Government Agents Are at the Door: Is Your Company Ready?

How to prepare for unannounced investigations, inspections, and subpoenas

By John Harris, Michael Anderson, and Gabriela Chartier

What starts as a normal workday can quickly devolve into turmoil when Government agents show up unannounced. Perhaps they have a search warrant. Maybe it’s a grand jury subpoena, a civil investigative demand, or an administrative subpoena. Or maybe agents are exercising their walk-in authority. Either way, unannounced demands by Government officials for company records, inspections of company facilities, and interviews with company personnel make for a bad day at the office.

This type of surprise “visit” typically signals that your company already is or may soon be squarely in the Government’s crosshairs. If your company operates in a highly regulated sector like healthcare, government contracting, food and drug, pharmaceutical, or environmental, there is an inherent risk of surprise compliance inspections and investigations given the complex regulatory schemes governing these industries.

If you’re caught unprepared, the impact can range from disruptive to devastating. Your response in these moments can determine whether operations resume quickly, whether you remain on the Government’s good side, and whether you preserve the ability to mount a viable defense if allegations arise. Without that footing your already bad day can escalate into serious civil—or even criminal—exposure.

The good news is that you can plan for the unexpected. Smith Anderson’s attorneys are equipped and ready to help you prepare for, understand, and navigate these surprise visits to minimize any potential harm to your company and employees.

Can Government Agents Just Show Up At My Office?

The short answer is yes, and it happens with regularity.  

Unannounced Government visits can come in a variety of forms. Certain state and federal agencies have the legal “walk-in authority” to conduct on-the-spot inspections and investigations if they believe that a company or its employees are engaged in legal violations. This means they do not need a warrant, and they do not need to provide notice. Agents can simply show up, demand and copy records, and enter and inspect facilities. These investigations can be triggered when Government officials receive complaints from employees, customers, patients, contractors, or whistleblowers accusing a company of wrongdoing. They can also arise from the Government’s own data mining and analytics (especially in the healthcare context). Either way, in response to a credible lead, the Government may be able to use its walk-in authority to investigate.

What Can Government Agents Ask For?

Government agencies exercising their walk-in authority can only request materials related to the area the agency regulates. For example, the Department of Health and Human Services – Office of the Inspector General (“HHS-OIG”) has walk-in authority related to fraud, waste, and abuse in healthcare programs. It cannot, for example, request materials related to violations of the Clean Air Act. Other agencies with walk-in authority include the Food and Drug Administration, the Occupational Safety and Health Administration, the Environmental Protection Agency, the Centers for Medicare and Medicaid Services, and state health, labor, environmental, and licensing departments. All are similarly limited to their zones of regulation.

By contrast, agencies without walk-in authority (such as the Federal Bureau of Investigation, the Drug Enforcement Administration, and the Internal Revenue Service) must have a warrant or subpoena to conduct an unannounced inspection or investigation. When Government officials conduct a search pursuant to a warrant or subpoena, strict compliance with a warrant or subpoena is generally mandatory, although experienced counsel can help navigate the process and potentially negotiate a more limited production or a more extended timeline.

In some cases, Government agents may not ask to conduct any kind of “search” or “inspection,” but they may come in person to deliver a subpoena or civil investigative demand for records to be produced at a later date—for instance, in connection with a qui tam suit brought by a relator.  The in-person delivery, however, may become an opportunity to assess whether individuals will voluntarily share information or consent to interviews.

During any of these unannounced visits, the Government may ultimately obtain records, documents, files, notes, and communications, and may inspect facilities related to its investigation. But there are several best practices you can implement to prepare for and navigate these surprise visits to minimize the disruption and harm to your company.

Be Prepared. Make a Plan. Put It Into Action.

In these high-stakes situations, preparation is what separates good results from chaos. Create a plan before Government investigators are in your lobby. Your response plan should be designed to maintain a polite and cooperative posture toward Government agents and their investigation while simultaneously protecting your rights and interests by ensuring the Government is acting within the legal boundaries.  

• Designate a specific point person to manage communication with the agents. This seems simple, but companies can get themselves into trouble when they do not have clear lines of authority for communication. Without this, you risk employees informally sharing information off-the-cuff with Government agents.  As a matter of good practice, you should ideally have only one or two people at the company communicating directly with investigators to keep the investigation as controlled as possible.  Whether it’s your general counsel, a senior official responsible for operations or litigation, a chief compliance officer, or even outside general counsel, your team should know who to contact when Government agents arrive.
• Maintain well-organized, easily accessible records. Keep certain information readily available in the event of an investigation. Permits, safety protocols, audit results, approved plans, and compliance materials should all be stored in an easily accessible location. The better your recordkeeping, the better able you will be to quickly comply with Government requests and get your team back to work.  And perhaps more critically, the better you will be able to track (and copy) exactly what you provide. Having a copy of those materials will enable a rapid and robust defense if necessary. This may also require collaboration with your IT department if the relevant documents and communications are numerous or complicated to transfer.  Know your retention requirements and implement the policies to comply with them. 
• Train your staff. A great plan is only as good as its implementation.  You should inform and train relevant executives and employees about the potential for these surprise investigations, so that essential personnel are prepared.  That includes everybody from the receptionist to the senior executives. Employees may be asked to provide certain materials and information or provide access to facilities during an investigation. Be sure those employees understand their key responsibilities and know who the designated point person is.  Tabletop exercises are particularly helpful. They can animate written policies, identify weaknesses or shortcomings, and meaningfully improve your ability to respond when—not if—the moment comes. 
• Establish outside counsel relationships early. You should maintain an ongoing relationship with trusted outside counsel with government investigations experience. Outside counsel can help prepare policies and procedures, conduct compliance audits and risk assessments, and be your first line of defense when Government investigators arrive.  Immediate and proper counsel from experienced practitioners who are familiar with your business is critical to protecting your rights and ensuring a fair process.  Involving a lawyer in the process can also trigger certain legal protections and allow your team to better understand the scope of the investigation before Government agents obtain access to materials or facilities.  Develop those relationships now.  There may not be time to vet and schedule introductory calls with law firms when investigators are combing through your filing cabinets and asking to interview your employees.

Be Ready Before Agents Arrive

Surprise visits from Government investigators can be extremely stressful events, even for prepared companies. Operating in a highly regulated industry or with public dollars at stake increases the likelihood that Government agents may come knocking. Smith Anderson attorneys can advise companies on their compliance, develop an investigation response plan, navigate surprise Government investigations, and minimize disruption to operations.

If you have any questions, please contact John Harris, Michael Anderson, Gabriela Chartier, or the Smith Anderson lawyer with whom you usually work, and we will be happy to help review your policies or help you get a plan in place.