The use of corporate monitors, as required by many deferred prosecution agreements (DPAs) and non-prosecution agreements (NPAs), continues to be a powerful government tool in the oversight of compliance with settlement terms and the law.
A review by Reuters of the 39 DPAs reached with the Obama Department of Justice found that 13 included a monitor requirement. Monitors have been assigned to a myriad of industries including health care organizations, such as hospitals, health plans, medical technology companies, and home health companies.
As set forth in guidance issued by the Justice Department, the primary responsibility of a monitor “is to assess and monitor a corporation’s compliance with the terms of the agreement specifically designed to address and reduce the risk of recurrence of the corporation’s misconduct, and not to further punitive goals.”
Monitorships are becoming such a reality in corporate America that even a giant like Wal-Mart may soon be faced participating in one. Given this backdrop, we offer some items to consider if your organization is currently under a corporate monitorship or if a corporate monitor is in your future.
The Practical Realities of Corporate Monitoring
Organizations under a corporate monitorship essentially function in a compliance fishbowl. Corporate monitors are given fairly broad access to day-to-day operations and are often granted substantial power in overseeing business operations. Not only are corporate monitorships expensive and costly to the organization, but they can also make day-to-day operations more challenging, given that there is an individual scrutinizing virtually every aspect of the business.
However, while a company’s obligations under a corporate monitorship may be onerous, it presents a unique opportunity for the compliance department and the organization generally to make real and tangible process improvements. For the compliance professional, there can be certain practical advantages to living under such an arrangement.
First, the presence of a monitor can bring about a renewed focus on compliance generally, but maybe more importantly on the significance of creating and sustaining a culture of compliance within the organization. For those companies where previous efforts to implement change were met with resistance, living under the watch of a corporate monitor may provide an opportunity.
For example, during the monitorship, there is little wiggle room or few grey areas. The presence of the monitor can ensure an increased focus on compliance in an effort to reduce the risk of future misconduct. This will likely be a time when more resources can and should be devoted to compliance activities.
Second, companies should take the time to identify the underlying causes and sources of potential misconduct and non-compliance, and take steps to combat them by adopting an effective compliance plan or improving an existing one. For example, there can and should be a greater emphasis on creating and updating detailed compliance policies and procedures. Resources should be spent ensuring that hotline calls and other suspected or reported instances of non-compliance are thoroughly and promptly investigated.
Monitorships also provide a chance to involve upper level management and executives in compliance initiatives. Enlisting management involvement and demonstrating the importance of compliance from a top-down perspective will help to motivate and encourage other employees to actively engage in the compliance program. While some executives may not have realized the importance of such activities or initiatives in the past, the presence of a monitor is sure to change that, if for no other reason than to help ensure the monitor will not return.
Sustaining a Culture of Compliance after Monitoring Ends
Equally as important, the processes and changes made under the monitor should be maintained on an ongoing basis. Companies that have experienced life under a corporate monitor should work to keep the momentum going and continue to focus on compliance as a central part of an organization’s everyday business. As such, even before the monitorship ends, systems, policies and procedures should be in place to continue compliance efforts even when the monitor is gone.
Practically speaking, this means that after the monitor, companies should continue to evaluate systems, processes and procedures to make sure they still adequately and effectively address potential concerns or issues. For example, any auditing functions implemented during the monitorship should continue. Policies and procedures should be revised and updated, and employee or staff training should continue and include a focus on issues identified during the monitor’s stay. Additionally, as was probably the case during the monitorship, the identification of potential compliance issues should continue to be a priority and any concerns must be handled promptly and efficiently.
Corporate monitors can have a significant impact on corporate compliance and can be used as a mechanism for change within an organization. If companies can learn to function under the constant watch of a monitor and at the same time take advantage of the opportunity to implement significant change, organizations can take major steps forward in creating and sustaining a culture of compliance that goes well beyond the term of the monitorship.
About the Authors
Deepa B. Selvam is an Associate in the Health Care and Life Sciences Practice of Epstein Becker Green. Her practice focuses on government investigations and compliance and regulatory counseling issues arising under Medicare, Medicaid and other third-party reimbursement programs.