Although the long-term impact of the Department of Justice's (DOJ) Yates memo has yet to be seen, the first six months under the new policy contain some clues as to how the new approach will impact fraud investigations, according to a report by the law firm Paul Hastings.
In September, Deputy U.S. Attorney General Sally Q. Yates authored a memo outlining the DOJ's renewed focus on investigating individuals involved in white-collar crimes, including fraud. In November, the DOJ solidified the changes in the United States Attorney's Manual, and Yates emphasized a key provision of the new approach: Corporations would only receive credit for cooperating if they provided all known information about individual wrongdoing.
As Paul Hastings attorneys point out, the DOJ Fraud Section has since finalized new requirements companies to certify disclosures about individuals engaged in wrongdoing, a change first reported by the Wall Street Journal in February. The DOJ's Foreign Corrupt Practices Act Unit has also implemented a new "fast-track" approach for corporations that report wrongdoing, effectively shortening the sometimes lengthy overseas investigation process.
In the healthcare industry, Paul Hastings lawyers point to two specific cases that highlight the early impact of the Yates memo. In October, the DOJ announced a $125 million settlement with Warner Chilcott. It also announced that criminal fraud charges were filed against the company's former president, W. Carl Reichel, who is accused of directing sales representatives to offer kickbacks to providers. In January, the DOJ brought charges against David Bostwick, owner and CEO of Bostwick Laboratories, for billing Medicare for unnecessary medical tests.
"The cases against Bostwick and Warner Chilcott's Reichel may demonstrate the early impact of the Yates memo on individual executives in the healthcare sector, which traditionally has not been known to involve criminal charges or civil resolutions against individual executives," attorneys at Paul Hastings wrote.
Although the impact of the Yates memo has been limited thus far, the legal experts argued that as the memo infiltrates various DOJ policies and investigations, the long-term influence of the updated approach will become clearer.
To learn more:
- read the Paul Hastings report
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