United States: New Board Compliance Guidance Prompts General Counsel Focus

Health care general counsel should review, and brief their internal clients on, the new Practical Guidance for Health Care Governing Boards on Compliance Oversight (Guidance), released on April 20, 2015.  A joint effort by the Office of Inspector General (OIG) of the U.S. Department of Health and Human Services (HHS), the Association of Healthcare Internal Auditors, the American Health Lawyers Association (AHLA) and the Health Care Compliance Association, the Guidance is an updated and condensed version of the three separate board compliance guidance resources published by the AHLA and HHS/OIG between 2003 and 2007.  As such, the Guidance is a useful and timely resource for both the general counsel and the board.  It should not be considered, nor is it intended to be, however, a comprehensive review of the complex issues associated with the health care board's exercise of its compliance oversight obligations under the Caremark decision.

The Guidance addresses such important compliance program considerations as (1) the definition of the interrelationship between, and the roles of, the organization's audit, compliance and legal functions; (2) mechanisms for effective and appropriate reporting of compliance issues within an organization; (3) methods for identifying regulatory risks; and (4) means of encouraging accountability for achievement of compliance goals and objectives throughout the organization.  The Guidance also reflects OIG's historical position that an organization's legal and compliance functions should be separate and independent, yet recognizes the need to balance attorney-client privilege considerations in the coordination of those relationships. 

Several aspects of the Guidance are particularly useful to the general counsel.  For example, the Guidance underscores the important role that the internal auditor plays in the overall compliance effort.  It also makes the very important point that the compliance program should be "right sized" for the organization; boards of organizations that have grown rapidly through merger or consolidation must constantly confirm that the compliance program meets the needs of the growing organization.  There is a very useful emphasis on the board's use of expert advice in order to stay abreast of current developments in the area.  (This should be balanced, however, with attentiveness to the reasonableness of such reliance in individual circumstances.)  In addition, the Guidance's articulation of roles and relationships offers some clarity, at a time when the distinctions between the roles of the key participants in the compliance program are increasingly becoming blurred (e.g., on such key matters as advising the board on governance, leading internal investigations, assessing risk and developing risk assessment strategies, and providing advice on organizational ethics).


Because the Guidance understandably speaks to a broad array of health care providers (large and small), it is limited in its ability to focus on the more complex and challenging issues concerning board oversight.  For that reason, the health care general counsel should note the following:

