Home-Field Advantage? Scrutinizing the Independence of the SEC’s ALJs

By Eric R. Breslin, Mauro M. Wolfe, and Jovalin Dedaj

In the last few weeks, the SEC and its administrative law judges (“ALJs”) have tested the truthfulness of the old adage, “There’s no such thing as bad publicity.”

On May 3, 2017, the United States Court of Appeals for the Tenth Circuit denied the SEC’s request to rehear a decision, in which the Court determined that the SEC’s administrative law judges were unconstitutional appointments. That decision was just another setback for the SEC in a high-stakes constitutional debate which could potentially put the issue of how the SEC appoints its ALJs before the Supreme Court. Later this month, much to the dismay of the SEC, the United States Court of Appeals for the D.C. Circuit will rehear arguments in its decision, which initially held in favor of the SEC. Continue reading Home-Field Advantage? Scrutinizing the Independence of the SEC’s ALJs

Melissa Geller Named A “New Leader of the Bar” by New Jersey Law Journal

Melissa GellerDuane Morris associate Melissa Geller has been named one of the New Jersey Law Journal‘s “New Leaders of the Bar.” With this list, the Law Journal “endeavors to identify attorneys representing the future of the legal profession in New Jersey.”

The honorees will be recognized at the Law Journal’s Professional Excellence event on June 20.

Department of Health and Human Services, Office of Inspector General Issues Compliance Effectiveness Guide, which has Broad Implications for Health Care Compliance Programs

By Michael E. Clark and Amanda L. Bassen

On March 27, 2017, the U.S. Department of Health and Human Services, Office of Inspector General (“OIG”) issued a 53-page resource guide on compliance program effectiveness, titled “Measuring Compliance Program Effectiveness: A Resource Guide” (“Compliance Guide”). The Compliance Guide is broken into seven compliance program elements, each containing numerous suggestions on how and what to measure with respect to each element. The OIG explained that its purpose in issuing the Compliance Guide was to provide health care organizations with as many ideas as possible for measuring the elements of their compliance programs, which would allow any type of health care organization to choose those that best suit its needs. The OIG cautions that the Compliance Guide should not be used as a “checklist” but rather be tailored to an organization’s particular needs in any given year.  Continue reading Department of Health and Human Services, Office of Inspector General Issues Compliance Effectiveness Guide, which has Broad Implications for Health Care Compliance Programs

Time is Running Out for the SEC: The Circuit Split on Limiting SEC Disgorgement to a Five-Year Statute of Limitations Signals an Impending Major Change

By Mauro M. Wolfe and Jovalin Dedaj

Under the new Administration, we have been promised a new tone regarding how Government interfaces with the market.  This “change” is of particular interest to those who defend matters before the SEC.  Will we see a change from “broken windows” enforcement where everything matters to a more traditional, and possibly, more friendly regulatory environment?  Winding its way through the courts is an SEC life-altering moment: does the SEC concede that there is a five-year statute of limitations on enforcement cases including disgorgement?  As far as penalties and fines are concerned, the Supreme Court has already ruled on that issue and said it does.  The SEC lost that one.  The question remaining is whether the Supreme Court will apply the same limitation to disgorgement and how the new SEC leadership will respond.  The short answer is that such a limitation should apply.  Continue reading Time is Running Out for the SEC: The Circuit Split on Limiting SEC Disgorgement to a Five-Year Statute of Limitations Signals an Impending Major Change

Healthcare Fraud Takedowns

As a former federal prosecutor in Chicago, I am well acquainted with the phrase “takedowns.”  For the unwary, a subject-area “takedown” is a practice used by federal prosecutors to send a message to a given industry.  Prosecutors investigate and prepare to charge cases in a given industry sector and then release the charges nationally on the same day along with a press release.  The idea is that such public “takedowns” serve as a deterrent to future criminal activity in the industry. For example, almost every April 15th, prosecutors across the country release charges in dozens of tax-fraud cases. Continue reading Healthcare Fraud Takedowns

