Melissa Jampol Quoted in “DOJ Sweetens Self-Disclosure Pot; Health Fraud Ranks High in White-Collar Enforcement Plan”

Melissa L. Jampol, Member of the Firm in the Health Care & Life Sciences and Litigation practices, in the firm’s New York office, was quoted in COSMOS Report on Medicare Compliance, in “DOJ Sweetens Self-Disclosure Pot; Health Fraud Ranks High in White-Collar Enforcement Plan,” by Nina Youngstrom.

Following is an excerpt:

The carrot for voluntary self-disclosures of corporate misconduct just got bigger—and the stick for imperfect self-disclosures smaller—under revisions to the corporate enforcement policy (CEP) of the U.S. Department of Justice (DOJ).

DOJ’s Criminal Division said May 12 it will decline to prosecute companies that voluntarily self-disclose wrongdoing if they meet certain conditions, such as fully cooperating with the government’s investigation. That’s a more ironclad guarantee than the “presumption” of declination that has been in place since the 2022 version of the CEP. DOJ is also offering brand-new incentives for “near miss” voluntary self-disclosures or companies that have aggravating factors. They probably will still face a criminal resolution in the form of a nonprosecution agreement, but there are sweeteners, such as a steep reduction in fines. …

Although the revised CEP won’t necessarily send companies running into DOJ’s arms when they violate the law, it may encourage more self-disclosures, attorneys say. “It gives you more certainty as to what the path can be,” said former federal prosecutor Melissa Jampol, with Epstein Becker Green. “There are a lot of benefits in the near-miss self-disclosure category.” …

Although the CEP comes from the DOJ Criminal Division, “in the world of health care fraud, the line between criminal and civil is often in the eye of the beholder, so these factors and this process can potentially be helpful to many companies,” Jampol said. “But it’s not a False Claims Act framework. It’s a criminal division policy.” A separate section of the Justice Manual explains that DOJ rewards self-disclosure and gives cooperation credit to companies in False Claims Act (FCA) matters, but DOJ is not nearly as explicit in terms of the benefits of coming forward in civil cases.

DOJ’s overarching goal is to promote corporate self-policing and self-disclosure without overburdening corporations. “A fair justice system requires that the Department be maximally transparent so that companies—including directors, executives, employees, and counsel—can make appropriate decisions when faced with potential misconduct,” said Matthew Galeotti, who heads the DOJ Criminal Division, in its new white-collar enforcement plan, which was unveiled with the revised CEP and other policies at an anti-money laundering and financial crimes conference. While white-collar crime “poses a significant threat to U.S. interests,” he said that “overbroad and unchecked corporate and white-collar enforcement burdens U.S. businesses and harms U.S. interests.” DOJ intends to strike a balance, guided by three tenets: focus, fairness and efficiency. At the top of its long list of targets is “Waste, fraud, and abuse, including health care fraud and federal program and procurement fraud that harm the public fisc.” …

Three Parts to Revised CEP

The CEP has three parts:

