OIG Investigations – Why Lawyers and Clients Should Both Worry

Virus searchOn first glance, investigations by a federal agency’s Office of Inspector General, or OIG, may seem like no big deal. An inspector general has no criminal authority. He can’t charge you with a crime or throw you in jail. He can’t even arrest you. Maybe he can fine you or get you fired if you are a federal employee.

But I’ve seen OIG investigations ruin people’s decades-long careers and lead to criminal investigations and False Claims Act cases. The upshot is that you should worry about an OIG investigation if you are the target of the investigation.

You should also worry if you are the target’s lawyer, because defending someone in these investigations is complicated. It’s never easy to defend a client when the deck is stacked against you, and when you may be actively prevented from advocating for your client.

What is an OIG?

In 1978, Congress passed the Inspector General Act, which created OIGs within each federal agency. It defined three purposes:

In order to create independent and objective units—

(1) to conduct and supervise audits and investigations relating to the programs and operations of the establishments listed in section 12(2);

(2) to provide leadership and coordination and recommend policies for activities designed

(A) to promote economy, efficiency, and effectiveness in the administration of, and

(B) to prevent and detect fraud and abuse in, such programs and operations; and

(3) to provide a means for keeping the head of the establishment and the Congress fully and currently informed about problems and deficiencies relating to the administration of such programs and operations and the necessity for and progress of corrective action.

In short, OIGs investigate waste, fraud and abuse within government agencies and report to Congress about their findings. OIGs are independent from the agency and the inspector general reports only to Congress. In other words, the Secretary of Defense cannot stop or direct a DoD OIG investigation.

It’s a narrow but deep channel of power within the federal government.

Who Should Worry about an OIG Investigation?

Federal government employees are the targets of OIG investigations and face the most direct repercussions.Any government employee–no matter who you are–can be investigated. There’s no exception for SES or heads of agencies.

Private companies should also worry. Many criminal investigations of private companies start with OIG investigations. For example, the OIG for Health and Human Services investigates Medicare fraud; that can easily lead to a False Claims Act case or criminal charges. The OIG for the Department of Defense often instigates government contracting fraud investigations.

For example, HHS OIG reported its results in a yearly report for 2016:

In FY 2016, investigations conducted by HHS’ Office of Inspector General (HHS-OIG) resulted in 765 criminal actions against individuals or entities that engaged in crimes related to Medicare and Medicaid, and 690 civil actions, which include false claims and unjust-enrichment lawsuits filed in federal district court, civil monetary penalties (CMP) settlements, and administrative recoveries related to provider self-disclosure matters.

This post will focus on OIG investigations into federal government employees. (Maybe I’ll talk about company investigations in a later post.)

What Do OIGs Investigate?

There’s a whole range of possible misconduct investigated by OIGs, but the most common ones are:

  1. Irregularities in procurement, such as soles sourcing a contract that should have been bid competitively, or failing to disclose a conflict of interest with an entity working with the agency;
  2. Improper use of government resources, including embezzlement or use of grant funds;
  3. Retaliation against whistleblowers;
  4. Improper hiring practices or personnel decisions;
  5. Falsifying time or work records;
  6. Violations of agency ethics and compliance rules.

The results of an OIG investigation may be made public through published reports. Each OIG has its own practice with respect to publishing investigation results. Some offices publish only a summary of the investigatory findings and others publish redacted final reports.

How Does an OIG Investigation Start?

OIG investigations often start with a whistleblower complaint. This is where I’ve seen a major problem: the whistleblower is often a workplace enemy of the complaint’s target. IGs open investigations without considering the fact that some complaints are made not because of any serious wrongdoing but because the whistleblower sees an easy way to harass someone over a disagreement.

My view is based on a relatively small number of cases, but it’s too much of a coincidence that the majority of my client’s cases started with a problem with a subordinate—a negative performance review, for example. The disgruntled subordinate then goes to the OIG to lodge a complaint and that starts the ball rolling.

It’s the ultimate revenge.

