DOJ Relaxes “All or Nothing” Yates Memo

The U.S. Department of Justice (“DOJ”) has softened its policy known as the “Yates Memo.” That policy required companies to produce all relevant information on individuals involved in misconduct in order to be eligible to receive any cooperation credit with DOJ attorneys. Rather than the prior “all or nothing” approach, the new policy requires the company to “identify all individuals substantially involved in or responsible for the misconduct at issue.”

New Policy Incorporated Into Justice Manual

The new policy is incorporated into the DOJ’s revised Justice Manual (formerly US Attorneys’ Manual) in the section on the DOJ’s Principles of Federal Prosecution of Business Organizations, particularly 9-28.700 (The Value of Cooperation).

Reason For The Change

DOJ Deputy Attorney General Rod J. Rosenstein announced the revised policy in a speech to the American Conference Institute’s International Conference on the Foreign Corrupt Practices Act on November 29. During the same speech, Rosenstein explained the rationale for the policy change, advising that the Yates Memo had unrealistic consequences, saying “we learned that the policy was not strictly enforced in some cases because it would have impeded resolutions and wasted resources,” and that “[o]ur policies need to work in the real world of limited investigative resources.” He further said, “[w]hen we allow only a binary choice –full credit or no credit – experience demonstrates that it delays the resolution of some cases while providing little or no benefit.”

The Yates Memo, introduced in 2015, drove a hard line. Its “all-or-nothing” approach required that a company undertake a careful analysis before beginning cooperation to determine whether it could meet the threshold to earn credit. The approach also exacerbated prosecution conflicts between a company and its employees.

Civil Attorneys May Exercise Discretion

In addition, the Deputy Attorney General explained that DOJ civil attorneys will have more discretion to resolve litigation. “When criminal liability is not at issue, our attorneys need flexibility to accept settlements that remedy the harm and deter future violations, so they can move on to other important cases.” He added, “[o]ur civil litigators simply cannot take the time to pursue civil cases against every individual employee who may be liable for misconduct, and we cannot afford to delay corporate resolutions because a bureaucratic rule suggests that companies need to continue investigating until they identify all involved employees and reach an agreement with the government about their roles.”

Analysis

The change marks a shift similar to the manner in which the DOJ handled corporate cooperation from 2006 to 2015. It appears that DOJ expects that these changes will increase companies’ willingness to cooperate with the DOJ and lead to more efficient prosecution efforts.

CMS Proposes Invalidating Adjuster Methodology and Recouping Past Improper Payments From Medicare Advantage Organizations

On October 26, 2018, the Centers for Medicare and Medicaid Services (CMS) issued a proposed rule that will, among other initiatives, allow CMS to recover higher dollar amounts of improper payments made to Medicare Advantage.

To read more about this ruling and what it might mean for you, click here to read a recent Squire Patton Boggs alert on the subject.

Company Wins Rule 502 Privilege Battle

Several interesting cases this year involve waiver and privilege jurisprudence. Perhaps none more sharply underscores the importance of a well-written proffer agreement when making disclosures to the government than a decision by the Fourth Circuit.  The court’s analysis depends in part on the operation of Fed. R. Evid. 502.

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Brazil Strengthens Battle Against Corruption

In August 2018, in an effort to battle corruption, Brazil enacted Decree-Law No. 9,468/18, which provides broader power to the Public Transparency and Anti-Corruption Council.  The Council’s purpose is to discuss ideas and suggestions to improve policies and strategies aimed at combating corruption and impunity within the Federal Public Administration.

For a closer look at this issue and others impacting the Latin America region, please visit our Latin America Legal Blog.

Third Circuit Clarifies Public Disclosure Bar in False Claims Act

Third Circuit Clarifies Public Disclosure Bar in False Claims Act

In United States v. Omnicare, Inc., the Third Circuit clarified the operation of the public disclosure bar in the False Claims Act (FCA). The court held that publicly available information “could not have reasonably or plausibly supported an inference” of fraud. This information included government reports of known fraud schemes and a 10-k financial disclosure by the defendant company. The Third Circuit rejected application of the bar because the relator used non-public information to “make sense of publicly available information.”

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Hoskins May Limit Extraterritorial Enforcement of U.S. Sanctions

The Second Circuit’s recent decision in United States v. Hoskins may impact enforcement of U.S. economic sanctions programs. The Hoskins decision precludes the government from charging a foreign national acting abroad with violating the Foreign Corrupt Practices Act (“FCPA”) through theories of conspiracy and accomplice liability. This holding is equally applicable to U.S. sanctions law.

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Britain Lifts Veil of Financial Secrecy for Overseas Territories

The UK Sanctions and Anti-Money Laundering Act signifies major changes to the UK’s anti-money laundering and sanctions regimes. Britain’s overseas territories, often criticized as tax havens, are now required to establish public registries of beneficial corporate ownership by December 31, 2020. The Act also includes a Magnitsky Amendment, modeled on U.S. law, enabling sanctions against foreign government officials implicated in gross human rights abuses.

 

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Switzerland Proposes Relaxed AML Rules for New FinTech License

In an effort to stimulate innovation in Switzerland’s financial markets, the Swiss Financial Market Supervisory Authority (“FINMA”) announced its plans to relax anti-money laundering requirements for certain smaller financial technology firms. If implemented, these plans would go into effect on January 1, 2019.

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Circuit Rejects Expansive Use of Conspiracy for FCPA

Judge pronouncing sentence to manThe Second Circuit issued its judgment on the case we have been monitoring, U.S. v. Hoskins. The court held that the “government may not expand the extraterritorial reach of the FCPA by recourse to the conspiracy and complicity statutes.”

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