Jay Rosen explores the early days of Affiliated Monitors, Inc.’s independent monitoring model, inspired by NYC’s “IPSIG” concept, but with some key changes.
President and Founder of AMI, Vin DiCianni, said the initial model for the independent monitor concept came from special commissions to address improprieties by construction contractors in building public schools in New York City.
Out of those commissions arose the concept of independent private sector inspector general (IPSIG), and the model was to bring accounting, legal and engineering skills into the oversight of construction contractors who were about to lose a contract because of some type of violation of the terms of the contract.
This IPSIG model was used to provide oversight for these contractors so that the buildings needed could get built, but with the necessary oversight to prevent future improprieties. However, according to DiCianni, this IPSIG model can be very intrusive to a company, with the monitor literally in the desk next to the contractor, reviewing accounting records, engineering drawing and contracts on an almost continuous basis.
For AMI, DiCianni envisioned a less intrusive, more collaborative and remedial model.
Yet he noted it took time to convince all the relevant parties, the regulators, defense counsel and companies of the effectiveness of this approach. He said there were three key factors in this process.
The first was to convince the regulators that a truly independent monitor not only had advantages, but would successfully remediate underlying deficiencies. A second factor was that many government agencies and state oversight boards did not want to put the licensed companies and persons out of business because of the public need for services.
For instance, in many ways it may hurt more than help to shut down a hospital, home health or a physician’s practice for technical regulatory violations, particularly if the violations were not life-threatening to patients.
Finally, during this time there were economic pressures that caused cutbacks to funding, and the regulators simply did not have the ability to fulfill the oversight role that an independent monitor can perform.
Similarly, DiCianni needed to convince defense attorneys of the efficacy of an independent monitor. He said that for “defense attorneys like myself, this was an idea that gave them something to negotiate with for their client before the regulatory agencies. One of the of benefits, for defense attorneys, is that they now had something that they could use as leverage with regulatory agencies as opposed to just being confronted with your client’s [suspension] for five years.”
Under this remedial approach, the recalcitrant party would be required pay the cost of the independent monitor.
When the defense counsel recognized the benefit that an independent monitor could bring to their clients, they became advocates for independent monitorships with the regulators.
I asked DiCianni if there were any areas of significant pushback from regulators or others in the early days of AMI. He responded that, although it was really not pushback on the independent monitor concept, there were some instances where the regulators desired to use the independent monitor in a manner wholly inappropriate to the overall concept.
This was in the realm where a regulator desired the independent monitor to act as the investigative arm of the regulator, continuing to investigate the company or person after the resolution had been agreed to and signed off on by all parties.
DiCianni mentioned two other areas of pushback:
- The first was around the cost of the monitorship, which is borne by the company to be monitored. Here, he noted that setting expectations is critical, particularly through a workplan.
- The second was what he termed as the hesitancy and initial reluctance of some companies to share documents, information and even access to speak with employees with a monitor. Here, DiCianni said the key was a well-structured corporate integrity agreement (CIA), deferred prosecution agreement (DPA) or administrative agreement that outlined with specificity the rights and obligations of all parties to the resolution agreement: the regulators, the party (ies) and the independent monitor.
Please join me next week for Part 3 of this series as we explore the expansion of independent monitors.
In case you missed the earlier installments of this ongoing series, please see the links below.