HomeHome Gibson Dunn LoginLogin
PracticesPractices LawyersLawyers OfficesOffices DiversityDiversity Our StoryOur Story Pro BonoPro Bono CareersCareers Firms NewsFirms News Firms NewsPublications

Publications

Home > Publications > 2009 Year-End Update on Corporate Deferred Prosecution and Non-Prosecution Agreements

2009 Year-End Update on Corporate Deferred Prosecution and Non-Prosecution Agreements

Print preview

Print

Although Deferred Prosecution Agreements ("DPAs") and Non-Prosecution Agreements ("NPAs") were rarely used and hardly discussed a decade ago, in the last several years they have become a hot topic and common aspect of corporate prosecutions:  Congress, legal academics, and practitioners—from prosecutors to defense counsel—have weighed in on the Department of Justice's ("DOJ's") use of the agreements.  DPAs and NPAs are types of pre-trial agreements whereby the government agrees not to pursue charges against a corporation so long as the corporation abides by the terms of the agreement.  Although often similar in content, the emerging difference between a DPA and an NPA is whether a criminal information is filed in a federal court.  With a corporate DPA, the information, as well as the DPA itself, are filed with and must be approved by a federal district court.  In contrast, NPAs are typically between the corporation and the government and nothing is filed or approved by a court.

The purpose of DPAs and NPAs is to deter, punish, and reform corporate behavior while limiting the collateral consequences of corporate indictment or conviction, such as a loss of a broker-dealer license, banking license, charter, or deposit insurance; suspension from government contracting; or prohibition from participation in government healthcare programs.  It should come as no surprise, then, that the use of DPAs and NPAs increased dramatically following the demise of Arthur Andersen, the accounting firm that imploded after being indicted and convicted of obstruction of justice in 2003.  By the time the Supreme Court overturned Arthur Andersen's conviction, the firm was already out of business.  But after five years of steady increase in the use of DPAs and NPAs, DOJ's use of these agreements the past two years has noticeably decreased.  In fact, the eighteen corporate DPAs and NPAs reported during 2009 is the smallest number of agreements entered since 2005, and just under one half the number entered into during 2007, the high water mark to date for DPAs and NPAs. 

There are several possible explanations for the recent decrease in DPAs and NPAs as discussed further below.  However, the most likely reason for the lower number of agreements is simply the normal ebb and flow of DOJ's investigation cycle. 

Gibson Dunn has represented numerous corporations in negotiating DPAs and NPAs; we also have written extensively regarding the policy considerations and implications of these agreements.  Although 2009 witnessed a leveling off of DOJ's use of DPAs and NPAs compared with prior years, DPAs and NPAs are here to stay as an often-sought alternative resolution for criminal investigations.  Accordingly, understanding the latest trends is essential.  This client update provides an overview of the 2009 DPAs and NPAs and identifies key trends by analyzing the agreements entered over the previous four years.

Non-Prosecution and Deferred Prosecution Agreements in 2009

DOJ entered into eighteen DPAs and NPAs with corporate entities during 2009—the lowest number of agreements entered into since 2005.  Even though this represents a drop of almost fifty percent from the number of agreements entered into during 2007, it is only one less agreement than 2008.[*]  The chart below summarizes the number of DPAs and NPAs entered into by DOJ over the past decade.

2000-2009 DOJ DPAs

The second half of 2009 kept pace with the first half, with eight of the eighteen DPAs and NPAs occurring in the second half of the year. In our 2009 Mid-Year Update, we described the ten reported DPAs and NPAs that DOJ entered into during the first half of the year.  The second half of 2009 brought five additional NPAs and three DPAs—three for FCPA violations, one for internet gambling, one for violations of the International Emergency Economic Powers Act ("IEEPA"), one for healthcare fraud, and two for immigration violations.  This is consistent with the types of DPAs and NPAs that were agreed to in the first half of the year.  While there were two tax fraud DPAs or NPAs in the first half of the year, there were no additional agreements for that offense in the second half of 2009.

The chart below summarizes all of 2009's federal corporate DPAs and NPAs. 

2009 Federal Corporate Deferred and Non Prosecution Agreements

Corporation

Violation

Total Monetary Penalty *

Type

Monitor

Term

AGCO Corp.

FCPA

$1.6 million

DPA

No

3 years

Beazer Homes USA, Inc.

Mortgage Fraud

$10 to 50 million

DPA

No

5 years

Columbia Farms, Inc.

Immigration Violations

$1.5 million

DPA

No

2 years

Credit Suisse

International Emergency Economic Powers Act

$268 million

DPA

No

2 years

Fisher Sand & Gravel Co.

Tax Fraud

$1,168,141

DPA

No **

~32 months

Halliburton Company

FCPA

None

NPA

No

2 years

Helmerich & Payne, Inc.

FCPA

$1 million

NPA

No

2 years

Lloyds TSB

International Emergency  Economic Powers Act

$175 million

DPA

No

2 years

NeuroMetrix, Inc.

Healthcare Fraud

$1.2 million

NPA

No **

3 years

Novo Nordisk A/S

FCPA

$9 million

DPA

No

3 years

Optimal Group, Inc.

Internet Gambling

$19,182,418

NPA

No

3 years

PartyGaming PLC

Internet Gambling

$105 million

NPA

No

No set term

Pilgrim's Pride, Inc.

Immigration Violations

$4.5 million

NPA

No

5 years

Quest Diagnostics

Health Care Fraud

None

NPA

No **

5 years

Spectranetics

Healthcare Fraud

None

NPA

No**

2 years

UBS AG

Tax Fraud

$780 million

DPA

No **

At least 18 months

UTStarcom, Inc.

FCPA

$1.5 million

NPA

No

3 years

WellCare Health Plans

Healthcare Fraud

$80 million

DPA

Yes

3 years


*  Only includes monetary penalties included in the agreement itself, not all monetary penalties arising out of the same facts that gave rise to the agreement.  Information on all monetary penalties can be found in Appendix A.

 **  These DPAs do not provide for an independent "monitor," but they do provide for some form monitor-like supervision.  More information on these provisions can be found in Appendix A.

 

Trends in Deferred and Non-Prosecution Agreements

Although eighteen agreements is a modest sample size, these agreements still provide a basis for some analysis of DOJ's use of DPAs and NPAs within the context of the last few years. 

The sections of DOJ that entered into DPAs and NPAs during 2009 are consistent with past years.  In 2009, Main Justice and the various U.S. Attorney's Offices entered into approximately equal numbers of agreements, with seven solely by Main Justice and eight solely by U.S. Attorney's Offices.  In 2008 half of the agreements were entered into by Main Justice and the other half were entered into by U.S. Attorney's Offices.  During 2009 there were also three agreements entered into jointly by Main Justice and a U.S. Attorney's Office.  While no agreements were entered jointly in 2008, the practice of joint agreements was not uncommon in prior years.