Federal agencies have an OIG hotline to allow for reporting of complaints. The complaints can be made anonymously. This anonymous reporting process serves a legitimate purpose—to encourage employees to report problems without fear of retribution, particularly if the alleged wrongdoer is a supervisor.

The OIGs’ Broad Subpoena Power

OIGs have incredibly broad administrative subpoena power. OIG subpoenas will be enforced by the federal courts as long as they (1) are issued for a lawful purpose, and (2) are reasonably relevant to that purpose, and (3) are not unduly burdensome. Some agencies have internal regulations that govern the issuance of subpoenas, as well.

There are also certain protections in federal statutes, such as the Right to Financial Privacy Act, which requires notice to an account holder when an OIG requests bank records.

Subpoenas can be issued to anyone in the United States, not just federal employees or contractors. This is very broad power, indeed. It’s like  a grand jury subpoena, but there’s not even the cover of a grand jury overseeing the process. It’s just the OIG, acting without oversight.

Why It Is Hard to Represent Someone in an OIG Investigation

An OIG investigation could destroy an employee’s career in the government, so the stakes are high.

The opening of an investigation can injure her professional reputation. Once the investigation is complete, any findings of wrongdoing are reported to an employee’s supervisory chain. The agency may then take certain action against the employee up to and including termination.

OIGs just love to refer cases to the Department of Justice.

Maybe it’s just me, but I always get the sense that the special agents who make up the OIG force live to refer cases to DOJ. If the case is referred, that special agent will often stick with the case and assist the FBI and AUSA in completing the criminal investigation. These agents get dug in; they started the case and they pushed to have it referred . Let’s just say that after all of that work, it’s unlikely an agent will still have an open mind as the investigation progresses.

There is a fundamental lack of fairness in the process because there is no process.

I don’t think that the grand jury system is all that fair, but at least it’s a system—with rules that (most) everyone follows. An OIG investigation has no such system or clear rules.

The employee is at the mercy of the investigation. She generally cannot refuse to be interviewed or she risks losing her job. Even the assertion of the Fifth Amendment may not be available (for reasons I’ll discuss in a later post, I promise.)

Defense counsel are not part of the process as they are in a standard white collar investigation. Although an employee can bring counsel to the interview, it is rare that the OIG lawyers will engage with or hear out defense counsel in the same way that an AUSA would during an attorney proffer.

I’ve literally begged to be heard by OIG lawyers, begged to be given the chance to explain our side of the case. I’ve been told that an agency’s “general practice” is not to hear from defense counsel. (To that particular OIG’s credit, my begging finally worked and I was allowed to make a presentation.)

But think about that for a second: Some agencies’ “general practice” is simply to refuse to listen to the target’s lawyer, or to hear an alternative view of how the facts could be interpreted or to learn how the OIG’s interpretation of the law may be flawed. I’m yet to meet an AUSA who is not willing to talk with me and hear my side of the case. At a minimum, it makes strategic sense–the AUSA will learn my theory of defense and can investigate facts to counteract it.

This is particularly odd given that the Quality Standards for Investigations report (discussed more below) says that agents have “a duty to be receptive to evidence that is exculpatory, as well as incriminating.” In my experience, the agents do not have much interest in finding exculpatory evidence or at least hearing about it from me.

There may be a written report made public.

At the end of an investigation, the OIG will write a report. Some agencies (it seems to be a minority) will publish them on their websites.

Now, the OIG will almost redact the employee’s name. However, people within the agency will likely know about the investigation and know exactly who its subject was. Nothing stops those people from telling others about it. And there’s sometimes no way to respond publicly to the report because the OIG won’t let you report it before it is finalized.

One agency did allow me to review the draft report and write a detailed response letter, published with the report, describing what we thought were its inaccuracies. That struck me as an incredibly fair process.

But other agencies will not even allow you to review the report before it is finalized, to correct any errors. It’s as though some OIGs simply don’t want to hear the other side of the story.

You can’t compare outcomes among cases because most of the information is not public.

For agencies that provide only brief summaries of investigations rather than reports, there’s no way to compare your case to other cases and demand a comparable result for your client. This leads to the perception—or the reality—that the system is unfair. Why should Employee A receive only a reprimand when he gave a contract to a company owned by his brother but Employee B be fired for the same conduct?

