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Healthcare Corporate Investigations: Are Your Internal Fraud Audits Protected By Privilege?

By Ronald W. Chapman, II

As many health care compliance officers are aware, an effective compliance program is crucial for any entity engaged in the business of health care. OIG guidance requires that health care entities institute sufficient controls to prevent fraud waste and abuse. This includes receiving reports of suspected health care fraud, investigating the veracity of those reports, and recommending appropriate corrective action. Failure to conduct this process under the guise of the attorney-client privilege would make the internal investigation discoverable by federal regulators in response to a civil investigative demands, investigative subpoenas, or discovery in a false claims case. Therefore, all investigations should be conducted by an independent external investigator and should be covered by the attorney-client privilege.

In Upjohn Co. v. United States, the Supreme Court held that internal investigations and the responses given by employees during internal investigations are protected by privilege. Following the Upjohn case, it became customary to provide Upjohn warnings to employees indicating that the investigation is governed by privilege and the company holds the privilege and may choose to waive the privilege at its discretion. Failure to provide an Upjohn warning may spell trouble in the event of a Federal investigation and may result in the disclosure of confidential internal information.
If you are aware of an allegation of health care fraud at your corporation, its vital that you conduct an internal investigation conducted by outside counsel. A thorough investigation properly protected by privilege will allow the health care entity to take corrective action swiftly while still maintaining the attorney-client privilege.

If you are aware that your entity is being investigated by state or local authorities, its imperative that you contact outside counsel to conduct a thorough parallel investigation. Failure to do so will leave you powerless to defend the eventual government allegations. In many cases, swift corrective action following an investigation will resolve disputes with federal regulators including Health and Human Services (HHS), the Drug Enforcement Administration (DEA), and the Department of Justice (DOJ).

Chapman Law Group is a multi-state health law firm devoted to representing health care professionals and health care entities during internal investigations as well as civil, criminal, and administrative proceedings. Chapman Law Group employs skilled health care attorneys and former state and federal prosecutors who are skilled at internal investigations.