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Home Health & Hospice Week

Compliance:

How The Standardization of Voluntary Self-Disclosure Can Benefit You

Published on Fri Jun 30, 2023

The DOJ’s new policy explained.

Admitting your mistakes may be better for you than you think. How do reduced fines and penalties or even waived prosecution sound?

The United States Attorney’s Offices’ (USAO) Voluntary Self-Disclosure Policy (VSD) was rolled out in February 2023. This immediately effective policy codified previous Department of Justice guidance and standardized nationwide how VSDs are defined and credited.

The goal of the VSD policy is to incentivize you to:

1. maintain effective compliance programs to identify misconduct,

2. expeditiously and voluntarily disclose and remediate misconduct, and

3. cooperate fully with the government

What is a VSD

When you become aware of misconduct by employees or agents and before the misconduct is publicly reported or otherwise known to the DOJ, you may voluntarily notify authorities.

Under the new policy, prosecutors are to consider your timely, voluntary self-disclosure (and cooperation) to grant you more favorable treatment than if the government learned of the misconduct through other means or discovered it themselves.

Even if you believe the government is already aware of the misconduct, promptly assess the situation, advise legal counsel, and disclose the misconduct. Your swift action will be looked at favorably, even if you do not meet the full VSD criteria outlined below.

Criteria of Voluntary Self-Disclosure

The policy states a VSD must be:

1. Voluntary - If there is a preexisting obligation to disclose, such as a regulation, contract, or a prior Department resolution (e.g., non-prosecution or deferred prosecution agreement) a disclosure will not be considered a VSD.

2. Timed Properly - Disclosure must be: prior to an imminent threat of disclosure or government investigation; prior to misconduct being publicly disclosed or otherwise known to the government; and within a reasonably prompt time after becoming aware of the misconduct.

The policy does not define reasonably. Polsinelli Law warns that, “The company bears the burden of establishing that the disclosure is timely.” “Where the disclosure is untimely, or the government otherwise discovers the misconduct, companies will not be guaranteed the same benefits even with outstanding cooperation with the investigation on the back end.”

Be aware: Deputy Attorney General Lisa Monaco has stated that in prosecution “speed is of the essence.”

3. Fully Transparent - The disclosure must include all relevant facts known about the misconduct.

Disclosing misconduct within a reasonable timeframe may limit you to preliminary details. The new policy takes into consideration that you may not know all the specifics immediately. Make it clear that your disclosure is based upon incomplete information, but be sure to reveal all the relevant facts known at the time of disclosure.

In Addition: The policy expects you to move in a timely fashion to preserve, collect, and produce relevant documents and/or information, and provide timely, factual updates.

Benefits of Meeting the Standards

1. Leniency. Absent any aggravating factors, a guilty plea will not be pursued if you have met the above criteria. However, aggravating factors alone will not necessarily require a guilty plea either. The USAO will assess the facts and circumstances and determine the appropriate resolution.

In instances of aggravating factors and the organization has met all the requirements, the USAO will recommend reduced fines and penalties. For example, the government may decide not to impose criminal penalties.

Consider This: The Justice Manual states, “Cooperation is a mitigating factor, by which a corporation — just like any other subject of a criminal investigation — can gain credit in a case that otherwise is appropriate for indictment and prosecution.”

But, even if prosecutors do impose penalties, because you self-disclosed they will not impose a criminal penalty that is greater than 50 percent below the low end of the U.S. Sentencing Guidelines fine range.

Per the policy, aggravating factors include, for example, misconduct that: poses a grave threat to national security, public health, or the environment;is deeply pervasive throughout the company; or involves current executive management.

2. No Independent Monitor. If you fully meet the VSD policy, and can demonstrate that you have implemented and tested an effective compliance program the policy says the USAO will not require an independent compliance monitor.

What’s an Independent Monitor? Per the Justice manual, a monitor assesses and monitors a corporation’s compliance to specifically address and reduce the risk of recurrence of the corporation’s misconduct, including, in most cases, evaluating (and where appropriate proposing) internal controls and corporate ethics and compliance programs.

Decisions about the need for a monitor are made on a case-by-case basis and at the USAO’s sole discretion. In evaluating your compliance program, they indicate they will refer to section D. Evaluation of a Corporation’s Compliance Program in the Deputy Attorney General’s (DAG’s) September 2022 memorandum and the resources referred to therein.

Note: See the DAG’s memo at www.justice.gov/opa/ speech/deputy-attorney-general-lisa-o-monaco-delivers-remarks-corporate-criminal-enforcement. For the VSD policy, go to www. justice.gov/d9/press-releases/attachments/2023/02/22/usao_ voluntary_self-disclosure_policy_1.pdf.

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