OIG investigatory results are not reviewed by any objective decision maker.

As crushing as it is to be indicted, at least it means you will eventually be in front of a jury. If you lose at trial, you can appeal. Your path to prison is littered with objective decision-makers.

Not so with an OIG investigation.

The only decision-maker is the IG herself. Her office opens the investigation, conducts the investigation, determines what law governs and decides the outcome. To expect that an IG is going to be a neutral arbitrator ignores reality. What IG is going to say no to the lawyers and agents within her office who have concluded that there is wrongdoing? Maybe it happens—and I hope it does—but I haven’t seen it.

Are There Any Standards at All?

Eh, kind of. There is an organization called the Council of Inspectors General for Integrity and Efficiency (CIGIE, pronounced sigg-ee). It published Quality Standards for Investigations.

You can read it, but it doesn’t say much that is helpful from the defense perspective. The statements are general and not specific. There’s just not much in there to hang your hat on.

So, you are on your own. I spend time in each new OIG investigation asking colleagues if they have had an OIG investigation from this particular agency. Because every agency conducts investigations differently, it’s hard to generalize from a previous investigation. This creates a lot of uncertainty for my clients and frustration on my part as I try to uncover the investigative method used by this particular OIG.

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4 Responses to OIG Investigations – Why Lawyers and Clients Should Both Worry

  1. An important topic that is often overlooked. I did lots of cases with IGs while at the DC US Attorney’s Office, and it can be just as serious as an FBI investigation.

    • Sara Kropf says:

      Agreed. There needs to be more commentary about these investigations because they really can have negative effects, yet there’s no standard method/process.

  2. brucejohnson20000 says:

    Actually, I think they are completely bias from the moment they take a case. I actually dealt with one who side-stepped every legal right I had. He wouldn’t hear of plausible explanations for what he assumed, he cherry-picked facts to fit the theory of guilt, he overstepped my legal rights on more than one occasion and he attempted to force a false confession out of me on the spot (or he threatened that I would rue not playing ball on his field by his rules). In most settings that is flat-out illegal and yet OIG Dillion did this in full view of a senior SSA investigator as if it was routine.

    What he wasn’t aware of is that I was in possession of a vocorder and I was taping every damn word. I would have said something as I usually give people the benefit of knowing they are being taped (in my case this is a memory aid and not a tool of entrapment) but since he came off like his 26 years of experience means he is never wrong….I felt it better to let him verbally ramble. I wonder if that would be enough to end his career if I made issue of it by filing a counter complaint?

    Yes, they do not have much oversight but they still have to answer to congress. Two HD recordings of his voice/investigation and his choice of tactic could well cost him everything and yet I haven’t pushed the idea because I feel that eventually the SSA will do the right thing in my case. I have let people know of this and the longer my case drags on the more I will speak of what I feel to be a miscarriage of justice. Imagine, if some one like me, can ‘up-end’ some like him….I do not believe in ultimate authority and never will. I do not experience fear as most or threat because of the autism/tbi concerns.

    I actually wouldn’t mind being the first to challenge the concept. I know he was in the wrong and maybe he is a good guy and a decease investigator but I have yet to see that with the outcome of my case. He looked over way to much exculpatory evidence. I have never liked bullies and the bigger they are the harder I like to see them fall. I won’t stop until my name is cleared and that is my intent to the bitter end if needed. It is my singulary purpose.

    It don’t help that so many of the SSA personnel have their noses buried into the OIG backside…I have yet to see one SSA investigator or Judge for that matter that isn’t swing hitting for the OIG in a very two-faced way. I know Peter Johnson and Richard Thrasher seems to be bent at the knee at the alter of the OIG’s proclamation. In my view none of them are worth the change in a bums pocket. I could not discern an ounce of independent thought with these people. Certainly they have no ethics with which to redeem themselves. Indeed!

  3. Shannon L Beebe says:

    Thanks for sharing your insight Sara! We’ve seen these investigations go in both directions – lodged by subordinates against supervisors, but also vice versa.

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