As in past years, DOJ's Fraud Section was the leader in entering into DPAs and NPAs during 2009, with five agreements.  The U.S. Attorney's Office for the Southern District of New York, historically a leader in DPAs and NPAs, entered into two agreements in 2009.  Nine other U.S. Attorney's Offices entered into one agreement each.

In 2009, half (nine) of the agreements were DPAs while half (nine) were NPAs.  This is in contrast to 2008 when thirteen of the nineteen agreements (sixty-eight percent) were DPAs and only six (thirty-two percent) were NPAs.  The rise in the number of NPAs could signal that more companies are self-reporting suspected violations, especially in the FCPA context.  In recent years, senior DOJ officials have repeatedly encouraged companies to voluntarily disclose suspected FCPA violations through promises of more lenient treatment.  In November 2009, Lanny A. Breuer, Assistant Attorney General, stated that "voluntary disclosure may result in no action being taken against a company, or the company may secure other preferred dispositions. . . ."  In fact, it appears at least initially that DOJ is more likely to grant an NPA to a company that self discloses.  Of the FCPA cases since 2004 involving a company that did not self disclose, only thirty percent resulted in an NPA, whereas fifty nine percent of the cases in which a company self-disclosed resulted in that favorable resolution.

For several years now, DOJ's most prevalent use of DPAs and NPAs has been to resolve allegations of FCPA violations and healthcare fraud; 2009 was no exception.  This past year, FCPA violations and healthcare fraud accounted for fifty percent of the total agreements—nine of eighteen.  This percentage is slightly higher than in 2008, when only forty-two percent of the agreements resolved FCPA violations or healthcare fraud, largely due to a much smaller number of healthcare cases that year.  In 2007 FCPA violations and healthcare fraud totaled fifty-three percent of the agreements. 

The charts below set forth the types of violations that resulted in DPAs and NPAs over the previous four years, which covers over ninety percent of the agreements entered into this decade.  A careful review of these charts reveals some trends in the types of offenses for which DOJ enters DPAs and NPAs. 

In 2006, DOJ entered into DPAs and NPAs for a large number of varying types of offenses; no single offense constituted more than eighteen percent of the total.  There were two DPAs or NPAs involving FCPA offenses, and only one agreement involving healthcare fraud.  The most prevalent use of DPAs and NPAs in 2006 was for accounting fraud offenses, which is not surprising given the passage of Sarbanes-Oxley just four years earlier.  There was also one agreement each related to tax fraud, immigration violations, and internet gambling, and two agreements related to money laundering.  Each of these types of offenses appears frequently, though in low numbers, in the following years.

2006 Alleged Violations 

In 2007, FCPA offenses and healthcare fraud came to the forefront, accounting for twenty-six percent and twenty-seven percent, respectively, of the total agreements entered for that year, and a combined fifty-three percent of the total.  As in 2006 there was a wide variety of DPAs and NPAs for other offenses, including internet gambling, money laundering, and tax fraud. 

 2007 Alleged Violations

In 2008, there was a decrease in the variety of offenses resolved by DPAs and NPAs.  In 2006 there were fifteen separate types of offenses, while in 2008 there were only nine.  Violations of the FCPA made up the single largest category of violations in 2008.  As in past years, DOJ also entered into DPAs and NPAs for immigration violations, money laundering, and internet gambling.

 

2008 Alleged Violations

In 2009, DOJ entered into DPAs and NPAs for only seven different types of offenses, which is even less variety than previous years.  As in past years, in addition to FCPA and healthcare fraud DPAs and NPAs, there were also agreements involving internet gambling, tax fraud, and immigration offenses.  DOJ also entered into DPAs and NPAs for some new offenses in 2009; for example, the first agreement related to mortgage fraud, which is likely to become more prevalent in the future given the government's focus on the role of mortgage fraud in the recent economic downturn.  Additionally, DOJ entered into two DPAs for violations of the IEEPA, which did not occur in any prior years. 

  2009 Alleged Violations

One significant trend in DPAs and NPAs in 2009 is the large monetary penalties DOJ assessed as a part of these agreements.  The largest monetary penalty in 2008 was $75 million against Milberg Weiss.  In 2009, however, there were five DPAs or NPAs with penalties greater than $75 million—UBS, $780 million; Credit Suisse, $268 million; Lloyds TSB, $175 million; Party Gaming, $105 million; and WellCare, $80 million.  In fact, the $780 million penalty assessed against UBS for tax fraud is almost three times more than the total penalties assessed in all DPAs and NPAs during 2008.  And the three highest monetary penalties assessed during 2009 were against foreign owned banks—UBS, Credit Suisse, and Lloyds TSB—for alleged tax fraud and violation of the IEEPA.  These extremely high monetary penalties were primarily due to companies agreeing to large forfeiture amounts, presumably because of DOJ's insistence on pursuing restitution as part of DPAs and NPAs.

This year also brought about the largest criminal fine ever assessed when Pfizer subsidiary Pharmacia & Upjohn Co., Inc. pleaded guilty to off label marketing of one of its drugs and agreed to pay $1.3 billion in fines and forfeiture.  Even though Pfizer agreed to pay an additional $1 billion to settle civil False Claims Act charges related to the same off label marketing (as well as for several other drugs), the parent corporation did not enter into a DPA or an NPA related to this conduct.

Another recurring trend in 2009 is a continued standardization of the content of DPAs and NPAs.  As reported in our 2008 Year-End Update and our 2009 Mid-Year Update, the terms and conditions of DPAs and NPAs have become more homogenous over the past few years.  In 2009, the vast majority of DPAs and NPAs contained provisions:  (1) requiring the company to continue to cooperate with DOJ during any ongoing investigation; (2) prohibiting the company for making any statement that contradicts the facts as laid out in the agreement; and (3) giving DOJ sole discretion to determine whether the agreement has been breached by the company.  Consistent with DOJ guidelines released in 2008 which bar the practice of extraordinary restitution, no DPA or NPA entered into during 2009 required a corporation to give a monetary donation to an uninjured third-party.  Also consistent with DOJ guidelines released in 2008 respecting the protection of attorney-client privilege, no DPA or NPA entered into during 2009 contains an explicit waiver of the privilege, and the vast majority explicitly reserve the privilege.  Although Congressman Frank Pallone re-introduced legislation in April 2009 which would restrict DOJ's use and negotiation of DPAs and NPAs, Congress has not acted on the legislation, and it remains in committee.  Nor, to date, has Attorney General Holder issued any new guidance relating to DPAs and NPAs.