• Part 1: Declining to prosecute. DOJ won’t prosecute companies for criminal violations when four factors are met: they voluntarily self-disclosed misconduct to the criminal division; fully cooperated in the investigation; “timely and appropriately remediated the misconduct”; and have no aggravating circumstances related to the “nature and seriousness of the offense, egregiousness or pervasiveness of the misconduct within the company, severity of harm caused by the misconduct, or criminal adjudication or resolution within the last five years based on similar misconduct.” Even if there are aggravating circumstances, prosecutors have the discretion not to prosecute companies based on things like their cooperation. But companies that escape prosecution under the CEP are required to pay all disgorgement/forfeiture and restitution/victim compensation payments stemming from the misconduct, and DOJ will make the declinations public.
• There’s still “a lot of ambiguity,” Jampol noted. For example, DOJ’s new definition of voluntary self-disclosure in Appendix B of the CEP says companies are encouraged to disclose at the earliest possible time, even if they haven’t completed an internal investigation. Disclosing before an internal investigation may not sit well with some companies, Jampol noted. “Many people like to know what the scope of the landscape is before they knock on the government’s door.”
• Part II: Near-miss voluntary self-disclosures and related resolutions. Even when companies don’t qualify for declination because their self-reporting isn’t a full-fledged voluntary self-disclosure (as defined in Appendix B) or they have aggravating factors that call for a criminal resolution, companies may get a break if they “fully cooperated and timely and appropriately remediated.” In these circumstances, the Criminal Division will offer companies a non-prosecution agreement (NPA) if there aren’t any “particularly egregious or multiple aggravating circumstances.” The term of the NPA may be fewer than three years; companies will be spared an independent compliance monitor; and there will be a reduction of 75% off the low end of the U.S. Sentencing Guidelines (U.S.S.G.) fine range.
• This new category sparked some enthusiasm. For one thing, companies stand to gain from coming forward despite missteps, Jampol said. … “At times, the money companies spend on their monitor could be better spent investing in their compliance programs or, if they haven’t already, making victims whole,” DOJ’s Galeotti said. (DOJ also released a new policy on corporate monitors.)
• Part III: Resolutions in other cases. Prosecutors will have discretion on a resolution— “including form, term length, compliance obligations and monetary penalty”—when companies don’t fall under either of the other categories. When it comes to fines, for example, the the company won’t get “a reduction of more than 50% off the fine under the U.S.S.G. Prosecutors will have discretion to determine the specific percentage reduction but there will be a presumption that the reduction will be taken from the low end of the U.S.S.G. range for companies that fully cooperate and timely and appropriately remediate. Otherwise, prosecutors will determine the starting point in the range based on the particular facts and circumstances of the case, including (but not limited to) the company’s recidivism.”

DOJ Is Expanding Whistleblower Rewards Program

In its white-collar enforcement plan, the Criminal Division said it’s committed to rooting out “insidious activity” of unchecked fraud, such as “the deadly activities of cartels and transnational criminal organizations” that are enabled by international money laundering. That’s been a drumbeat of the Trump administration so far. But DOJ also emphasized fraud against Medicare and other government programs. “Rampant health care fraud and program and procurement fraud drain our country’s limited resources. Corporations and individuals defraud important government initiatives, including Medicare, Medicaid, defense spending, and other programs intended to assist vulnerable citizens. Anyone who cares about good and effective government should be concerned about waste, fraud, and abuse at the hands of bad actors in government agencies. The Criminal Division will lead the fight in holding accountable those who exploit these programs and harm the public fisc for personal gain.”

As part of its efforts to fight white-collar crime, DOJ said it’s expanding a corporate whistleblower rewards pilot program implemented by the Biden administration. The program dangles dollars for original information on four types of criminal fraud, including fraud against private insurers. Whistleblowers could be rewarded for nonpublic information they give to DOJ—including information they initially reported through an organization’s “internal whistleblower, legal or compliance procedures”—as long as they do it within 120 days of reporting internally, and it results in a successful prosecution and $1 million in forfeiture.

Now DOJ is adding a number of areas to the whistleblower rewards program if tips lead to forfeiture, such as violations by corporations related to international cartels or transnational criminal organizations, including money laundering, narcotics, Controlled Substances Act and other violations.

In addition to revising the CEP moving forward, the Criminal Division may end existing criminal resolutions early, Galeotti said. He has instructed the fraud section and money laundering and asset recovery section “to review the length of terms of all existing agreements with companies to determine if they should be terminated early.” Factors that may result in termination include “substantial reduction in the company’s risk profile” and “maturity of the compliance corporate program, and whether the company self-reported the misconduct.” Already, DOJ has ended some agreements early. Also, from now on, DOJ will limit criminal sentences in corporate fraud cases to three years “except in exceedingly rare cases.”