  1. The board has a particular responsibility to ensure the most effective coordination between the various internal functions associated with corporate compliance, including legal, compliance, internal audit and human resources.  The board must be attentive to the risk of dissonance or disharmony between these functions, and to the need for structures and procedures for minimizing that risk.  It must also balance the need for a coordinated board reporting protocol with the individual abilities of the compliance officer and general counsel to access the board and compliance committee as need may require.
  2. There is a need to ensure proper and reasonable "job descriptions" for the roles of compliance officer and general counsel, to prevent role confusion or interference between the two positions (and the Guidance provides some support for that task).
  3. The OIG's position in the Guidance on compliance officer independence from the general counsel is essentially the same view the agency has taken for the last 12 years.  However, there is no law or regulation that prohibits a compliance-officer-to-general-counsel reporting relationship.  Indeed, the Guidance makes it very clear that there is no "one size fits all" approach to compliance programs and protocols.  That notwithstanding, organizational leadership should certainly be briefed on the OIG's position, especially when the reporting relationship between the organization's chief compliance officer (CCO) and general counsel differs from that preferred by the OIG.
  4. The board has an obligation to establish a detailed, timely and effective reporting mechanism by which "line management" is required to report in a timely manner and in the proper context the compliance and other risk developments that "keep them awake at night" (i.e., a reporting relationship that goes beyond management reporting to the CCO and the general counsel, and that delivers the information to the board in a context it can understand and in a timeframe that allows it to act).
  5. There is a clear need to ensure that board members with direct responsibility for compliance oversight (e.g., the members of the compliance, or audit and compliance committees) possess the proper qualifications and independence to exercise such oversight.
  6. Where compliance oversight responsibility is subsumed within a board committee with dual responsibilities (e.g., the "Audit & Compliance Committee"), sufficient time must be allocated on the committee agenda for attention to purely compliance matters.
  7. There is also an important need for extra diligence to be exercised by board and committee members (apart from the compliance committee function) in applying a proper level of constructive scrutiny and informed decision-making to business transactions with significant potential compliance risk.
  8. The Guidance does not address in significant detail the board's obligation to monitor the important connection between compliance and quality of care.  However, this was the specific focus of the 2007 AHLA/OIG Compliance Resource whitepaper.
  9. The OIG is not the only constituency concerned with the exercise of a board's Caremark obligations; the U.S. Department of Justice (DOJ), state attorneys general and, in financial distress situations, the Committee of Unsecured Creditors, all have an interest in the extent to which the board has capably addressed matters of compliance oversight.
  10. While the Guidance acknowledges the need to balance attorney-client privilege concerns with the desired independence of the compliance officer from the general counsel, the board should be aware that compliance investigations conducted by the compliance officer without any involvement of the general counsel (or outside counsel) are not protected by the attorney-client privilege.  The board should consider whether it would be appropriate in certain situations for the compliance officer to conduct such investigations at the direction of the general counsel, or under the supervision of outside counsel, in order to preserve the privilege.
  11. Leadership should be made aware of pending guidance from DOJ that reportedly will set forth with clarity DOJ's expectations in terms of "corporate cooperation" in the context of investigations—e.g., how organizations may gain "cooperation credit" for exposing the malfeasance of their own employees.  This forthcoming guidance will most certainly require the attention of the board and its audit committee, as well as increased coordination between the general counsel, the compliance officer and the internal auditor.
  12. The Guidance hints at the interest of some constituencies in requiring that board/committee members be "certified" on compliance oversight, and in the use of compensation "clawbacks" or similar means to incentivize compliant behavior by corporate officers.
  13. The publication of the Guidance provides an excellent opportunity for the board to familiarize itself with important new trends in public policy recognizing an expanding organizational role for the general counsel not only as technical legal expert, but also as a "wise counselor" with respect to organizational ethics and reputation, and as a valued business advisor (with attendant attorney-client privilege awareness).  This is a very important consideration that is not discussed in the Guidance.
  14. The publication of the Guidance should also prompt a discussion at the audit/compliance committee level about the "reporting up/reporting out" professional responsibility obligations of the general counsel, particularly in light of highly controversial current state court litigation concerning the proper scope of these obligations.


The Guidance reflects a commendable effort by the participating organizations.   OIG's ongoing interest in providing compliance guidance resources to the health care industry is particularly appreciated.

While the Guidance doesn't break new ground, it serves as a valuable reminder of the board's critical compliance oversight obligation.  The Guidance also provides a useful opportunity for the health care general counsel to review with the board the effectiveness of its approach to compliance oversight.

Kelsey Leingang, associate in McDermott's Health Industry Advisory practice, also co-authored this article.

New Board Compliance Guidance Prompts General Counsel Focus

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.

To print this article, all you need is to be registered on Mondaq.com.

Click to Login as an existing user or Register so you can print this article.

In association with
Related Video
Up-coming Events Search
Font Size:
Mondaq on Twitter
Register for Access and our Free Biweekly Alert for
This service is completely free. Access 250,000 archived articles from 100+ countries and get a personalised email twice a week covering developments (and yes, our lawyers like to think you’ve read our Disclaimer).
Email Address
Company Name
Confirm Password
Mondaq Topics -- Select your Interests
 Law Performance
 Law Practice
 Media & IT
 Real Estate
 Wealth Mgt
Asia Pacific
European Union
Latin America
Middle East
United States
Worldwide Updates
Mondaq Ltd requires you to register and provide information that personally identifies you, including what sort of information you are interested in, for three primary purposes:
  • To allow you to personalize the Mondaq websites you are visiting.
  • To enable features such as password reminder, newsletter alerts, email a colleague, and linking from Mondaq (and its affiliate sites) to your website.
  • To produce demographic feedback for our information providers who provide information free for your use.
  • Mondaq (and its affiliate sites) do not sell or provide your details to third parties other than information providers. The reason we provide our information providers with this information is so that they can measure the response their articles are receiving and provide you with information about their products and services.
    If you do not want us to provide your name and email address you may opt out by clicking here
    If you do not wish to receive any future announcements of products and services offered by Mondaq you may opt out by clicking here

