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New Department of Justice guidance on evaluating corporate compliance programs

Thomas E. Herrmann (therrmann@strategicm.com) is a Managing Senior Consultant at Strategic Management Services LLC in Alexandria, VA.

In April 2019, the U.S. Department of Justice (DOJ) issued updated guidance for federal prosecutors on the process and considerations related to the Evaluation of Corporate Compliance Programs.[1]The new guidelines are intended to assist criminal prosecutors in assessing the effectiveness of a corporate compliance program when determining the appropriate enforcement and resolution of a criminal case. Valuable information is provided for compliance professionals as to what DOJ considers important in designing, developing, and implementing a corporate compliance program, and evaluating the effectiveness of an existing compliance program.

The new DOJ guidelines are the latest issuance of information relating to corporate compliance programs by the federal government since the Office of Inspector General (OIG) in the U.S. Department of Health and Human Services (DHHS) published its series of Compliance Program Guidances (CPG) for various sectors of the healthcare industry between 1997 and 2008.[2] The new guidelines do not introduce any dramatically new concepts related to corporate compliance programs, but they highlight the current DOJ view on considerations and priorities related to the evaluation of an organization’s compliance program. Moreover, the guidelines are not limited to healthcare organizations, but are applicable to corporate compliance programs in all business sectors.

DOJ notes at the outset that it “does not use any rigid formula to assess the effectiveness of corporate compliance programs,” and “recognize[s] that each company’s risk profile and solutions to reduce its risks warrant particularized evaluation,” with “an individualized determination” in each case. It goes on to make the point that “there are ‘common questions’ that need to be asked and answered in making the ‘individualized determination’ with respect to a corporation’s compliance program effectiveness.” DOJ explains that the new guidance is intended “to assist prosecutors in making informed decisions as to whether, and to what extent, [a] corporation’s compliance program was effective at the time of [an] offense, and is effective at the time of a [DOJ] charging decision or resolution . . . .”[3]

DOJ focuses on three “fundamental questions” that need to be asked:

  1. Is a corporation’s compliance program well designed?

  2. Is the compliance program being applied earnestly and in good faith?

  3. Does a corporation’s compliance program work in practice?[4]

To address these three lines of inquiry, the DOJ has identified key issues and compliance program elements that need to be assessed.

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