The trend of including DPA-like terms in NPAs, first identified in our 2009 Mid-Year Update, continued throughout the second half of the year as well.  For example, the Optimal Group NPA included provisions: (1) requiring the company to continue to cooperate with any DOJ investigation, including handing over non-privileged documents at the request of DOJ; and (2) prohibiting the company from making any public statement contradicting the facts in the NPA—both standard terms in DPAs.  The NPA entered into by UTStarcom and DOJ Fraud Section contained similar provisions, and additionally required the company to "strengthen its compliance, bookkeeping, and internal controls standards and procedures" as described in the agreement.   Helmerich & Payne's NPA also included similar DPA-like provisions, including a requirement that the company strengthen its compliance program and report periodically to DOJ on such program. 

As NPAs become longer and more detailed, the differences between DPAs and NPAs continue to diminish.  Of course, there remain significant advantages to NPAs:  Most notably, with an NPA, DOJ decides not to prosecute, rather than to file criminal charges but defer prosecution pending compliance with the terms of the agreement.  Corporations continue to seek NPAs to avoid any criminal charges, which is understandably viewed more favorably than when a company is charged with a crime, but ultimately reaches an agreement to defer prosecution.  Another advantage of NPAs is that they do not require court approval or judicial scrutiny.

Decreasing DPAs and NPAs Reflect the Normal Prosecution Cycle

There are a number of factors that may be contributing to the falling number of DPAs and NPAs over the past two years.  For example, Main Justice may be using these agreements more sparingly while the new administration considers how DPAs and NPAs fit into its prosecution philosophy.  But the most likely explanation for the decreased use of DPAs and NPAs is simply the normal ebb and flow of DOJ's investigation cycle.  Corporate criminal investigations follow observable trends.  According to data generated from the FBI's Uniform Crime Reports, corporate arrests often surge in the years following highly-publicized events, such as the dot-com bust and Enron scandal in the early 2000s.[†]  Recently, DOJ has placed particular emphasis on investigating and prosecuting FCPA violations and healthcare fraud.  And although DPAs and NPAs are consistently entered to resolve a wide variety of alleged violations, as the two charts below illustrate, the total number of DPAs and NPAs each year is largely a function of the total number of DPAs and NPAs for FCPA and healthcare fraud offenses. 

Total DPAs and NPAs per Year

 

Alleged Violations by Year

The exceedingly large number of DPAs and NPAs during 2007 is primarily the result of numerous agreements related to two large DOJ investigations—the FCPA Oil-for-Food investigations and healthcare fraud investigations into orthopedics manufacturers.  In fact, five of the ten FCPA related DPAs or NPAs in 2007 stemmed from the Oil-for-Food investigation.  In addition, DOJ entered into five DPAs resulting from its investigation into the manufacture of orthopedic devices.  Taking this into account, it seems likely that the high number of DPAs and NPAs in 2007 was a statistical outlier, and the lower number of agreements during the past two years represents a return to normalcy in the number of agreements entered each year. 

That said, the Obama Administration and DOJ have expressed their intent to continue to vigorously investigate and prosecute both FCPA violations and healthcare fraud:  In November 2009, a senior DOJ official stated that there would be an increase in investigations and prosecutions for FCPA violations in the pharmaceutical industry in the coming years.  And the energetic and articulate head of DOJ Criminal Division, Lanny A. Breuer, announced in December that DOJ will expand its Medicare Fraud Strike Force into new districts, working in cooperation with the U.S. Attorney's Offices in those districts.  Breuer also announced plans to significantly increase the Fraud Division, which, as noted above, has historically been the leader in negotiating DPAs and NPAs.  Given DOJ's stated intention to aggressively pursue FCPA and healthcare fraud offenses, we expect that the number of DPAs and NPAs will follow DOJ's investigative cycle, with spikes such as those seen in 2007 following an increase in the number of investigations.

Alternatives to Corporate Monitors

Although the debate surrounding the use of corporate monitors in DPAs and NPAs continued during 2009, with Congress holding hearings on the role of monitors in DPAs in June, to date, nothing has come of those Congressional hearings.  And although the GAO Report discussed in our 2009 Mid-Year Update concluded that DOJ should adopt internal procedures requiring prosecutors to document the reasons for requiring a monitor and the justification for the selection of a specific monitor, DOJ has yet to release any new guidance on monitors since the Morford Memorandum in 2008.

One byproduct of the scrutiny involving corporate monitors has been a significant drop during 2009 in the number of DPAs requiring the appointment of a corporate monitor.  Only one DPA out the eighteen agreements this year contained a requirement for an independent monitor.  In contrast, in 2006 ten out of twenty-one DPAs required monitors.  As the chart below illustrates, the proportion of DPAs or NPAs that require a monitor has been dropping every year since 2006. 

Independant Monitors Required

The lack of a corporate-monitor requirement in 2009 is particularly notable in the FCPA and healthcare fraud DPAs and NPAs.  During 2009, none of the DPAs or NPAs for FCPA violations required a corporate monitor—a significant departure from 2008 when three of the seven DPAs contained a monitor requirement. 

There are several factors that are likely contributing to the decrease in the use of monitors.  One major factor is that during negotiations with DOJ, corporations are now advocating for alternative monitoring arrangements, such as self-monitoring, as a way to minimize the costs of an outside monitor while still providing DOJ the oversight that it seeks.  This may reflect prior debate surrounding how monitors are appointed and concerns regarding the cost of corporate monitors.  The drop in the number of monitors may also be attributed to a decrease in the types of violations (i.e., the extent and category) for which DOJ believes monitors will benefit corporate reform.  For example, the lack of monitors for FCPA violations during 2009 may be attributed to DOJ's perception that the offenses were less systematic than in previous years, and/or the companies' proactive and substantial improvements of their compliance programs and internal control environments.  As Gibson Dunn has long advocated, a company that institutes early and broad corporate compliance reform may be more likely to persuade DOJ that an outside monitor is not required.  In this regard, it is also relevant that all of the agreements entered into during 2008 for FCPA violations were DPAs, while half of the agreements entered into during 2009 were NPAs, which less frequently have a monitor requirement. 

Although only one DPA in 2009 contained a requirement for a true external "monitor," several agreements contained monitor-like provisions calling for independent confirmation of compliance with the agreements.  As a part of its DPA, UBS agreed to hire an "independent accounting or other appropriate firm" to conduct testing and issue reports on UBS's exit from its cross-border business, and to implement internal controls related to cross-border business.  Much like a corporate monitor, the reports of the independent firm are to be submitted to DOJ and the Audit Committee of UBS.  In several instances this year, DOJ agreed to allow the companies to self-monitor—i.e., report to DOJ on the implementation of their improved compliance policies without the need for an external monitor.  For example, in the Fisher Sand & Gravel DPA the company agreed to appoint a Compliance Officer to function much like a Compliance Officer in any corporation, save for the fact that the Compliance Office is required to provide periodic reports to DOJ, in addition to corporate management.  The Helmerich & Payne and UTStarcom NPAs both contained similar terms, where DOJ agreed to allow the companies to self-monitor and self-report to DOJ on the implementation of their improved compliance policies.

