Articles on Compliance Strategies

Featured Health Business Daily Story July 23, 2008

Congress Moves to Boost Attorney-Client Privilege; Know What Is and Isn't Protected

Reprinted from REPORT ON MEDICARE COMPLIANCE, the nation's leading source of news and strategic information on false claims, overpayments, compliance programs, billing errors and other Medicare compliance issues.

By Nina Youngstrom, Managing Editor (nyoungstrom@aispub.com)

Wanton use of the "attorney-client privilege" stamp will not protect documents if they aren't, in fact, entitled to that protection. Understanding when records, memos, e-mails, investigative reports and other materials are protected by the attorney-client privilege and work-product doctrine is essential to protecting your organization if it becomes apparent that a compliance problem requires more than a repayment to resolve.

"It's not uncommon for individuals to assume that talking to an organization's lawyer immediately triggers the privilege or that labeling a communication as privileged automatically affords protection," says attorney Julie Chicoine, compliance director for Ohio State University Medical Center. Attorney-client privilege typically does not cover patient charts, remittance advices, explanation-of-benefits forms, correspondence, transactional documents, office policies and relevant e-mails. "People often think turning business documents over to an attorney automatically makes them privileged, but it's not true," she says. Compliance officers should be clear on the scope of the attorney-client privilege and work-product doctrine, she contends. Even if the compliance officer is an attorney, no attorney-client privilege automatically attaches to the routine operational work of the compliance department.

Meanwhile, Congress is poised to reinforce the protections of the attorney-client privilege and work-product doctrine. The Attorney-Client Privilege Protection Act of 2008, sponsored by Sen. Arlen Specter (R-Pa.), looks like it's going to pass, says former Assistant U.S. Attorney Kathleen McDermott, who is now with the law firm Sonnenschein Nath & Rosenthal LLP. The bill forbids the government from threatening a civil, criminal or administrative action against an organization for refusing to waive attorney-client privilege, she says. The bill also says that its provisions should not interfere with voluntary disclosures.

"It's very similar to the McNulty memo," she says. That Department of Justice memo provides oversight of prosecutors to prevent abuses of attorney-client privilege. But, she adds, "Congress apparently believes stronger protections are necessary."

According to American Bar Assn. Model Rules (1.6), communications between a lawyer and his or her client for the purpose of seeking legal advice or services are confidential and privileged. Similarly, the work-product rule is a judicial doctrine that protects an attorney's work product — including papers, investigative reports, witness statements or other items that the attorney generates or directs his/her agents and employees to generate, Chicoine explains. In the case of a hospital (or other corporation), it is the client — not its officers, directors or employees — who ultimately holds the privilege, she notes.

Keep Separate Compliance, Legal Files

Compliance is all about self-policing and transparency, "but there is a gray area between being transparent and protecting the organization's communications when a potential violation arises," she says. When compliance officers suspect something more is at stake than making good on an overpayment, they should get legal guidance before proceeding, even if they are lawyers. "You can't throw everything but the kitchen sink into attorney-client privilege - you have to be smart and fair with the government," she says.

Things get tricky for compliance officers along the audit-and-investigation continuum, when a simple billing error/Medicare repayment starts to look more like intentional fraud. When the compliance officer picks up the phone to contact the hospital's lawyer (in-house or external counsel), attorney-client privilege is triggered, says Chicoine. From then on, everything is subject to privilege. But privilege is not retroactive.

"When there are more than routine day-to-day compliance activities — if you think there is a health care fraud issue — you should get legal counsel. You are working from both compliance and legal perspectives," she says. From that point on, Chicoine says, the compliance and legal departments should maintain separate files for the investigation. The compliance file is open for inspection by the government (if there is a self-disclosure, for example), but the legal file is protected by attorney-client privilege.

"Compliance documents should stay in compliance, and legal documents should stay in legal," Chicoine says. Compliance documents might be, for example, billing and claims information related to a potential violation. The privileged documents would be memos from the lawyer to the compliance officer and CEO offering his or her impressions of the liability of the conduct. Such documents "represent your attorney's thoughts and impressions about the problem and should not be shared with the government," she says.

Here are some compliance tips from Chicoine:

(1) Determine the purpose of the investigation at the outset. If the preliminary information suggests a serious issue, get legal counsel involved before proceeding.

(2) Sort out these questions: Are you asking the organization's attorney for legal advice or merely clarifying a rule or regulation that you already know? Are you seeking legal guidance before taking further action on a problem? Did you intend for your communication to be confidential? "These questions can help filter the day-to-day communications from those that would fall within the privilege," she says. "Follow-up communications from the legal counsel should clarify that they are giving legal advice to the compliance officer."

(3) Make sure attorneys and compliance professionals understand what does and does not fall within the work-product doctrine. "Attorney work-product generally includes reports, investigations and other materials generated at the attorney's direction in anticipation of litigation," she says.

(4) Maintain and update a "privilege log" of all documents that fall within the privilege and work-product doctrine.

(5) "Label, label, label," she says. "All relevant e-mails that contain attorney communications should be labeled 'attorney communication' and not be forwarded. All work product should be labeled as 'attorney work product.'"

(6) Identify which documents don't fall under the privilege (e.g., medical records, office policies).

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