By John F. Libby, Partner, Corporate Investigations and White Collar Defense | Jacqueline C. Wolff, Partner, Corporate Investigations and White Collar Defense | Kenneth B. Julian, Partner, Litigation
Why it matters: In a speech on July 25, 2017, Sandra Moser, acting chief of the Fraud Section of the Department of Justice (DOJ), announced that prosecutors from the agency’s Foreign Corrupt Practices Act (FCPA) Unit would henceforth be “working hand in hand” with the Corporate Strike Force of the agency’s Healthcare Fraud Unit to “investigate and prosecute matters relating to healthcare bribery schemes, both domestic and abroad.”
Detailed discussion: On July 25, 2017, Sandra Moser, the acting chief of the DOJ’s Fraud Section, delivered a speech at the American Conference Institute’s 8th Global Forum on Anti-Corruption in High Risk Markets in Washington, D.C., where, among other things, she announced that prosecutors from the Fraud Section’s FCPA Unit would henceforth be “working hand in hand” with the Corporate Strike Force of the Fraud Section’s Healthcare Fraud Unit to “investigate and prosecute matters relating to health care bribery schemes, both domestic and abroad.”
Moser’s remarks were made in the context of a larger “state of the FCPA” speech. She began by stating that at this point in time, the United States and other countries “stand at a critical juncture in the fight against transnational corruption” and its devastating effects, giving as examples the “undermin[ing] of the rule of law and destabiliz[ation of] economies; the link between corruption and terrorism and the attendant threat to global security; [and] the erosion of the free and fair market and, with it, the public’s confidence.” Moser said that, from an FCPA enforcement perspective, the DOJ is “well-positioned to remain at the forefront of the fight against corruption” especially with full and increasingly strong coordination with the global enforcement community.
To combat such “deep rooted and pervasive corruption,” Moser said that corporations needed to “[b]e better, do better” and provided a helpful list to accomplish this, including investing in a robust compliance program sooner rather than later and empowering compliance officers. Moser stated that the Fraud Section—through its FCPA Unit—is doing its part to “be better, do better” by, among other things, “taking additional steps to enhance our enforcement of the FCPA against both corporate and individual actors, and to promote transparency in doing so.” Moser pointed to the FCPA pilot program announced in April 2016 as just one example of the DOJ’s focus on transparency by offering “clearer guidelines not only internally to our own prosecutors, but to companies and their employees, regarding what is required to receive full credit under its auspices.” See our April 2016 newsletter article titled “Alert: DOJ Launches New FCPA Voluntary Disclosure Pilot Program” for a discussion of the FCPA pilot program’s provisions.
After providing an overview of the FCPA Unit’s notable global resolutions and enforcement actions against both corporations and individuals in 2016 and the first six months of 2017 across all markets, industries and business sectors, Moser turned her focus to the healthcare industry: “This conference is all about high-risk regions and high-risk industries. As you know, health care cuts across both.” Moser pointed out that in recent years healthcare companies have increasingly come before the Fraud Section in connection with FCPA violations: “Investigations have revealed that healthcare companies operating overseas frequently interact with state-employed doctors and foreign public officials who work for government-owned hospitals and medical institutions. In addition, publicly funded and administered foreign health care programs are invariably run by government officials, which means that, to do business in these countries, a company must deal with government officials. As a result, we have seen a number of significant FCPA cases involving the payment of bribes and kickbacks by healthcare companies to foreign officials to obtain a wide variety of improper business advantages.”
Moser noted that, in all of these instances, the FCPA violations arose from failures in the healthcare companies’ compliance programs, or the absence of those programs altogether. Among the “basics” for large international corporations that were lacking or missing altogether were “things like maintaining a confidential employee hotline, enhancing training, having those at the top of the food chain certify to the effectiveness of the compliance program, and adopting guidelines to claw back bonuses and the like from those executives that engage in misconduct or who simply fail to promote compliance within their organization.”
Thus, Moser concluded, “to become better and more efficient” at investigating and prosecuting foreign bribery and kickbacks involving healthcare companies and their executives, she was announcing a new partnership between the Corporate Strike Force of the Healthcare Fraud Unit and the FCPA Unit: “Together they will investigate and prosecute matters relating to health care bribery schemes, both domestic and abroad. This increased coordination will ensure that companies, their executives, employees, and agents are held to account for the payment of bribes and kickbacks to foreign and domestic officials and actors regardless of the market.”