All of the NPAs for healthcare fraud in 2009 required that the company enter a Corporate Integrity Agreement ("CIA") with the Office of the Inspector General of the U.S. Department of Health and Human Services ("HHS-OIG").  CIAs have been common for years in the resolution of False Claims Act violations in the healthcare field.  In fact, as a term of its 2009 civil settlement for off label marketing, Pfizer agreed to enter into a CIA with the HHS-OIG.  The terms of CIAs are increasingly monitor-like in that they require the creation or improvement of a corporate compliance program, but rather than being overseen by a third-party who reports to the government, they are overseen by the HHS-OIG.  Whereas previously CIAs were used strictly in civil settlements, they are increasingly used in the resolution of criminal cases as well.   As reported in our Mid-Year Update, NeuroMetrix's and Quest Diagnostics both agreed as a part of their NPAs to enter into a five-year CIA with the HHS-OIG.  In December 2009, Spectranetics also entered into an NPA (with the U.S. Attorney's Office for the District of Colorado) that contained a CIA requirement. 

Conclusion

Although 2009 saw a slight decrease in DPAs and NPAs for the second straight year, these agreements still provide insights into what to expect from DOJ in the future.  It appears likely that DOJ's slightly restrained use of DPAs and NPAs this year resulted from the resolution of several programmatic investigations involving FCPA and healthcare-related offenses.  DOJ's public declaration to vigorously pursue FCPA and healthcare fraud, coupled with increased staffing in pursuit of that mission, makes it likely that the number of DPAs and NPAs in coming years will remain steady or increase in response to DOJ's increased investigations.  It is too early to tell whether the use of corporate monitors will permanently decrease, to be replaced by alternative arrangements, or whether DOJ will determine that the use of monitors remains the most effective manner for it to maintain visibility into a company's compliance program and encourage corporate-culture reform.  In any event, companies who cooperate fully with a DOJ investigation and exhibit a strong culture of compliance will be in the best position to avoid a corporate–monitor requirement.  In negotiating the resolution of a criminal investigation with DOJ, corporations must seriously consider alternative monitoring approaches as a way to minimize costs, while still providing DOJ the information that it needs to ensure that the company's compliance program is on track.   

Gibson, Dunn & Crutcher LLP 

 The White Collar Defense and Investigations Practice Group of Gibson, Dunn & Crutcher LLP successfully defends corporations, senior corporate executives, and public officials in a wide range of federal and state investigations and prosecutions, and conducts sensitive internal investigations for leading companies in almost every business sector.  The Group has members in every domestic office of the Firm and draws on more than 75 attorneys with deep government experience, including numerous former federal and state prosecutors and officials, many of whom served at high levels within the Department of Justice and the Securities and Exchange Commission.  Joe Warin, a former federal prosecutor, currently serves as the U.S. counsel for the compliance monitor for Siemens, and recently completed his role as the monitor for Statoil pursuant to a DOJ and SEC enforcement action.  Debra Wong Yang is the former United States Attorney for the Central District of California, and recently completed her role as a monitor pursuant to a DOJ enforcement action.

Washington, D.C.
F. Joseph Warin (202-887-3609, fwarin@gibsondunn.com)
John H. Sturc (202-955-8243, jsturc@gibsondunn.com)
Barry Goldsmith (202-955-8580, bgoldsmith@gibsondunn.com
David P. Burns
(202-887-3786, dburns@gibsondunn.com)
David Debold (202-955-8551, ddebold@gibsondunn.com)
Brian C. Baldrate (202-887-3717, bbaldrate@gibsondunn.com)

New York
Joel M. Cohen (212-351-2664, jcohen@gibsondunn.com)
Lee G. Dunst (212-351-3824, ldunst@gibsondunn.com)
Christopher M. Joralemon (212-351-2668, cjoralemon@gibsondunn.com)
Mark A. Kirsch (212-351-2662, mkirsch@gibsondunn.com)
Randy M. Mastro (213-351-3825, rmastro@gibsondunn.com)
Marc K. Schonfeld (212-351-2433, mschonfeld@gibsondunn.com)
Orin Snyder (212-351-2400, osnyder@gibsondunn.com)
Alexander H. Southwell (212-351-3981, asouthwell@gibsondunn.com)
Jim Walden (212-351-2300, jwalden@gibsondunn.com)
Lawrence J. Zweifach (212-351-2625, lzweifach@gibsondunn.com)

Denver
Robert C. Blume (303-298-5758, rblume@gibsondunn.com)

Orange County
Nicola T. Hanna (949-451-4270, nhanna@gibsondunn.com)

Los Angeles
Debra Wong Yang (213-229-7472, dwongyang@gibsondunn.com)
Marcellus McRae (213-229-7675, mmcrae@gibsondunn.com)
Michael M. Farhang (213-229-7005, mfarhang@gibsondunn.com)
Douglas Fuchs (213-229-7605, dfuchs@gibsondunn.com)

© 2010 Gibson, Dunn & Crutcher LLP

Attorney Advertising: The enclosed materials have been prepared for general informational purposes only and are not intended as legal advice.

__________________________________________________

Appendix A:  Deferred and Non-Prosecution Agreements Entered Into During 2009

AGCO Corp.                                                                                      September 30, 2009

DOJ Office

  • Department of Justice, Criminal Division, Fraud Section

Allegations

  • Wholly-owned subsidiaries of AGCO violated the FCPA by paying, through the Oil-for-Food Program, approximately $5.9 million in alleged kickbacks to the Iraqi government in order to obtain contracts to sell heavy equipment.
  • Internal accounting records were falsified to conceal the nature of the payments.
  • The subsidiaries committed wire fraud violations by inflating the price of each piece of equipment before submitting contracts to the U.N. for approval, then drawing on a U.N. line of credit, issued via international wire, in order to fulfill payment.

Length of DPA

  • Three years

Penalties

  • Criminal Fine – $1.6 million
  • Civil Penalty – $2.4 million to the SEC
  • Disgorgement – $13,907,393 in profits and $2 million in pre-judgment interest to the SEC
  • Foreign Fines – $630,000 to the Danish State Prosecutor for Serious Economic Crimes to resolve criminal charges against its Danish subsidiary

Revised Compliance Program

  • Implement a compliance and ethics program designed to detect and prevent violations of the FCPA and other applicable anti-corruption laws throughout their operations.
  • AGCO will, on an annual basis, provide a brief report, in writing, to DOJ on its implementation of the compliance policies and procedures.

