strategic and international studies hosts a conversation on progress made in public diplomacy during the obama and bush administrations and talk about challenges and opportunities that president-elect trump will inherit and you can see that live here on c-span3. the american bar association held a day long forum on health care policies. this hour long panel considered different perspectives on the justice department's false claims act, investigation, litigation and enforcement practices as they apply to health care fraud. good afternoon, everyone. welcome back from lunch. wac back to the panel. i guess the theme for the program this year is change.

and for those of us who spend our time representing health care companies and individuals in civil and criminal enforcement actions, the change that we have been focused open for a while is the change created by deputy attorney sally yates, who last september, september 2015, promulgated the individual accountability memo. and that memo is really more evolutionary than revolutionary, i think. it is the latest iteration and government's ongoing efforts to try and shift focus to emphasize ing the role of individuals in alleged corporate fraud and to hold them accountable. that we're going to discuss that

policy today. we call it the yates memorandum. deputy attorney general yates says she doesn't like it to be called that. she would prefer it to be called the individual accountability memorandum. but defense attorneys, we like every opportunity we can to get under the government's skin so we keep calling it the yates memorandum. my name is david douglass. i'm a partner in a d.c. law office where i specialize in representing corporations and individuals who have been wrongly accused of fraud. in doing that, it's largely my role to protect my clients from people like the gentleman to my right. rick hartunian. but i'll let him introduce himself. >> i see how this is starting out. my name is rick hartunian. i'm the united states attorney for the northern district of new york. i am in my 20th year with the department of justice, the first 13 of which were spent as an

ausa doing violent crime cases, white collar crime work and all manner of things that we do in our office. the last seven years i've had the privilege of being the united states attorney and during that time have a healthy new perspective for all the different kinds of challenges that we face in this area. i have also served on the attorney general's advisory committee and that's been a privilege under attorney general holder and attorney general lynch and gotten to know a good bit about the department's viewpoint on things like individual accountability. nice to be hear. thank you. >> good afternoon. my name is leo reichert, i am the general council of wellstar health care system in metropolitan atlanta. we have about 11 hospitals. we have a large medical group, about 1,000 providers in the medical group, about 200 ambulatory locations around the city and about 20,000 team members total. we had the privilege of

acquiring from tenet, the facilities that were the subject of discussion yesterday, which is how we went from five hospitals to 11 hospitals last year. >> i'm bill pericak, a partner in the d.c. office. i've been with the firm for two years. prior to that i had a 25 year career at doj, including a stint in the fraud health care unit supervising cases in brooklyn and houston and baton rouge and getting a flavor for and including corporate health care fraud matters, which was a more recent trend of the health care fraud unit, and getting a flavor for what the department wanted to do in the corporate health care fraud context. >> thank you. as the slide recites the basic elements of the yates memo, but let me put into the broader context and tell you why it's so important that we all understand the substance and implications of the yates memorandum.

what we say to clients in false claim acts investigations is that every civil false claims act case is also a criminal false claims act case. because there's a statute although we don't talk about it much, but also because of some of the underlying conduct that can lead to false claims liability. for example, anti-kickback statute. so in many respects however that threat has been more theoretical than real. many times practitioners are attempted to ignore the criminal case and say the criminal folks aren't looking at it, but what the yates memo is designed to do is to require the civil attorneys to cooperate with their criminal counterparts to make sure the department of justice has looked at both civil and criminal liability in every false claims act case and to have a plan for resolving individual accountability, be it civil or criminal. so the yates memo.

at least in the short-term, and we can talk late bere where we think the long-term implications are, but in the short-term, what it has made the theoretical very real. if you are handling a false claims act case, now as a matter of doj policy there is a criminal ausa who will be looking at that case and considering potential criminal liability as well. so there are two important considerations. one if you're representing the corporation, what does it mean for cooperation credit? and then the second, there are ethical concerns that relate to representing the relationship between the corporation, your client and its employees who are not your clients. so this is something that has changed the way we practice and it has focused our attention on criminal liability. so with that, let me just start with the basics and ask rick,

what is the doj's policy with respect to cooperation credit for a company? >> so the policy, david, is straightforward and it is this, for a cooperating company to get credit as a threshold matter, it needs to provide all relevant facts relating to the individuals responsible for misconduct, all relevant facts. it's a threshold analysis. it's not a sliding scale analysis. there's no partial credit given for cooperation that fails to meet that threshold. all relevant facts. what does that mean, all relevant facts? it doesn't mean theories, legal theories or conclusions. it means facts. what happened, who did what, who promoted the conduct, how and when did it occur, who is responsible for approving it, what documents show and describe