    Terms & Conditions and Privacy Statement

    Mondaq.com (the Website) is owned and managed by Mondaq Ltd and as a user you are granted a non-exclusive, revocable license to access the Website under its terms and conditions of use. Your use of the Website constitutes your agreement to the following terms and conditions of use. Mondaq Ltd may terminate your use of the Website if you are in breach of these terms and conditions or if Mondaq Ltd decides to terminate your license of use for whatever reason.

    Use of www.mondaq.com

    You may use the Website but are required to register as a user if you wish to read the full text of the content and articles available (the Content). You may not modify, publish, transmit, transfer or sell, reproduce, create derivative works from, distribute, perform, link, display, or in any way exploit any of the Content, in whole or in part, except as expressly permitted in these terms & conditions or with the prior written consent of Mondaq Ltd. You may not use electronic or other means to extract details or information about Mondaq.com’s content, users or contributors in order to offer them any services or products which compete directly or indirectly with Mondaq Ltd’s services and products.


    Mondaq Ltd and/or its respective suppliers make no representations about the suitability of the information contained in the documents and related graphics published on this server for any purpose. All such documents and related graphics are provided "as is" without warranty of any kind. Mondaq Ltd and/or its respective suppliers hereby disclaim all warranties and conditions with regard to this information, including all implied warranties and conditions of merchantability, fitness for a particular purpose, title and non-infringement. In no event shall Mondaq Ltd and/or its respective suppliers be liable for any special, indirect or consequential damages or any damages whatsoever resulting from loss of use, data or profits, whether in an action of contract, negligence or other tortious action, arising out of or in connection with the use or performance of information available from this server.

    The documents and related graphics published on this server could include technical inaccuracies or typographical errors. Changes are periodically added to the information herein. Mondaq Ltd and/or its respective suppliers may make improvements and/or changes in the product(s) and/or the program(s) described herein at any time.


    Mondaq Ltd requires you to register and provide information that personally identifies you, including what sort of information you are interested in, for three primary purposes:

    • To allow you to personalize the Mondaq websites you are visiting.
    • To enable features such as password reminder, newsletter alerts, email a colleague, and linking from Mondaq (and its affiliate sites) to your website.
    • To produce demographic feedback for our information providers who provide information free for your use.

    Mondaq (and its affiliate sites) do not sell or provide your details to third parties other than information providers. The reason we provide our information providers with this information is so that they can measure the response their articles are receiving and provide you with information about their products and services.

    Information Collection and Use

    We require site users to register with Mondaq (and its affiliate sites) to view the free information on the site. We also collect information from our users at several different points on the websites: this is so that we can customise the sites according to individual usage, provide 'session-aware' functionality, and ensure that content is acquired and developed appropriately. This gives us an overall picture of our user profiles, which in turn shows to our Editorial Contributors the type of person they are reaching by posting articles on Mondaq (and its affiliate sites) – meaning more free content for registered users.