Beazer Homes USA, Inc.                                                                   July 1, 2009

DOJ Office

  • United States Attorney's Office for the Western District of North Carolina

Allegations

  • Beazer conspired to commit mortgage fraud by using fraudulent practices to originate loans insured by the Federal Housing Administration.
  • These fraudulent practices included charging illegal fees, making improper gifts to purchasers to cover down payments, secretly raising home prices to offset expenses, conspiring to hide its default rates from the Department of Housing and Urban Development, and deliberately making loans to unqualified buyers.
  • Beazer also conspired to commit accounting fraud by practicing "cookie jar accounting."

Length of DPA

  • Five years or earlier if all of the following conditions are met:  at least 3 years have passed (or a change of control of the company), payment of $50 million has been made to the restitution fund, and consent of DOJ (which will "not be unreasonably withheld").

Penalties

  • Restitution – $10 million to $50 million (creation of a restitution fund with an immediate contribution of $10 million, and contingent payments into the fund based on a specific formula, but with a cap of $50 million).

Revised Compliance Program

  • Beazer had previously exited the mortgage origination business, but agreed not to attempt to reenter the business.
  • There is a "Claims Administer" who will administer the restitution fund.  The administrator will be selected by Beazer in consultation with DOJ, subject to approval by DOJ, and subject to the approval of the court where the DPA is filed.

Additional

  • A simultaneous settlement agreement was reached with DOJ Criminal Division on False Claims Act allegations, for which Beazer paid the United States $5 million and agreed to contingent restitution payments of up to $48 million.
  • A settlement agreement was reached with the SEC in September of 2008.  The settlement did not include any monetary penalties.
  • The DPA is binding on all 93 U.S. Attorney's Offices and the Criminal Division of Main Justice.  This provision likely received the approval of the Criminal Division (since an individual U.S. Attorney's Office is otherwise not permitted to bind those other entities), although the DPA does not state such explicitly.


Columbia Farms, Inc.
                                                             November 2, 2009

DOJ Office

  • United States Attorney's Office for the District of South Carolina

Allegations

  • Management employees of Columbia Farms hired and continued to employ approximately 729 unauthorized workers at a processing facility in Greenville, South Carolina.
  • The managers made false statements to agents of the United States.

Length of DPA

  • Two years

Penalties

  • $1.5 million was paid to resolve all criminal, civil, and administrative actions.

Revised Compliance Program

  • The company will adopt a comprehensive, risk-based compliance program, designate a full-time Compliance Officer, and establish procedures to ensure periodic review of the compliance program by the Board of Directors.
  • The company is required to use the Department of Homeland Security's "E-Verify" employment eligibility verification program, the Social Security Administration's Social Security Number Verification Service, and, when appropriate, Spanish language I-9 Forms.
  • Within 60 days of the agreement, the company will establish a training program for employees to instruct them on how to use the government verification programs and how to identify fraudulent identification documents.  Only employees who have been trained through the program are permitted to verify immigration status.
  • The company will hire an external audit firm to conduct annual I-9 audits, which are to be reported to ICE.

Credit Suisse AG                                                                               December 16, 2009

DOJ Office

  • Department of Justice, Criminal Division, Asset Forfeiture and Money Laundering Section

Allegations

  • Credit Suisse violated the International Emergency Economic Powers Act and United States economic sanctions by stripping information from outgoing U.S. dollar wire transfer payment messages that would have revealed that the transactions involved countries, banks, or persons that were considered sanctioned parties under Iranian sanctions.
  • These actions also caused New York financial institutions to falsify records.

Length of DPA

  • Two years

Penalties

  • Forfeiture – $268 million.
  • Forfeiture to other entities – $268 to the District Attorney for the County of New York

Revised Compliance Program

  • The Company will demonstrate future good conduct and compliance with international Anti-Money Laundering and Combating Financing of Terrorism best practices and the Wolfsberg Anti-Money Laundering Principles for Correspondent Banking.
  • By June 30, 2010, the company will conduct or repeat U.N., U.S., and E.U. sanctions training for all relevant employees.
  • By June 30, 2010, the company must certify that it has a written policy to require the use of the MT 202COV bank-to-bank payment message where appropriate, and employs a bank-wide system architecture that requires the use of the MT 202COV for all cover payments.
  • Maintain an electronic database of Society for Worldwide Interbank Financial Telecommunications Message Transfer payment messages and other internal documents relating to USD payments processed during the period from 2002 through April 30, 2007 in electronic format for five years from the date of the agreement.
  • No monitor.

Additional

  • Credit Suisse also entered into a contemporaneous DPA with the Manhattan District Attorney's Office.  The DOJ DPA requires adherence with the DPA of the Manhattan District Attorney's Office.
     

Fisher Sand & Gravel Co.                                                                 May 1, 2009

DOJ Office

  • United States Attorney's Office for the District of North Dakota
  • Department of Justice, Tax Division

Allegations

  • FSG allowed the personal expenses of its owner (and his family members) to be paid by FSG as business expenses.  This caused FSG's income to be artificially understated on its income tax returns.
  • FSG also falsified payment entries in their business records, concealed these payments from their outside accountants, and filed false tax forms with the IRS.

Length of DPA

  • Approximately 32 months (until December 31, 2011)

Penalties

  • Restitution – $668,141 to the IRS (including interest)
  • Criminal Fine – $500,000

Revised Compliance Program

  • Implement a Code of Business Ethics and Conduct that prohibits the payment of personal expenses by FSG for any employee and prohibits false, misleading, and artificial entries on the books and records of FSG.
  • The Code of Business Ethics and Conduct should be designed to monitor, detect, and prevent the payment of personal expenses and the deduction of those expenses from FSG's federal income tax returns.
  • Use reasonable efforts not to include within the substantial authority of the personnel of FSG anyone who FSG knows, or should know, has engaged in illegal activities or conduct that is inconsistent with an effective ethics and compliance program.
  • No "monitor," but the required "Compliance Officer," who functions much as the Compliance Officer in any corporation, must periodically report to DOJ.
  • Within thirty (30) days, the Company will choose a Compliance Officer and provide the officer's name to the government.
  • The Compliance Officer will be responsible for implementing the provisions of the Code of Business Ethics and Conduct.
  • The Compliance Officer will take steps to detect any criminal conduct related to any aspect of the accounting function of FSG; to periodically evaluate the effectiveness of the ethics and compliance program; and to establish a system by which individuals can report possible criminal conduct without fear of retaliation.
  • In order to carry out these responsibilities, the Compliance Officer will have adequate resources, appropriate authority, and direct access to high level personnel and the FSG Board of Directors.
  • The Compliance Officer will report quarterly to high-level personnel and the FSG Board of Directors on the effectiveness of the compliance and ethics program.  During the term of the DPA, the Compliance Officer will also provide a quarterly report to the government that details the same.