how it happened and how the events unfolded. so those are some of the basic things that we are looking for when we say that. we are trying to get at the truth of what happened. we're not looking for a pelt or somebody necessarily to be served up. we want to understand the facts. sometimes there can be some questions or confusion about what we're looking for. i think the deputy attorney general has said and others you should contact the prosecutors if you have questions. you should engage in dialogue with us. i know my folks talk routinely with defense counsel. we're as open as we can be. sometimes we can't lay everything out for strategic reasons but we try to help build a dialogue so you know what we're looking for. i don't think this is a new concept as you alluded to. we have always been interested in what individuals are doing, who is responsible individually. corporations act through their

employees, through their executives, but it can be difficult sometimes to untangle the different levels of corporate structure and there can be thousands involved in corporations. sometime operations overseas can be difficult to obtain witness testimony. these are special challenges in these white collar cases and that is the purpose behind it all. >> when we talked about cooperation credit for years, what we're really talking about were criminal prosecutions of organizations and what does that mean for credit under the sentencing guidelines, but as the slide presents the question is the yates memo limited to just criminal investigation? >> it's not. it applies to civil investigations as well and our assistant attorney general for the civil division gave a speech and made clear that this

cooperation policy applies as a threshold matter in civil cases as well and we use cooperation for determination of whether we should go forward, what charges we should bring, how to determine penalties and damages. these are -- this is a factor that we utilize, laid out clearly in the u.s. attorney's manual, that are important in our analysis. so they apply on both sides of the equation. >> in a criminal case, i can get a reduction in points under the guidelines, but in a civil case should i come to you and make my same pitch for getting some kind of reduction in the civil damages and penalties by virtue of my outstanding cooperation? >> absolutely. i think that's clear and i think that we have a record in our office certainly of crediting cooperation and lowering damage calculations in situations where we have clear cooperation by the company that we're looking at.

>> what other policies and strategies that doj is pursuing that creates this tension between companies and employees and i'll direct that to bill. >> thank you. i think the most important one for this group to be focused on is that doj is applying traditional investigative techniques, traditional law enforcement investigative techniques to health care fraud, whether it be civil or criminal, they're applying techniques such as lining up cooperators and sending them in to talk to hospital administrators, using search warrants, using other investigative techniques such as bugs in offices, cameras, gps trackers, all kinds of techniques traditionally associated with organized crime cases. the section is now taught and i know that because i taught it

when i was there about four years ago, different investigative techniques to use in these investigations. to give you a couple of recent examples, in the riverside hospital case which was a case out of houston, texas, i supervised that case back in the day and in that case a cooperator was -- that was a data driven case. i think you heard some other speeches about how is doj finding these leads? it's relaters in cases and it's data driven analyses. in that case it was data driven and a cooperator was identified, somebody who had a drug problem, and that person was enlisted to cooperate to wear a body wire and to go in and have conversations with the hospital add straighter.

that executive was prosecuted on a tape recording. from the good old days of doing drug cases they used to call them dry conspiracy cases in drug cases. it was a tough case to prosecute what the fbi, dea, all the government agencies wanted to do was go out and do wire taps and recordings and catch people in the act and that same thought process is being transferred to corporate health care fraud cases. the other example is the hospital case which i was not personally in, but did start during my time there and in that case the agent went out with -- i think with the fraud section trial attorney and in an early morning sort of wake up confrontation, knocked on the door of the suspected kickback recipient, confronted her and she confessed and agreed to cooperate and similarly they confronted a hospital admin

straighter and this all occurred without the knowledge of the hospital, the counsel for the hospital, this all occurred in the background without anybody realizing what was going on and it's this type of proactive investigation that's occurring in both civil and fraud health care investigations. >> so leo, when bill comes to you in a case and says i've got good news and bad news. i have lobbied rick and he's down to double damages, i'm sure if phil was doing it would be down to 1.5, minimum number of penalties, this is well within what we expected, it's a good disposition for the company, but he wants you to serve up some of our key people. talk about what that means to you as a general counsel and the challenges that presents. >> that's not a good day to have

that happen. we have an organization -- i shared the yates memo with the leadership team when it came out as an example of what's going on. i haven't broadcasted up and down the organization so everybody knows about it, but certainly the leadership team is aware of it and it's -- so what's the concern? the concern obviously is that they are going to be less inclined to want to cooperate with the investigation. other leaders in the organization, employees, may want to lawyer up earlier in an investigation. it may or may not be something that in another case prior to this coming out they would have had that focus on, but now knowing that there's a focus on this sort of individual accountability and executives in organizations are being charged, they could be less forthcoming. if they go out and select their own counsel or want to select their own counsel, that can obviously be a problem. if it's not somebody who is experienced in this area, it's not that we don't want people

who need counsel to have appropriate counsel, but these kind of cases are unique and you want somebody who is obviously going to protect their rights, but my duty is to represent my client. i want somebody that's going to cooperate with us, maybe consider a joint defense, so forth. the other area is -- there was a session about this yesterday and there was conversation about the upjohn warnings where i have to make clear while we're talking to an individual, an employee, we represent the organization. we have to be real clear about that. we really the organization and be not them individually which leads to the question of whether they should get their own lawyer. >> i should have mentioned at the outset, we invite questions from the audience throughout the presentation, although unlike me you all will have to make up your own questions. so i wanted to ask rick just what is your sense from your work on the u.s. attorney's committee of where the different

