Under Pressure: Understanding and Working Through Regulatory Inquiries

Welcome to the July 2019 edition of our newsletter!  In this issue, we’ll examine how government probes – whether federal antitrust officials or a state attorney general – can affect your firm, and how best to respond.

What To Do If Big Brother Comes Knocking

As “Big Tech” faces scrutiny from the U.S. Justice Department amid allegations of anti-competitive behavior, the situation serves as a reminder to companies of all sizes concerning how to respond when an agency comes calling.  Many industries face some measure of county, state or federal oversight, whether you’re an electrician operating a small business or a large insurance company that operates in a dozen states.

The notification process for the beginning of an inquiry can be daunting – typically arriving in the form of a subpoena – either issued by an agency or a grand jury, the latter if criminal conduct is suspected at the outset – or, more rarely, a search warrant.  Often, the agency issuing a subpoena has worked with related inspectors general or state agencies to build a case using other records or whistleblower tips, and if your company is the target of an investigation it is more likely at the end of a chain of inquiries than the beginning.

Depending on the circumstances, you may be advised by counsel not to cooperate with an inquiry, but conducting your internal investigation should be similar in any event.  Companies are large groups of people whose aims are hopefully aligned most of the time, so if an inquiry concentrates on allegations about a certain division – say, the billing to Medicare by a health care provider – a recommended course of action is to create profiles of relevant staff members, to determine if any could have worked together to pursue the alleged conduct, and if they had any financial or professional motives for doing so.   This can best be pursued by integrating internal records, such as e-mail communications, with publicly available records like liens or judgments, to better understand a person’s circumstances and mindset if they are in a position of responsibility when your firm is accused of wrongdoing.