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Boards Should Note Important New Compliance Program Guidance

Wednesday, March 1, 2017  
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Michael W. Peregrine, McDermottt Will & Emery


The audit & compliance committees of hospitals and health systems will want to review the new compliance program guidance issued by the Fraud Section of the Department of Justice. The “Evaluation of Corporate Compliance Programs” (hereby referred to as the Guidance) provides an exceptionally practical set of benchmarks against which the audit & compliance committee, in consultation with the general counsel and the chief compliance officer, can evaluate the effectiveness of the health system’s compliance program.


The Guidance is presented in the form of a series of substantive compliance-focused questions that the Department of Justice frequently considers when evaluating a corporate compliance program, such as:

1.      Analysis and remediation of underlying misconduct

2.      [Role and involvement of] senior and middle management

3.      Autonomy and resources

4.      Policies and procedures

5.      Risk assessment

6.      Training and communication

7.      Confidential reporting and investigation

8.      Incentives and disciplinary measures

9.      Continuous improvement, periodic testing, and review

10.  Third party management

11.  Mergers and acquisitions


Questions particularly relevant to healthcare organizations include those that focus on the conduct of senior and middle management; the internal stature of the compliance function; the autonomy of the compliance function; program funding and resources; corporate response to expressed compliance concerns; the process for responding to investigative findings; consistency of disciplinary measures; and periodic updating of procedures and practices.


Important questions focus on the board’s exercise of its compliance oversight duties—including whether relevant expertise is available on the board and  how  compliance related  information is provided to the board.


The release of this Guidance is a significant development in terms of assuring the most effective possible corporate compliance plan. It is directly relevant to the fiduciary obligations of the board’s audit & compliance committee and should be brought to the committee’s immediate attention by the health system general counsel, in consultation with the compliance officer.


Click here to view a PDF of the Evaluation of Corporate Compliance Programs.