offices are in approach to yates issues if you have any general observations. >> i think it's fair to say when i started -- i'll use my office as an example. we were not doing a lot of affirmative health care fraud work. a lot of the smaller offices and we're not really equipped in their civil divisions to do more than defensive work. so during my tenure i've doubled the side of my civil division and hired some civil enforcement lawyers who have expertise in this area. i would say i'm not alone. i think there's been a lot of districts, i'm talking about districts other than the districts with which we are most familiar that have been engaged in this work for a lengthy period of time, boston, massachusetts, philadelphia, south florida, southern district, eastern district of new york. those are obviously hot spots with lots of resources. so i think there's been a redirection of resources and i think there's been an emphasis

as well on something that the individual accountability memo requires now and that is to have our lawyers in the civil and criminal divisions work in tandem with each other and that's something that we do now as a matter of routine, as a matter of course, and i think it has made our work better. our lawyers are working well together. they can bring the tools and techniques from each of the house to bear on investigation and they can really drill down more quickly on the facts and get to a quicker resolution at the end of the day that's in the interest of justice and the interest of our department and in the interest of certainly people who are effected. >> i think it may be in the interest of the department of justice, i'm not so sure it's in the interest of justice. that's a cocktail debate. >> i see how this is going. >> but it's something if you actually dig around in the

archives, maybe ten or as many as 15 years ago back when massachusetts was really sort of pioneering aggressive prosecution under the false claims act, you can find an article he wrote in the u.s. attorney's bulletin, they have a newsletter. >> that's right. >> he was saying i don't know why more -- he was saying that in their office back then civil and criminal worked hand in hand and he gave examples of how well it worked and he was surprised then that more u.s. attorneys' offices weren't doing and he was commenting that the civil lawyer says, well, i'm going to send a subpoena and a criminal lawyer says i'm going to send an agent with a search warrant. it's taken a while, but it seems like doj has adopted that approach or is going in that direction. >> it really helps us get at some difficult proof challenges in white collar cases. it is not always easy to prove intent beyond a reasonable doubt. when we have both sides of the house involved in a case, again the u.s. attorney and my

supervisory staff we can make assessments that are more tailored to the facts of the case and be bring these cases to conclusion. sometimes white collar cases can langish as lawyers try to get at this challenge. i think this is a good development. i think we're seeing it kind of be used much more frequently across the country. >> so, bill, the question is should the lawyer who represents the company and employees, give us a little bit of grounding in the conflict of interest rules and why that's so -- such an important question. >> so the -- obviously the ethical rules apply here and the predominant ethical rule is 1.782 which -- i'll preface this by saying i've been out for two years and this question has been asked of me a half a dozen times. why don't you represent the employees. why do i have to get an outside

lawyer. why do i have to pay that expense. you know about the case. i have to pay them to learn it. why don't we do that. so the conversation that i have starts off well there's this ethical consideration that if there's a significant risk that will be a conflict in the future, then i should not take on that representation and i think with the yates memo it's obvious now that with the -- again, prior to the yates memo, we always knew there was focus on employees, but now it is so overt you have to say i think this is a very likely scenario there's going to be an individual conflict here. >> leo. >> i'll probably follow the penn state investigation and sort of what happened there with the general counsel at the university and it was one of those instances where the general counsel obviously represents the interests of the

university. she met with the president of the university, the vp of finance, the athletic director as part of the sandusky investigation. there was a subpoena from the attorney general of the commonwealth and she met with those folks and didn't give clear upjohn warnings. she said what you tell me is not confidential. i may tell the board of trustees, but she didn't give anything akin to an upjohn warning. in her defense the attorney general's office said i'm not going to ask you about anything that's privileged. they're not targets. so she also showed up for the grand jury testimony and appeared as their lawyer. she later was called by the attorney general's office to give testimony against those folks and on behalf of the university waved the privilege and she believed that she was representing only the university at that time and that she didn't represent the individuals. as you can imagine the whole thing sort of blew up. she's no longer with the university and the criminal charges against those three gentlemen that were derived from

her grand jury testimony were all dismissed by the appellate court. got to be very careful about that representation and that's something i get all the time. i'm in house. they know me. i work with the team every day. it's a unique situation when you're inside and work with the cfo and the compliance team and everybody every day and then you have to come and be acted those hard questions to make sure they understand who you represent and i bring in somebody like bill so i don't have to do that. >> that brings us to the next point. if i can't represent the employee, who should. >> the way we structure to go forward so the corporation and the employees may have separate counsel can work together and share privileged information is we enter into a common interest agreement that are called joint

defense agreements, but it's a common interest agreement and it may not apply only to situations where there are adverse legal interests. but a common legal interest is that the parties to the agreement have a common legal interest. it doesn't have to be an identical legal interest, but it has to be a primary interest such that their interests are sufficiently aligned so it makes sense for them to share privileged information. that's really all it is. most of the ones i frankly do are on a handshake because i know the lawyers that i'm inclined to enter into an agreement with, but i've always done them and they can be multiple pages, particularly in large investigations of multiple corporations where there are many interests to consider sharing of documents, return of documents, proprietary information and the like. so the concept is very simple.