Additional

  • The owner of FSG and two other officers of FSG pleaded guilty to individual charges of conspiracy to defraud the United States.

Halliburton Company                                                             February 10, 2009

DOJ Office

  • Department of Justice, Criminal Division, Fraud Section

Allegations

  • Halliburton, through a former subsidiary, allegedly violated the FCPA by making improper and corrupt payments to Nigerian government officials in order to obtain contracts in connection with a natural gas liquefaction project in Nigeria.

Length of NPA

  • Two years

Penalties

  • None specifically in the NPA, but Halliburton will pay $382 million in criminal fines and $177 million in disgorgement of profits as part of the former subsidiary's guilty plea.

Revised Compliance Program

  • None reported in the NPA
  • No monitor
     

Helmerich & Payne, Inc.                                                                   July 29, 2009

DOJ Office

  • Department of Justice, Criminal Division, Fraud Section

Allegations

  • Two foreign, wholly-owned subsidiaries made corrupt payments of approximately $173,000 to government officials in Argentina and Venezuela in order to avoid or lower duties on imports and to avoid or lessen inspection of imports.
  • The improper payments were not recorded properly in the companies' books and records.
  • The subsidiaries also made facilitating payments of approximately $10,000 which were improperly recorded in the companies' books and records.

Length of NPA

  • Two years

Penalties

  • Criminal Fine – $1 million.

Revised Compliance Program

  • The company and all of its subsidiaries agreed to conduct a review of its internal controls, policies and procedures, and to adopt new or modify existing controls, policies, and procedures where appropriate.
  • The internal controls, policies, and procedures are required to have the following minimum elements:  (1) a compliance code with a clearly articulated corporate policy against violations of the anti-corruption laws; (2) a system of financial and accounting procedures designed to ensure the maintenance of fair and accurate books, records, and accounts; (3) promulgation of compliance standards and procedures designed to reduce the prospect of violations of the anti-corruption laws; (4) assign responsibility for the implementation of such compliance policies and procedures to one or more senior officials; (5) mechanisms designed to ensure the effective communication of the policies and procedures to all company officers, employees, and, where appropriate, agents and business partners; (6) an effective system for reporting suspected criminal conduct; (7) appropriate disciplinary procedures to address violations of the anti-corruption laws; (8) appropriate due diligence requirements related to the retention and oversight of agents and business partners; (9) where necessary, standard provisions in agreements and contracts designed to prevent violations of the anti-corruption laws; and (10) periodic testing of the compliance program.
     

Lloyds TSB                                                                                        January 9, 2009

DOJ Office

Allegations

  • Lloyds violated the International Emergency Economic Powers Act and United States economic sanctions by stripping information from outgoing U.S. dollar wire transfer payment messages that would have revealed that the transactions involved countries, banks, or persons that were considered sanctioned parties under Iranian, Sudanese, and Libyan sanctions (the exportation of such services from the United States to those nations was prohibited by the sanctions).
  • These actions also caused New York financial institutions to falsify records.

Length of DPA

  • Two years

Penalties

  • Civil Forfeiture – $175 million

Revised Compliance Program

  • The Company will demonstrate future good conduct and compliance with international Anti-Money Laundering and Combating Financing of Terrorism best practices and the Wolfsberg Anti-Money Laundering Principles for Correspondent Banking.
  • Within 270 days and with the assistance of an outside consultant of Lloyd's selection, the Company will conduct a historical transaction review of all available incoming and outgoing SWIFT MT 100 and MT 200 series USD payment messages from April 2002 through December 2007 that were processed through its UK processing centers and Dubai branch.  (Although this is part of the "cooperation" section of the DPA, some may consider it a penalty given the substantial costs involved with the review.)
  • No monitor.

Additional

  • Lloyds also entered into a contemporaneous DPA with the Manhattan District Attorney's Office, which included forfeiture of $175 million.  The DOJ DPA requires adherence with the DPA of the Manhattan District Attorney's Office.

NeuroMetrix, Inc.                                                                              February 9, 2009

DOJ Office

  • United States Attorney's Office for the District of Massachusetts

Allegations

  • NeuroMetrix paid illegal remunerations to physicians in order to induce them to recommend to their colleagues the purchase of a NeuroMetrix medical system.
  • These illegal remunerations were reimbursed in whole or in part by Medicare, in violation of the Medicare Anti-Kickback Act.

Length of DPA

  • Three years

Penalties

  • Criminal Fine – $1.2 million
  • Civil Fine – $2,498,377

Revised Compliance Program

  • NeuroMetrix will sign a five-year Corporate Integrity Agreement with the Inspector General's Office of the Department of Health and Human Services.
  • A violation of the Corporate Integrity Agreement will not automatically lead to a breach of the DPA.
  • The Corporate Integrity Agreement contains many compliance-related requirements, including training obligations that require all NeuroMetrix employees to receive annual training on the proper methods of selling, marketing, and promoting medical devices, including information on relevant anti-kickback laws and regulations.
  • Enforcement of the Corporate Integrity Agreement is the responsibility of the Inspector General's Office, who will serve as de facto monitor of NeuroMetrix's compliance with the Corporate Integrity Agreement.  The Inspector General's Office also will have the authority to penalize NeuroMetrix for violations of the Corporate Integrity Agreement (despite the fact that the violations of provisions in the Corporate Integrity Agreement may not lead to a breach of either the DPA or the Settlement Agreement).

Novo Nordisk A/S                                                                              May 6, 2009

DOJ Office

  • Department of Justice, Criminal Division, Fraud Section

Allegations

  • Through the Oil For Food Program, the Company conspired to violate the FCPA by paying approximately $1.4 million in kickbacks to the Iraqi government in order to obtain contracts to provide them with insulin and other medicines.  Novo also inaccurately recorded the kickback payments as "commissions" in its books and records in violation of FCPA provisions.
  • The Company conspired to commit wire fraud by inflating the price of the contracts by ten percent (10%) prior to submitting them for United Nations approval, concealing the fact that the price contained a kickback to the Iraqi government and drawing on a U.N. line of credit, issued via international wire, in order to fulfill payment.

