What Happens During an Internal Investigation

An internal investigation is a privileged inquiry, conducted under counsel’s direction, into the clinical and administrative conduct that a government investigation may be examining. Its purpose is to give the practice and its legal team the most accurate possible understanding of what happened before the government presents its version of events.

The internal investigation is not primarily an effort to find exculpatory evidence. It is primarily an effort to find the truth, in all of its complexity, so that the defense can be built on an accurate foundation. The internal investigation that produces findings favorable to the practice strengthens the defense. The internal investigation that produces findings unfavorable to the practice identifies the weaknesses the defense must address, the areas where the clinical justification is most vulnerable, and the records that will require the most careful expert analysis. Both outcomes are valuable. Both are better than the alternative of encountering those findings for the first time in discovery.

Structuring the Investigation to Preserve Privilege

The internal investigation must be structured under counsel’s direction to preserve the attorney-client privilege and the work product doctrine over its findings. An investigation conducted by the practice’s own staff, without counsel’s involvement, produces findings that are not privileged and that the government can compel through subpoena. The same investigation, conducted by compliance professionals retained by and working under the direction of defense counsel, produces findings that are protected from the government’s access.

The engagement letter between the practice and outside counsel should specifically identify the internal investigation as a component of the legal representation, and counsel’s engagement of any investigation professionals should be structured as a retention under counsel’s direction for the purpose of assisting in the provision of legal advice. The investigative professionals’ work product should be documented as prepared in anticipation of litigation under counsel’s supervision. Those structural features preserve the privilege and work product protection.

Reviewing the Medical Records

The medical record review is the core of the internal investigation in an opioid prescribing case. The review should examine a sample of the patient records for the period under investigation, focusing on the patients and prescriptions most likely to be the focus of the government’s inquiry. The review assesses whether the records adequately document the clinical basis for each prescription, whether the prescriptions are consistent with the diagnoses and examination findings recorded, and whether the monitoring activities required by applicable clinical guidelines and the practice’s own compliance policies were conducted and documented.

The medical records reviewer is typically a physician expert retained by counsel who has experience in the specific clinical area at issue and who can assess the records against the applicable standard of care. The expert’s preliminary findings, communicated to counsel in a privileged communication, inform the defense strategy before any aspect of the government’s case has been disclosed. Finding the record’s weaknesses before the government does is the purpose of the review.

Reviewing the Financial Records

In cases where the government’s investigation has a financial component, the internal investigation should include a review of the practice’s financial records by a forensic accountant retained under counsel’s direction. The review should examine the billing records, the cash receipts, the bank records, and the tax returns to assess whether the financial picture is consistent with the clinical record and whether there are financial patterns that might support a money laundering or tax evasion theory.

Financial records that are inconsistent with the billing records, cash receipts that exceed reported income, or payment patterns that suggest structuring are findings that the internal investigation is far better positioned to identify and address than the defense team that discovers them in discovery after the government has already built its financial theory around them.

Interviewing Staff

Internal interviews of clinical and administrative staff who may have knowledge of the conduct under investigation are among the most important and most sensitive components of the internal investigation. Staff interviews must be conducted by counsel or under counsel’s direct supervision, with Upjohn warnings provided to each interviewee clarifying that counsel represents the practice rather than the individual staff member and that the privilege belongs to the practice.

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The internal investigation that identifies a problem is the investigation that provides the most value. The finding that a specific staff member prescribed controlled substances to patients who were not examined, or that billing records reflect services not provided, or that cash receipts were not reported as income, is a finding that the defense must address before the government presents it as evidence. Addressing it requires knowing it exists. The internal investigation is the mechanism for knowing.

Acting on the Findings

The findings of an internal investigation may require immediate action: corrective changes to prescribing protocols, termination of staff who engaged in unauthorized prescribing, voluntary disclosure to the government in appropriate circumstances, or changes to compliance policies and procedures. Those actions, taken before the government has presented its findings, are actions that demonstrate good faith and institutional accountability. They are also actions that should be taken on counsel’s advice, because their timing and substance affect the legal strategy in ways that cannot be assessed without understanding the full scope of the exposure the internal investigation has revealed.