we simply agree our interests are aligned. we agree to protect privileged information we receive from the other party under a common interest agreement. you are not obligated to provide privileged information, but you are entitled to. so if i provide it to bill as we work together in rick's investigation, he has to preserve, even though i wasn't obligated to provide it, if i choose to, he is then obligated to preserve it. actually, speaking of rick, did the doj -- what is doj's view of joint defense agreements? and can i just note you clearly are a u.s. attorney because you haven't made that disclaimer because u.s. attorneys don't care what justice thinks. >> that's not true. joint defense agreements, i think there's two rules that are important for our discussion today. one, participation in the joint defense agreement does not make a corporation ineligible to

receive cooperation credit. that's an important point. and we do not request that a corporation, second point, refrain from entering into such we do not request that a corporation, second point, refrain from entering into such an agreement. that is a matter for the corporation to determine. we note, however, that sometimes these agreements can complicate a corporation's ability to cooperate, because they may have derived information from an employee, and that employee may be represented and there may be some prohibition from a company then sharing information with the prosecutors that can present a challenge. i think that challenge has to be identified and weighed and assessed by the corporation. >> sometimes it's a little hard to know how that plays out. if i get privileged information that i then can't share with you, it's not as if you're

deprived of information. so you're not getting less. so sometimes these kinds of arrangements actually can complicate both our jobs. so let's turn to sort of one of the difficult issues that arises in these cases. you have the company. you've done your investigation. it's clear that some folks have done something wrong. they are probably also under investigation, or maybe. their value. you have a lot of intellectual capital in those people, particularly who are seniors. you're a publicly traded company. those people have their own market value. a few things bring company moral down more than firing a bunch of people when the company is under investigation. that has ripple effects. so leo, i'm going to dump all that on you. >> so the harder question is the

one you didn't ask. if you're earlier in the investigation, and you don't really know what's happened, you can still have employee now who are getting nervous about things and they are reluctant to talk to you. if you don't know they are a wrong doer, what do you do. how you work through that, they may or may not have counsel. you have to be careful whether they have done something wrong or they don't. we're careful about anything received as retaliation. retaliation on statutes federally, state employment issues around it, so you have to be very careful how you handle those things. we have, like others, i think, looked at different things like suspending somebody administratively and paying them. so if they have gotten nervous early on and we don't necessarily think they are a wrong doer but trying to work

through the issues, we might try to put them on administrative suspension. that can be a challenge, if you're paying them, taken them out of their job. you have a lawyer on the other side saying this is ridiculous you couldn't take them out of their jobs because they are exercising his or her rights. i have to zealously represent corporate interest and not the interest of these employees. you have to look at these things very carefully, a facts and circumstances analysis but there are times you have to do that. >> bill will will open up. what about the employee says i don't want to talk to you. >> that's the $64,000 question, how do you react to this. representing the corporation, i know that i have to talk to doj. i have to report to them what my investigation found and was my investigation a solid investigation. and what do i do about the employer, what did the company do about that employee. i don't think we pointed this out. in addition to accountability memorial -- memo, there's helpful things like speeches and frequently asked questions.

the questions to one of the frequently asked questions is a company, i think rick would echo this, is not required to take specific action against employees. but response to misconduct is something doj will take into consideration. until recently, i think people sort of thought, okay, we can do certain things, interim steps. we might be able to dock a little bit of a pay. but in the recent ember case, fcpa case, doj actually exacted a financial penalty on the company for failing to discipline to the extent doj thought was appropriate a senior executive doj felt was involved in the misconduct.

so it's very problematic now what to do about and employee. if they are a whistleblower and you don't know who the whistleblowers are, you take action against them, that's retaliation. if you don't take action and they are culpable, you may have a financial penalty. they may be one in the same person. the whistleblower may be culpable or most culpable involved, what do you do in that case. i think i'm supposed to answer those questions. i'm posing them because there's no easy answer. it's a very difficult situation we find ourselves in. >> in house when we do something like this, you talk to audit committee, board about you what found, they are going to ask you what are you going to do with the person if you identified a wrong doer, this wasn't an accident, mistaken interpretation, this is somebody doing something deliberately wrong, in this case it's an easy decision. the board is going to expect you to do that given the government vision, if you have a wrong doer in an organization you're going

to want to get them out. organization. sometimes there can be risk of retaliation. that game is going to be made whether it's a good one or bad one. you can go ahead and try to excise the problem from your corporation. you have to deal with the consequences later. >> and just to be clear, the department doesn't require that a company take any specific act against an employee in order for it to remain eligible for cooperation. that is obviously one of the factors we look at so it does present a conundrum for the corporation. we want to know what remedial action that been taken, what a company does about a wrongdoing employee says a on the about where the corporation is, what their attitude is. that is a factor that we assess when we're determining what charges to bring, what penalties or damages to assess and the like.