    We are only able to provide the material on the Mondaq (and its affiliate sites) site free to site visitors because we can pass on information about the pages that users are viewing and the personal information users provide to us (e.g. email addresses) to reputable contributing firms such as law firms who author those pages. We do not sell or rent information to anyone else other than the authors of those pages, who may change from time to time. Should you wish us not to disclose your details to any of these parties, please tick the box above or tick the box marked "Opt out of Registration Information Disclosure" on the Your Profile page. We and our author organisations may only contact you via email or other means if you allow us to do so. Users can opt out of contact when they register on the site, or send an email to unsubscribe@mondaq.com with “no disclosure” in the subject heading

    Mondaq News Alerts

    In order to receive Mondaq News Alerts, users have to complete a separate registration form. This is a personalised service where users choose regions and topics of interest and we send it only to those users who have requested it. Users can stop receiving these Alerts by going to the Mondaq News Alerts page and deselecting all interest areas. In the same way users can amend their personal preferences to add or remove subject areas.


    A cookie is a small text file written to a user’s hard drive that contains an identifying user number. The cookies do not contain any personal information about users. We use the cookie so users do not have to log in every time they use the service and the cookie will automatically expire if you do not visit the Mondaq website (or its affiliate sites) for 12 months. We also use the cookie to personalise a user's experience of the site (for example to show information specific to a user's region). As the Mondaq sites are fully personalised and cookies are essential to its core technology the site will function unpredictably with browsers that do not support cookies - or where cookies are disabled (in these circumstances we advise you to attempt to locate the information you require elsewhere on the web). However if you are concerned about the presence of a Mondaq cookie on your machine you can also choose to expire the cookie immediately (remove it) by selecting the 'Log Off' menu option as the last thing you do when you use the site.

    Some of our business partners may use cookies on our site (for example, advertisers). However, we have no access to or control over these cookies and we are not aware of any at present that do so.

    Log Files

    We use IP addresses to analyse trends, administer the site, track movement, and gather broad demographic information for aggregate use. IP addresses are not linked to personally identifiable information.


    This web site contains links to other sites. Please be aware that Mondaq (or its affiliate sites) are not responsible for the privacy practices of such other sites. We encourage our users to be aware when they leave our site and to read the privacy statements of these third party sites. This privacy statement applies solely to information collected by this Web site.

    Surveys & Contests

    From time-to-time our site requests information from users via surveys or contests. Participation in these surveys or contests is completely voluntary and the user therefore has a choice whether or not to disclose any information requested. Information requested may include contact information (such as name and delivery address), and demographic information (such as postcode, age level). Contact information will be used to notify the winners and award prizes. Survey information will be used for purposes of monitoring or improving the functionality of the site.


    If a user elects to use our referral service for informing a friend about our site, we ask them for the friend’s name and email address. Mondaq stores this information and may contact the friend to invite them to register with Mondaq, but they will not be contacted more than once. The friend may contact Mondaq to request the removal of this information from our database.


    From time to time Mondaq may send you emails promoting Mondaq services including new services. You may opt out of receiving such emails by clicking below.

    *** If you do not wish to receive any future announcements of services offered by Mondaq you may opt out by clicking here .


    This website takes every reasonable precaution to protect our users’ information. When users submit sensitive information via the website, your information is protected using firewalls and other security technology. If you have any questions about the security at our website, you can send an email to webmaster@mondaq.com.

    Correcting/Updating Personal Information

    If a user’s personally identifiable information changes (such as postcode), or if a user no longer desires our service, we will endeavour to provide a way to correct, update or remove that user’s personal data provided to us. This can usually be done at the “Your Profile” page or by sending an email to EditorialAdvisor@mondaq.com.

    Notification of Changes

    If we decide to change our Terms & Conditions or Privacy Policy, we will post those changes on our site so our users are always aware of what information we collect, how we use it, and under what circumstances, if any, we disclose it. If at any point we decide to use personally identifiable information in a manner different from that stated at the time it was collected, we will notify users by way of an email. Users will have a choice as to whether or not we use their information in this different manner. We will use information in accordance with the privacy policy under which the information was collected.

    How to contact Mondaq

    You can contact us with comments or queries at enquiries@mondaq.com.

    If for some reason you believe Mondaq Ltd. has not adhered to these principles, please notify us by e-mail at problems@mondaq.com and we will use commercially reasonable efforts to determine and correct the problem promptly.

    By clicking Register you state you have read and agree to our Terms and Conditions