meetings to visit with employees face-to-face, to hear their priorities and ideas, and to be a visible member of a team. Such meetings take time away from valuable business activities so clients need to feel as if this is time well spent, and not a veiled marketing ploy. Such meetings, whether in person or via phone/video conference, also foster personal relationships between the client’s internal team and external counsel. There is no substitute for learning the players within an organization. Once trust is established, the client’s team will not hesitate to turn to counsel for both legal and business advice, and it is then that counsel becomes a member of the team who is well-positioned to provide the greatest value to the client.
Often times the counsel’s highest and best use is not in answering an inquiry about whether a particular activity is appropriate or not under the law. There are, remarkably, instances in which legal answers are quite apparent. No, often times the key is in choosing a strategy to effectuate a particular goal given the known underlying legal framework. Will an organization be plagued by the road not taken, or will it forge ahead down a road fraught with pitfalls? Experienced counsel must be knowledgeable enough to identify the avenues that are available to reach a particular goal, the likely consequences of choosing one over another, and handicapping the likelihood of success depending on the avenue chosen.
Practical solutions that place the organization’s interests first. When issues do arise, and they will, counsel should identify practical solutions that do not necessarily involve major billings for the outside counsel’s law firm. Not every potential whistleblower complaint should be met with a recommendation for a full-scale internal investigation. White collar litigation teams need not be brought in at the first sign of trouble. Indeed, full blown investigations and teams of outside attorneys have their place in quantifying and containing some issues. But, this is not typically the starting point for experienced counsel who should assess issues and recommend corrective actions with the least amount of business interruption possible.
One area where this tension is often found is in the assessment (or reassessment) of compliance and ethics programs. Although most organizations in heavily regulated industries have such programs, these are not, nor should they be, stagnant. As such, these programs are continually measured and updated against regulatory changes, agency policy (or interprepations of existing policy), government enforcement initiatives, and, of course, changes in a client’s business. When issues are uncovered during this process, counsel should not view this as a full-time employment opportunity. Rather, specialized counsel should be able to identify the significance of the changed regulatory landscape and assess whether only prospective corrective actions need be implemented and the affect, if any, on historical practices. Although such go-forward approaches involve less legal wrangling and more operational counseling, which likely is less lucrative for the law firm, a proactive fix, where supportable, is infinitely preferable to an organization.
Specialized counsel who has undertaken efforts to understand your business and key business goals should be able to take that specialized legal knowledge and industry contacts, and translate that into practical solutions.
Ms. Lutz is a partner at Sonnenschein Nath & Rosenthal LLP, in Washington, D.C., specializing in health care compliance counseling and civil fraud defense.