>> i want to add a little more gray to this situation, which is when it's not clear, when it's not clear how involved the supervisor was, whether the supervisor really knew or was negligent, what do you do in that situation, and there's a little bit of a dance that goes on with doj, because they are not going to tell you terminate somebody. they are not going to tell you what to do, but you say i'm thinking of recommending that we keep so-and-so on. then you look for a reaction. if it's okay, or if it's a glum look -- >> my prosecutors are trained not to react. >> but you do, you try to feel this out and try to propose possible solutions to gauge what the doj reaction is so you can advise your client, this seems to be what's going to happen, because at the end of the day in the ember case, why should the corporation pay 10% more, that was a multi-million dollar settlement, why should they pay 10% more if they do adequately

consider, okay, maybe we should take more action, greater action against the employee. it's a difficult situation to be in all the way around. >> sounds a little bit, as a practical matter it's going to be very difficult to say to the government we've identified this person as the person who made the false certifications or even this person who seals to be within the zone of misconduct but refused to talk to us. we're keeping them on the payroll. saying not only do you have problems with the prosecutors, broader problems about what it says about the company, board of directors, shareholders, customers if you have someone who engaged in wrongdoing or refuses to explain to you exactly what they did on the company's behalf. >> i would certainly seek counsel on it.

if you have investigation and documents that point in a direction and you've got to ask questions of an employee and that employee refuses to talk to you, they have an obligation as an employee to talk to you. again, recognizing there are risks as the attorney for the organization, i expect them to comply with it. we have had occasion where we had to do it before where someone won't talk to you. they will sometimes ask to bring an attorney in. if we have a conversation, internal conversation, you don't have the right to bring an attorney when we have that interview. so from employment disputes in particular, would not allow to bring an attorney in, come talk to us period, you're an employee. if they don't, that's going to be subject to a sanction probably. >> in some instances i've encountered when i got the person an attorney, when they won't talk. my view, a zealous advocate, not heartless. you fire under cloud of investigation they are never

going to work again. so it's not something you want to do precipitously. sometimes i have recommended let's get that person an attorney and let that attorney clarify the person's thinking about where they are. >> they are absolutely true. there are a lot of times to the company's benefit to have an attorney, frankly to have a good attorney. everything works better when you've got good attorneys involved and folks that know the lay of the land and the likelihood of average consequences to the employer or what information the employee has to share and that it may be in the employee's best interest to share and work together on that. i don't mean the first step is determining, you try and work through it and see if there are ways to get the the cooperation because it's too everybody's benefit to do that. >> touching on that, plus this notion of multiple representation, i generally am of the view that hiring counsel for employees is some of the

best money companies can spend, after the money they spend on me, because it's much easier when those employees have their own advocate that frankly helps them to remember what happened and to be free and to talk with them clearly, but also so that i'm not the bad guy when rick starts asking tough questions and say, well, they have their own attorney. go talk to that person. i think it would be hard maybe for rick to agree i've cooperated if i've not disclosed facts i've got in a privileged way. but if there's an employee with a lawyer and say i'm telling you all i can tell you, go leverage that person, i think it might be harder to make the case i haven't cooperated if i don't represent some of the key individuals. bill. >> i think we all remember the days not too long ago when doj's position was that the company should not pay for the lawyer to represent the employee. that was the thompson memo that

was reversed. i think i'll defer to rick on this. i think doj's position is if you want to pay for employees to have lawyers, god bless you, it's all to the good. they should not hold it against you. >> so now we have all this privileged information, but i'm desperate to communicate it to the public to get a good deal for my client. bill, what do we do? >> well, so the first thing is, we have to decide whether or not to wave the privilege. i think the first question maybe for rick is what is doj's position whether we have to wave privilege. >> well, i think the rule there is clear a waiver of the privilege. we've been directed not to ask for waivers. sally yates in some speeches she's given has challenged defense bar to let her or her office know if some prosecutor asks their client to wave the

attorney-client privilege. that is not something we're going to do. the situation can change, however, if there's an advice of counsel defense raised. in those situations, communications with in-house or outside counsel that occur prior to or contemporaneous with the alleged wrongful conduct, those can be expected to be produced where we're not required to just take on faith some representation that this person absented on advice of counsel. so that situation presents a little different story. i think there's a strong line of cases that kind of support that approach. and you know, we've had cases. bill i know has had experience with this, too, where, you know, an advice of counsel defense is raised. we delve in a little bit, get ahold of the lawyer and find out