Length of DPA

  • Three years

Penalties

  • Criminal Fine – $9 million

Revised Compliance Program

  • Implement a compliance and ethics program designed to detect and prevent violations of the FCPA and other applicable anti-corruption laws throughout its operations.
  • Conduct a review and periodic testing of policies and procedures regarding compliance with the FCPA and other applicable anti-corruption laws.
  • Maintain a system of internal accounting controls designed to ensure fair and accurate books, records, and accounts.
  • Institute an anti-corruption compliance code that is applicable to all directors, officers, employees, and, when appropriate, outside parties acting on the company's behalf.
  • Assign a senior official to oversee compliance with the FCPA and anti-corruption laws.
  • Institute periodic training and annual certification on compliance for all directors, officers, employees, and, where appropriate, agents and business partners.
  • Institute a system for reporting criminal conduct and appropriately disciplining non-compliant employees.
  • Insert standard provisions into contracts and agreements that are reasonably calculated in order to ensure that business partners and agents are complying with the FCPA and other anti-corruption laws.
  • No monitor.

Additional

  • Novo also reached a settlement with the SEC in connection with these facts, for which Novo paid $3,025,066 in civil penalties and $6,000,079 (including interest) in disgorgement of profits.

Optimal Group, Inc.                                                                           October 30, 2009

DOJ Office

  • United States Attorney's Office for the Southern District of New York

Allegations

  • The Canadian corporation acquired a company that provided payment processing services to a variety of merchants, including internet gambling websites. 
  • Through this and other subsidiaries, the company processed approximately $14.3 billion in payment transactions for internet gambling websites located outside of the United States, but who had approximately 80 percent of their customers located in the United States.

Length of NPA

  • The latter of three years or the date on which all prosecutions arising out of the conduct described in the agreement are final.

Penalties

  • Civil Forfeiture – $19,182,418.18

Revised Compliance Program

  • None reported
  • No monitor
     

PartyGaming PLC                                                                              April 6, 2009

DOJ Office

  • United States Attorney's Office for the Southern District of New York

Allegations

  • Conducted an illegal gambling business (for-money online games).
  • Committed wire fraud and bank fraud by misrepresenting illegal gambling transactions on credit card statements.

Length of NPA

  • No set term

Penalties

  • Civil Forfeiture – $105 million

Revised Compliance Program

  • None reported
  • No monitor

Additional

  • A founder and former officer of PartyGaming pleaded guilty to using wire transfers to transmit bets and wagering information in interstate commerce.  He also admitted to forfeiture allegations, which required him to forfeit $300 million to the United States.

Pilgrim's Pride Corp.                                                             December 30, 2009

DOJ Office

  • United States Attorney's Office for the Eastern District of Texas

Allegations

  • The company employed approximately 338 unauthorized aliens over a period of several years in Texas.

Length of NPA

  • Five years

Penalties

  • Criminal Penalty – $4.5 million

Revised Compliance Program

  • The company is required to use the Department of Homeland Security's "E-Verify" employment eligibility verification program, the Social Security Administration's Social Security Number Verification Service, and, when appropriate, Spanish language I-9 Forms.
  • The company will establish a training program for employees to instruct them on how to use the government verification programs and how to identify fraudulent identification documents.  Only employees who have been trained through the program are to be permitted to verify immigration status.
  • The company will hire an external audit firm to conduct annual I-9 audits, which are to be reported to ICE.

Quest Diagnostics                                                                              April 15, 2009

DOJ Office

  • Department of Justice, Civil Division
  • United States Attorney's Office for the Eastern District of New York

Allegations

  • Violated the False Claims Act by allowing a subsidiary to fraudulently sell inaccurate and unreliable test kits.

Length of NPA

  • Five years

Penalties

  • None in the NPA but as a part of a civil settlement Quest and its subsidiary will pay $262 million.  The subsidiary will also pay a criminal fine of $40 million as a part of its guilty plea.

Revised Compliance Program

  • Quest entered into a Corporate Integrity Agreement with the Inspector General's Office of the Department of Health and Human Services.
  • The Corporate Integrity Agreement contains many compliance-related requirements, including the establishment of a compliance program run by a Compliance Officer.
  • Enforcement of the Corporate Integrity Agreement is the responsibility of the Inspector General's Office, who will serve as de facto monitor of Quest's compliance with the Corporate Integrity Agreement.  The Inspector General's Office also will have the authority to penalize Quest for violations of the Corporate Integrity Agreement (despite the fact that the violations of provisions in the Corporate Integrity Agreement may not lead to a breach of either the DPA or the Settlement Agreement).

Spectranetics Corp.                                                                           December 17, 2009

DOJ Office

  • United States Attorney's Office for the District of Colorado
  • Department of Justice Office of Consumer Litigation

Allegations

  • The company conducted clinical studies that did not comport with federal regulations governing the protection of human subjects, and failed to report serious adverse events to the FDA. 
  • The company imported and sold two unapproved healthcare devises from overseas companies.

Length of NPA

  • Two years

Penalties

  • There were no penalties assessed as a part of the DPA.
  • Civil Settlement – $4.9 million.

Revised Compliance Program

  • Spectranetics sign a five-year Corporate Integrity Agreement with the Inspector General's Office of the Department of Health and Human Services.
  • The Corporate Integrity Agreement contains many compliance-related requirements, including the appointment of a Chief Compliance Officer and a Compliance Committee of the Board of Directors.  The company will also undertake training obligations that require all company employees to receive training on the proper methods of clinical investigation and reporting.
  • Enforcement of the Corporate Integrity Agreement is the responsibility of the Inspector General's Office, who will serve as de facto monitor of Spectranetic's compliance with the Corporate Integrity Agreement.  The Inspector General's Office also will have the authority to penalize Spectranetics for violations of the Corporate Integrity Agreement.

 
UBS AG                                                                                              February 18, 2009

DOJ Office

  • Department of Justice, Tax Division
  • United States Attorney's Office for the Southern District of Florida

Allegations

  • UBS participated in a scheme to defraud the United States by assisting a number of United States taxpayers to establish accounts with UBS in a manner designed to conceal the taxpayers' interest in the accounts, which allowed the taxpayers to evade IRS reporting requirements, conceal assets from the IRS, and engage in financial transactions in which UBS did not withhold U.S. income taxes as required by law.
  • False or misleading IRS forms were accepted and filed by UBS in order to conceal the identity of the owners of the above-referenced accounts.  These forms were required by law as a result of a Qualified Intermediary Agreement UBS voluntarily signed with the IRS.
  • UBS bankers, managers and executives continued this cross-border business, despite the fact that they knew or should have known that their clients were evading U.S. taxes.

Length of DPA

  • The longer of 18 months, the completion of UBS's Exit Program (as described below), or the resolution of a "John Doe" summons enforcement action (which is an attempt to gain Swiss records of United States persons who maintained accounts with UBS).

