How you can guard against growing liability
How you can guard against growing liability
The demand for health care compliance officers is growing rapidly. Unfortunately, so is the risk they face as individuals. All too often, that risk is increased by lack of any employment agreement, according to Greg Miller, a partner with the law firm of Miller, Alfano & Raspanti, in Philadelphia. "The position and exposure of compliance officers is growing dramatically," he says. "The best way to limit that exposure is through an employee agreement."
Miller says that risk is increasingly coming from solicitations by qui tam lawyers, stockholders and class action suits as compliance officers become more central to the operation of health care organizations. He adds that prosecutors more and more frequently zero in on compliance officers when beginning an investigation.
To protect themselves from this growing liability, Millers says compliance officers should attempt to secure an employee agreement before assuming a new position. That is usually no easy task, however. "There is a real tug-of-war going on between health care organizations and employees," says Miller, who has negotiated those agreements on behalf of both compliance officers and health care organizations. "Companies are very reluctant to grant rights that are not otherwise there."
"The employment agreement is the brass ring because it offers the most protection," he asserts. But even if an organization refuses, compliance officers have other options that can offer significant protection, such as a separation or indemnification agreement, which are usually easier to attain.
And the contracts offered by some organizations are becoming more sophisticated, he adds. For example, some organizations now include a clause that makes the compliance officer agree not to institute any lawsuit, claims, or charges against the company or its directors and makes the compliance officer liable for all costs and expenses required to defend against such a suit.
Likewise, some organizations add a confidentiality clause that makes the compliance officer agree to safeguard information and deliver all records, files, and other documents upon termination.
Both clauses can spell trouble, and Miller advises trying to have them removed. However, once a company consents to develop an agreement, Miller says there are several provisions that should always be included:
- Job description. Despite the proliferation of compliance officers, Miller notes that many organizations have no job description for that position. That spells trouble, he says. "One problem compliance officers have is that it’s difficult to evaluate performance," he explains. When there are results, they are often negative ones that come in the form of overpayments returned to the government."
To remedy that, Miller says compliance officers should develop a job description that incorporates all of their goals and objectives. That description should include clearly definable objectives that can be demonstrated before the organization's board of directors, he says.
- Legal expenses. Compliance officers should also include a provision in the contract that if the government begins an investigation, the organization will provide counsel and cover the legal fees of the compliance officer, Miller warns. Once an investigation begins, he says, a redacted bill should be sent to the employee and then forwarded to the employer in order to protect the nature of those discussions. He also points out that the obligation of counsel is to the employee, not the organization.
- Termination. The bottom line when it comes to termination is that "termination without cause" is vastly preferable to "termination with cause," Miller asserts. But he says one little known fact is that compliance officers can be indemnified even if they are convicted of criminal or civil charges or plead nolo contendre. "Even if you’re convicted, the board can decide to indemnify you," he adds. "The problem is a lot of people don't know what their indemnification policies say."
- Compensation. According to Miller, compliance officers should always include a provision in their contract that provides for a compensation package, regardless of the cause of termination. "I think it is only fair that regardless of grounds, compliance officers get some compensation over a period of time," he says. If termination occurs, establishing who is right and who is wrong should take a back seat to securing a settlement.
A typical agreement might call for three months’ severance pay with an additional two months’ pay for each additional year with the company, says Miller. But he adds that compliance officers might seek a full year's compensation if they are forced to relocate to assume the position.
Miller also advises compliance officers to receive that payment in a lump sum — as opposed to spreading that payment over a period of time — even though most organizations will try to force that issue in the opposite direction.
Finally, Miller advises compliance officers to take caution if they include a provision for a bonus in their contract because of the conflict of interest it may create. He says it’s possible to develop appropriate bonus incentives that are not tied to conventional measures. However, those incentives should never be tied to the company's profits or losses.
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