what the lawyer was told. lo and behold, the lawyer wasn't told all the facts that were relevant to give the client. we've seen that on a number of occasions. >> really this comes up not so much with the corporation relying on advice of counsel but with corporate employees relying on advice of counsel defense. in-house counsel told me this was okay. does that ever happen, leo? does anybody ever say you told me it would be okay. >> it happens all day every day. you have to be careful about that. >> as rick points out, typically in my experience the situation was the employee thinking that this is okay is different from the this the in-house or outside lawyer might have said was okay. it's that discrepancy that leads to advice of counsel. >> i would note parenthetically,

department of justice's position evolved to the point where doj prosecutors are not to ask for a waiver except in cases of advice of counsel. sec actually reserves the right to ask for a waiver if you're ever involved in a case i think which the sec is involved. they have to go through their own supervisory review but they are clear they do reserve the right to request a waiver of privilege from a company under investigation. >> all right. so how do we go about disclosing these facts, and what are some of the implications? bill? >> there's a fair amount of case law out there. what are the traditional ways. traditional way number one, i conduct the investigation. i have this bunch of associates

taking careful notes. we prepare an interview memorandum. i go in to talk to the government. i say here, here are the memoranda of all the interviews we conducted. that's clearly a matter of privilege. if we do that, some lawyers do that. that's the way they decided to practice. that's what they want to do. of course you need permission from client to waive privilege and tell them what's going to happen. the second way i've seen people do it quite frequently is what people call the oral download. i think people used to think an oral download would not be susceptible to waiver analysis. in acceptance lawyers come in and read the memorial okay to the prosecutor without handing

it over. recently that, too, is a waiver. that's effectively the same thing as handing them the memo. the third possibility is an oral download that's not specifically reading each interview memorandum but really giving a general impression, an overall approach. in those cases, that's not a waiver with respect to specific memos or specific interviews you conducted. but there's another technique that is fast gaining traction and that's the hypothetical professor. in the southern district case where the judge approved it, it's sort of if you were to ask so-and-so, he might say this. i expect that you might hear this if you were to interview someone. at least in the southern district, with that particular judge, that was not a waiver. that was actually basically that the judge said that was a brilliant strategy by the lawyer to communicate the facts the government needed to know and not waive the privilege in connection with it. >> so bill, should the company

be concerned about waiving privilege or is that just a lawyer's concern? >> i think that there are concerns about waiving privilege. we're going to get to the way around that in a second. certainly if you waive privilege and it's a subject matter waiver, then you have to be concerned about everything, a search of your files, everything going over. this would come up in particular if an employee is charged, or if an employee is the subject of the investigation where the employee's lawyer is now asking the company to turn over will their privilege matter because it's a subject matter waiver. there's another concern, leo, right, with shareholder litigation. >> thankfully we're a nonprofit so we don't have to worry about that. shareholder. there can be other collateral consequences.

the point is if you decide to waive the privilege or thinking about it, you have to think carefully about potential collateral consequences use of that information either in the court of public opinion or another court. >> it's important to underscore it's not the form that determines the waiver, whether written or oral. if you disclose privileged factual information it's a waiver. it's two fold, oral hypothetical, sort of the standard, well, you know, if my client told you this, what would happen. there you haven't actually disclosed any privileged facts, it's a hypothetical. to the extent you're relaying facts, this is what our investigation found. it is a waiver. it's harder for third parties to get at. we should talk about federal evidence 502 which was put in place to make it easier for parties investigations or potential litigation to manage

the privilege issues. now, what 502 provides is that in privileged information that is disclosed in the federal proceeding is a waiver only to the extent disclosed. it's not a subject matter waiver. the rule 502 generally was really driven by the scale of ediscovery. and the problem of reviewing thousands, tens of thousands, hundreds of thousands of documents and then you find a privileged one in there. it was completely unmanageable frankly for all parties. i think that was the heart of rule 502. in our context 502, a provides some very valuable protections. >> i think it's important to

understand advisory committee notes may clear the the exception if the waiver is intentional typically occur in internal investigation. here are the interview memoranda. the third criteria, they ought in fairness be considered together, advisory committee notes made clear that what's intended is to do away from subject matter waivers, that the important consideration is it's unfair if misleading. if i turn over a memoranda to rick saying x didn't happen, also have an interview with leo said x did happen, under the rule that would be misleading and misleading attempt. what you actually either-orally or in writing produce. there's another component to 502, 502 (d) which really seals the deal. 502 (d) allows you to -- allows

the parties to obtain a court order, which is binding and definitive in state and federal litigation that a particular waiver is simply a waiver as the documents provided. >> couple of quick notes on 502, provides mechanisms for regulating how you handle the disclosure of privileged information. one is a clawback. >> you allow the other side to look and then if they say we're interested in that, you say that's privileged and decide where to go from there. the difference between clawback and peak, -- quick peeks, who bears the responsibility or cost in identifying and managing the privilege issue. in a clawback, the burden is on the party producing the information to be vigilant and say we want it back. in the quick peek it goes to the other side, i think.