Penalties

  • Civil Disgorgement – $380 million ($200 million of which is directly to the SEC)
  • Restitution – $400 million (including restitution, interest, penalties and federal back-up withholding taxes that should have been withheld)

Revised Compliance Program

  • Engage in an "Exit Program," under which UBS will cease to operate in the United States cross-border business and provide banking or securities services only to United States private citizens residing in the United States through subsidiaries or affiliates registered to do business in the United States with the SEC.
  • Provide the government with periodic reports on the progress of the Exit Program.
  • Implement a revised governance structure under which Group General Counsel will have functional management responsibility and authority over the legal and compliance functions of all business divisions, as well as final authority over compensation and the promotion of division-level legal and compliance personnel.
  • Appoint personnel with direct oversight authority of UBS's performance under the Qualified Intermediary Agreement.
  • Develop policies and procedures that are in compliance with the Qualified Intermediary Agreement (including the training of employees and an investigation into allegations of failure to comply).
  • No "monitor," but there is an "external auditor" designated to monitor UBS's Exit Program and particular internal controls who will report on the Company's progress within the Exit Program and implementation of internal controls with respect to the Qualified Intermediary Agreement.
  • UBS will adopt any reasonable recommendations of the external auditor that will further comply with the Qualified Intermediary Agreement.

Additional

  • In addition to general cooperation, UBS shall disclose the identities and account information of certain United States clients and shall comply with the John Doe summons enforcement action if all objections to the action are denied (i.e., UBS would still retain all rights to defend itself against the summons; this provision only applies if those defenses are denied).

UTStarcom, Inc.                                                                                 December 31, 2009

DOJ Office

  • Department of Justice, Criminal Division, Fraud Section

Allegations

  • The company had a standard practice of including as part of each of its contracts for wireless network equipment in China to pay for some of the government-controlled, telecom companies' employees to attend purported "training" overseas at UTS facilities.  Rather than for training, the trips were to popular tourist destinations—such as Hawaii, Las Vegas, and New York—where UTS had no facilities.
  • Between 2002 and 2007, the company spent approximately $7 million on 225 such trips, in violation of the FCPA anti-bribery provision.
  • UTS improperly recorded the expense for these trips in its books and records in violation of the FCPA books and records provision. 

Length of NPA

  • Three years

Penalties

  • Criminal Penalty – $1.5 million

Revised Compliance Program

  • The company will conduct a review of its internal controls, policies and procedures, and to adopts new or modify existing controls, policies and procedures where appropriate.
  • UTS will clearly articulate a company policy against violations of the FCPA; promulgate compliance standards and procedures designed to reduce the prospect of violations of the anti-corruption laws; create mechanisms designed to ensure the effective communication of the policies and procedures to all company officers, employees, and, where appropriate, agents and business partners; create an effective system for reporting suspected criminal conduct; and create appropriate disciplinary procedures to address violations of the anti-corruption laws.
  • The company will assign to one or more senior officials for the implementation of such compliance policies and procedures.
  • UTS will create appropriate due diligence requirements related to the retention and oversight of agents and business partners, and where necessary, insert standard provisions in agreements and contracts designed to prevent violations of the anti-corruption laws.
  • The company will periodically test the compliance program.

WellCare Health Plans, Inc.                                                              May 5, 2009

DOJ Office

  • United States Attorney's Office for the Middle District of Florida

Allegations

  • Two wholly-owned subsidiaries conspired to commit health fraud by fraudulently inflating medical expenditure information, all in an effort to reduce the amount of money they would be contractually obligated to pay back to two Florida health care benefit programs.

Length of DPA

  • Three years

Penalties

  • Restitution – $40 million plus interest
  • Civil Forfeiture – $40 million plus interest

Revised Compliance Program

  • Within sixty (60) days of the agreement, the Company will implement updated policies and procedures that are designed to ensure complete and accurate reporting of all federal and state health care program information.
  • Develop and operate adequate internal controls to prevent any of the improper and/or illegal activities that gave rise to the DPA.
  • Evaluate and revise internal bid procedures in order to ensure fair and accurate submission of all data and information in response to any government bids and/or any government requests for proposals.

Monitor

  • A Monitor will be selected by the U.S. Attorney's Office in accordance with DOJ guidelines and after consultation with WellCare.
  • The monitorship will last for 18 months.
  • Monitor will have access to all non-privileged documents, information, officers, employees, and agents of WellCare that he/she reasonably believes are necessary in the execution of his/her duties.
  • The Monitor will immediately report to DOJ any misconduct that: (a) poses a significant risk to public health and safety; (b) involves senior management of WellCare; (c) involves obstruction of justice; (d) involves a violation of any federal or state criminal statute, or otherwise involves criminal activity; and (e) otherwise poses a significant risk of harm to any person, state or federal entity, or government program.  DOJ may choose to divulge this information to WellCare.
  • The Monitor will review, evaluate, and make recommendations regarding policies which relate to: (a) the accounting and reporting of all revenues, expenditures, and costs incurred in providing any services to health care program beneficiaries; (b) the documentation of medical records pertinent to any health care services provided to health care program beneficiaries; (c) the submission of claims for payment to health care programs; (d) the preparation, certification, and submission of bids to health care programs; and (e) the training of WellCare employees in order to ensure that any information provided to health care programs is true, accurate, complete, and transparent.
  • WellCare will adopt all recommendations submitted by the Monitor.  If WellCare objects to a recommendation made by the Monitor, DOJ will issue a non-appealable decision resolving the dispute.
  • The Monitor will review WellCare's compliance with the DPA and all applicable federal and state health care laws, regulations, and programs.
  • The Monitor will submit three written reports to DOJ, WellCare senior management, and WellCare's Board of Directors.  The reports will address: (a) WellCare's compliance with the DPA and all applicable federal and state health care laws, regulations, and programs; (b) a summary of the Monitor's recommendations to WellCare and WellCare's responses to those recommendations; and (c) any other relevant information.
  • WellCare will not employ or be affiliated with the Monitor for at least one year after the monitorship is terminated.


  [*]   Our 2008 year-end update reported thirty-eight DPAs and NPAs in 2007 and seventeen DPAs and NPAs in 2008.  We have since learned of other NPAs during those years.  Because NPAs are not filed with a court, we occasionally learn of new NPAs during our ongoing research of the agreements.  We will continue to revise our statistics to account for all new NPAs. 

DOJ is not the only law enforcement agency that utilizes DPAs and NPAs in conjunction with corporate investigations; state Attorneys General, the SEC, the FTC, as well as other government agencies also use corporate equivalents.  This client update addresses only DPAs and NPAs entered into by DOJ, excluding DOJ's Antitrust Division, which has an official and well-recognized amnesty policy.

  [†]   National White Collar Crime Center, White Collar Crime Statistics (October 2009), available at http://www.nw3c.org/research/visitor_form_val.cfm.

SEARCH PUBLICATIONS

AUTHORS

News Search
Lawyers Entire Site
Submit
Site Map Attorney Advertisement Legal Notices Safe Harbor Privacy Policy Contact Us