Supreme Court Hears Argument In Honeycutt

The Honeycutt brothers run an operation selling iodine to methamphetamine dealers.  One brother makes $269,000 in total profits.  The other brother gets paid a weekly salary, but otherwise takes home nothing.  They are both charged in a drug conspiracy.  The first brother reaches a plea deal with the government, and as a result gets to keep most of the money he made.  The second brother loses at trial.  At his sentencing, the trial court orders the second brother to forfeit (i.e. give back to the government) an amount equal to the total $269,000 in profits – even though he never saw a dime. Continue reading Supreme Court Hears Argument In Honeycutt

New Scrutiny of Civil Forfeiture Laws

The Inspector General of the U.S. Department of Justice (“DOJ”) released a report on March 29, 2017, faulting the DOJ for failing to systematically evaluate its forfeiture data to determine the extent to which seizures benefit law enforcement efforts or present potential risks to civil liberties.  While the Inspector General’s (“IG’s”) report specifically focused on the forfeiture activities of the federal Drug Enforcement Agency (DEA), its conclusions may likely be extended to other arenas in which the federal government initiates civil forfeiture activities, including white collar crime.  Continue reading New Scrutiny of Civil Forfeiture Laws

The Department of Justice Speaks on the Adequacy of Corporate Compliance Programs

In mid-February, the Department of Justice’s Fraud Section issued a publication entitled “Evaluation of Corporate Compliance Programs,” (“Compliance Memorandum”) which highlighted important topics and reoccurring problems in the compliance arena.   This is the first such guidance that this Section has published on this topic since President Donald J. Trump assumed office.

This publication considers the “Filip Factors,” named for a Deputy Assistant Attorney General, who wrote the memorandum entitled “Principles of Federal Prosecution of Business Organization.”  The Filip Memo highlighted 10 separate factors that federal prosecutors analyze when making charging decisions with respect to corporate officers.  One of the main factors used is an analysis of “the existence and effectiveness of the company’s pre-existing compliance program.”  The DOJ drafted the new Compliance Memorandum to provide more transparency to corporate officers regarding how federal prosecutors will undertake particularized evaluations of corporations’ unique compliance programs when making charging decisions in the wake of potential corporate wrongdoing. Continue reading The Department of Justice Speaks on the Adequacy of Corporate Compliance Programs

Supreme Court’s Materiality Standard in United Health Services, Inc. v. U.S. ex rel. Escobar May Limit Criminal Liability in Healthcare Fraud Prosecutions

By Amanda L. Bassen and Michael E. Clark

In healthcare fraud prosecutions under the Anti-Kickback Statute (42 U.S.C. § 1320a-7b(b)), the knowing or willful solicitation or receipt, either directly or indirectly, of any remuneration (including kickbacks, bribes or rebates) in exchange for the referral of patients for items or services covered by a federal healthcare program is a criminal offense.  In the seminal case of United States v. Greber, 760 F.2d 68 (3d Cir. 1985), the Third Circuit articulated the “one purpose test,” where so long as “one purpose” of a payment is to induce a referral, a criminal conviction may be sustained under the Anti-Kickback Statute, even if there are other, legitimate purposes for the payment.  Greber’s “one purpose test” has been widely adopted in Anti-Kickback prosecutions.   Continue reading Supreme Court’s Materiality Standard in United Health Services, Inc. v. U.S. ex rel. Escobar May Limit Criminal Liability in Healthcare Fraud Prosecutions

Changes Are Coming to the SEC Enforcement Division – What Does It All Mean?

This week reports surfaced that a major shift in the SEC enforcement division had taken place – behind the scenes.  The timing is quite interesting as the agency’s annual seminar and SEC Alumni dinner will occur at the end of the month.  No doubt this will be a topic, among many, of the annual SEC cocktail regulars in DC.

The reports indicate that the Acting Chairman Michael Piwowar has centralized the power of the enforcement division to “issue subpoenas or formally launch probes,” as Reuters put it.  The question that has been asked is – What does all of this really mean, really?  Continue reading Changes Are Coming to the SEC Enforcement Division – What Does It All Mean?