so how do you get rule 502 order. >> rule 502 says litigation, if it's pending before the court, then you can get a court order. you say to your self how does that apply to me. certainly if you get a grand jury subpoena, a grand jury

proceeding is a type of proceeding that is pending before the court. i have successfully obtained with the consent of the government 502 d orders that disclosure of certain things are not subject matter waivers. there are other examples, rick will be able to fill us in. >> grand jury, can matter under seal. sometimes difficult to know if there's key under seal. may ab suspicion and circumstances where i might get a partial seal lift to allow the

order to be obtained. >> back to the quick question of cooperator or not to cooperate. from the view of the u.s. attorney can or should a company decline to cooperate? >> this is the $64,000 question. i think the bottom line here is it's up to the company to decide, just like it's up to any client or any target or defendant to decide whether cooperation is in their best interest. typically that decision is made as a result of consultation with their lawyer, communication with our office and it works out one way or another.

we can't force or compel any person or corporation to cooperate. if someone doesn't cooperate that, doesn't necessarily mean we're going to be punitive or we're going to seek an indictment because they're not cooperating. we're, again, going to make an individualized assessment of the facts and weigh the federal principles of prosecution, take a look at the nature of the conduct. we're going to take a look at the background of the defendant, and we're going to take a look at the strength of the evidence and we're going to make that decision upon an analysis of all the factors that we need to think about when we're making those hard decisions. >> leo? >> i was going to say depends on what you mean by cooperate we would certainly, we have

policies. our policy is to cooperate with an investigation if somebody shows up we are going to respond to document requests, we're going to do what we need to do. we will certainly, if there are individuals who need to be interviewed and they may or may not have counsel we may or may not have paid for. we may ultimately disagree on what that leads to. we may do the investigation and think, hey, this was not reckless. maybe there was a mistake made. you can disagree about the ultimate outcome, but cooperate during the course of the investigation. >> i think the department made clear, though rick stated benignly what the consequences are for cooperate or not cooperating. you can look at it in the difference in these cases, but find examples in health care cases of petro tiger versus alstom where in speeches the department, various officials pointed out, look what happened to petro tiger, they did not cooperate.

they got a fine that was in the middle of the guideline range. i'm sorry, petro tiger did cooperate, alstom did not cooperate. they got a fine in the middle of the guideline range. petro tiger got a 20% discount from the bottom end of the range to really make you think, okay, you have to cooperate. you always have to ask yourself this question. the 20% discount off of what and that's, you know, that's the elephant in the room. what is the what we're talking about? if we're talking about $5 billion or $500 million was the elephant in the room and you can have serious disagreement about whether it should be $500 million or $200 million or $100 million, and it's a difficult one. so i would say it's obvious once you have arrived at a number, you're much better off cooperating and getting the discount, but if to arrive at the number to cooperate you have to agree to some inflated or

what you believe to be inflated number, you're not getting much of a benefit at all. >> it's interesting. i think as a practical matter, it's hard for a company to just flat-out tell the government to go pound sand. particularly for health care providers apart from doj you have permissive exclusion issues if oig decides you're not doing the right thing. it can be different with individuals, however. paw these rules are so complex. the regulations are arcane. the e-mails may be unclear. the government needs an individual and it can be that there are cases where you simply say to the government, i'm sorry, i'm not going to talk to you. good luck to you. if you get something, come back and talk to me. maybe i'll cooperate with immunity. we all like immunity. i'll talk your ear off once i

get immunity. but i don't know that it makes sense -- it does not always make sense for individuals to cooperate. and in the context here of these multiple representations as a corporation, i would expect to be in close communication and coordination with company counsel saying here's where i am. it might be bill's representing the company. he's saying, i didn't tell you to do that, but good. >> i think it's clear in the government's view to cooperate includes an admission to whatever the government says the facts are and whatever the government says the number is. now there may be negotiation over the facts in the number, but the end document that you're going to see is going to be an admission. again, going back to the good old days, it used to be you could enter into settlements where it could say government contends that and the defendant or the company disputes that, but in order to resolve this, we agree to this. that is becoming less and less frequent. it's still, there are still

districts where you can get that. there are districts that will not enter into this position that do not contain a definite admission of either guilt or wrong doing, whether it be criminal or civil. >> we require clear admissions, clear statement of conduct. we think it's in the interest of transparency and the public understanding the nature of the investigation and why we arrived at a resolution. there are negotiating points certainly throughout these cases. we think it's very important that we be clear about why we're doing what we're doing. we want to inspire confidence in the justice system and the work of the prosecutors and so that's really the reason behind this requirement. >> it is difficult in a civil investigation where the potential damages under the false claims act are add as many zeros as you want to if it's a claim that goes out a lot.

