With the headlines today about how little privacy we may have left, that’s a loaded question! But I’m talking about whether a healthcare enterprise, such as a hospital, or a medical practice or group can undertake an internal investigation, only to have to share the results with the government if the government ever asks. A recent federal district court opinion out of Washington, DC has caused both panic by clients, and a flurry of advice letters and articles from law firms nationwide.
When it comes to internal investigations of whether your healthcare enterprise or medical group is obeying the criminal law of controlled substances, or any other healthcare related criminal laws, here’s what you need to know:
1. In the recent case of Ex Rel Barko v. KBR (Kellogg, Brown & Root, a defense contractor that did lots of work during the Iraq War), the judge ruled that KBR did have to disclose to the plaintiff and the government the materials and results of a KBR internal investigation. The plaintiff believed that KBR had committed fraud against the US government, in violation of the False Claims Act. The plaintiff sued as a whistleblower/on behalf of the taxpayers, to force the company to pay back alleged fraudulently received funds. The plaintiff asked KBR to hand over documents of an internal investigation the company had conducted. KBR resisted on grounds of attorney-client privilege; a judge in Washington, DC agreed with the plaintiff and ordered production of the documents. KBR and its law firm went bonkers, and are concerned that this means internal investigations aren’t privileged information, and that the ruling means new carte-blanche authority for the government to obtain such documents in every case from now on.
2. The panic is misplaced — unless you’re KBR.
3. The court’s ruling has been interpreted to mean that internal investigations and the resulting documentation still could be and should be seen as privileged, and not subject to discovery, IF:
-OUTSIDE COUNSEL, vs in-house counsel, is hired to conduct the inquiry;
-the inquiry is conducted to provide the client with legal advice, not routine business advice.
-witnesses are interviewed only by the attorneys conducting the inquiry, or their investigators, and all witnesses are told that the attorneys represent the enterprise or company, not the individual witness; and,
-the attorneys conducting the inquiry oversee the investigation and closely supervise and direct every part of it.
So, should an enterprise or medical group wanting to know, for example, if it’s in compliance with federal and state criminal laws about controlled substances, conduct an internal investigation to see? Yes; it is still better to know in advance and take steps to remediate, than it is to wait and see, and risk aggressive government enforcement and a perception by government agents that you’ve been lax or neglectful by not taking care of problems in the business. But, it can’t just be in the name of regular, routine operations; it has to be for legal advice, even advice to try and avoid getting into criminal trouble. And it’s not a job for in-house counsel. It’s a job for outside counsel, following the protocols listed above.
Finally, this article is not meant to pile on against KBR’s lawyers for somehow getting it wrong, in the court’s view. You never know, in advance, what a court will think of a novel situation. Sometimes, you can only hope that you’re guessing right. With the law in this area a moving target, it’s important for companies and lawyers to keep up with dramatic changes and try their best to give and take advice that is current, honest, and thorough in its assessment of risk and recommendations on how to meet modern challenges.