The First Rule of Internal Investigations: Get a Lawyer
July 26, 2022 | Sherrard Roe Blog | Christopher C. Sabis
There are many scenarios in which a company may wish to conduct an internal investigation. Inquiries vary significantly in subject matter, scope, and apparent importance to the business and its operations. For example, a healthcare or construction company may need to perform an investigation of its billing practices on federal government contracts based on an anonymous, internal compliance complaint – obviously a potentially serious problem. By contrast, a company may need to investigate what seems like a minor allegation that an employee violated an internal company policy or conduct a review of its security protocols. Such inquiries may seem less significant. Despite the differences, the first rule for conducting any of these investigations is the same. Get a lawyer.
This may seem like obvious, self-serving advice coming from an attorney. After all, we get to bill, and you get to pay. Why bring on an attorney for something relatively small that can be done by non-lawyer employees? Because lawyer-led investigations may be protected by the attorney-client privilege and the work-product doctrine.
While a Medicare or disadvantaged business enterprise (DBE) fraud and abuse investigation appears big on its face, the seemingly smaller investigations may not be so small. What starts as a minor violation of company policy could turn into a harassment investigation with multiple potential claimants. A review of a company’s security policies could result in consultant recommendations that will cost the company significant funds to implement. How the company handles the results of these inquiries can improve its operations and employee relations, or it can expose the company to significant liability.
So, where does the lawyer come in? Without retaining counsel to guide its investigation, a company’s sincere desire to do the right thing can come back to haunt it. For example, the company wants to confirm its building’s structure is intact after an earthquake. The company retains an engineering firm. The firm inspects the building and reports that over $500,000 worth of repairs is necessary. Suppose, even for legitimate reasons, the company ultimately declines to perform all the repairs suggested by that particular firm. In that case, the engineering report it provided can serve as evidence in litigation if someone is hurt in a later accident in the building. No good deed goes unpunished.
But good faith efforts to comply and do the right thing need not run such risks. If the company retained an attorney first, it could develop an investigative plan in conjunction with its lawyer. As part of that plan, any necessary consultant analysis or similar inspection can be performed at the request of counsel. This step may then afford the protection of attorney-client privilege to any subsequent reports or recommendations if the attorney secured the information to provide legal advice regarding the company’s obligations or potential liability. Similarly, if there are already concerns of potential litigation, reviews ordered as part of an attorney-led investigation may be protected by the work-product doctrine, which shields certain materials prepared in anticipation of litigation from discovery. Proper attention to these protections can help a company make necessary improvements and identify potential problems without creating documentation that, in hindsight, may prove problematic.
Yes, lawyers cost money. They will cost money before a problem is identified or after it becomes evident. Investing a little money up front may save more money and sleepless nights later.
We continue to monitor developments in the FCA space. Follow us on LinkedIn for future updates and contact the lawyers in our Government Compliance & Investigations group with any questions or concerns.
Chris Sabis is a healthcare and procurement fraud lawyer specializing in Government Compliance and Investigations, Healthcare, and Litigation.