you're trying to make a business decision that i'm not going to risk the future of my company because we did a lot of x-rays or whatever you think of some claim that gets submitted a lot of times. only takes 50 claims to get $1 million under the new false claims act penalty. you're making a business decision to resolve it even if you don't think you acted recklessly and the regulation or code was vague, whatever. sometimes you're being forced to confront do i have to admit this or make a business decision? it is difficult when you have a district that might not allow you to do that. i'm certain you would be willing to consider the facts and circumstances of every case with an open mind. i do think that creates difficulty. it is a business decision how you settle these things. >> now what the yates memo required is when there is a resolution the asa resolving the case have clear liability of

implicating individuals. if you charge the company but not charging the individuals, you're going to have to prepare a memorandum explaining my plan or here is why i'm not going after them. >> and documentation of declinations, we do normally. this has been a focus by the deputy attorney general requiring there to be supervisory analysis interaction about these decisions. no sign-off, no passes for culpable individuals without high level u.s. attorney or aeg approval. so these are things that are built into the policy that are going to affect a more rigorous analysis of how we're handling these cases. i think it's a good thing. it's something we have required for the most part during my tenure as u.s. attorney. requires our asas to focus on the conduct of the people involved in the case and to be

clear, as they approach their supervisors about how they are going to reach a disposition, be clear about the reasons for the settlement or disposition. >> that's what i really hate when asa is really focused. but the practical problem and something to keep in mind is what i find in dealing with justice, if you have to get someone to write a memo to get approval for them to get approval to do what your client wants, you're in a lot of trouble. here is a place where particularly if you're -- whether representing the company or the individuals, you can help your client by preparing a memo. saying here's all the reasons i think you should not prosecute any individuals here. you say it may be true for the company that you have a basis to prosecute, but my client's 45 years old, has always obeyed the law, was operating, i don't think a jury is going to convict this person beyond a reasonable doubt, particularly after i bring in three experts to say this is routinely done and

ambiguous and blah, blah, blah. i have now given you something you can turn around into the memo you need. >> the kind of information you describe get a hard look from us. i frequently require it. i did so recently in a case. significant responses to the defense submissions beyond the original material that i had been given to review it, challenging a white collar case. i say go back, answer every one of these arguments and i want to see it in writing. then i'm going to weigh it and assess it with my supervisory team. lest you think these submissions get ignored or given short shriff, that's not the case. >> i'll let you wrap up the last word about compliance. >> the time has run out on the shot clock. very quick point about compliance.

the question is does a pre-existing compliance program help you? the answer is sometimes. in the case of olympus corporation, the doj determined their compliance program was inadequate. they were then punished really a higher fine was imposed under the guidelines than otherwise would have been in place or imposed because, again, doj's judgment, their compliance program was not up to snuff. >> we are looking for effective compliance programs here. i think leslie caldwell called it, "kicking the tires regularly." the senior leadership provides support for it. there is a compliance officer have authority? does the compliance office have resources? are training programs accessible? are they frequent, comprehensive? are there rewards for compliance and disincentives for noncompliance?

these are things we drill down on to get at whether compliance is real or not. >> i heard the phrase paper tiger which is the prosecutor's way of sloughing off the compliance program. that's a paper tiger. it didn't catch this. how good could it be? which is a challenge because if it's a good program, why didn't it catch this particular type of misconduct? you have to be prepared to answer that question. a skeptical prosecutor will always ask that question. >> thank you all for your attention. i'm sure if you have questions, the panel will be happy to answer them afterwards. thank you, panel. president-elect donald trump has morpg of meetings here today in trump tower in new york city including with the head of

boeing. they'll wibe discussing the nex air force one that's under design. bloomberg reporting it's their second meeting since trump tweeted out his displeasure of the cost. boeing has several designs. this afternoon, the flekt heads to washington for a dinner. craig kaplin tweeting outside this picture of preparations. security barriers are set up surrounding u.s. capitol west front where friday's inauguration will be held. between now and friday, president-elect trump's cabinet picks will be visiting capitol hill to answer senator's questions and this afternoon at 2:15 eastern, the montana congressman will go before the senate energy and resources committee. cspan will have live coverage of that. then at 5:00 p.m. eastern, betsy

devos will be answering questions. that will also be live on cspan. live here today, mike pence will be speaking at the annual gathering of the u.s. conference mayers this afternoon. he'll be talking about how trump plans to work with cities. live coverage of that starts at 2:30 and at 4:00 eastern, the center for strategic and international studies will host a conversation look iing at progress made in public diplomacy during the obama administration and bush administrations. he'll also discuss challenges and opportunities that president-elect trump will inherit. cspan 3 will have it live. ♪ the presidential inauguration of donald trump is friday. cspan will have live coverage of all