History of Hotlines

Ideally, there always should be internal channels in any company through which concerns might be articulated.  Numerous industries instituted hotlines to achieve open lines of communication.  Specifically, the defense industry in the 1970s and the banking industry in the 1980s utilized hotlines for the centralized reporting of possible misdeeds.  Other industries, especially after the United States Sentencing Commission, in November of 1991, issued “Guidelines for Organizations and Entities” that suggested the use of hotlines to report suspected activity, began to use ethics and compliance hotlines.  More recently, hotlines have become prevalent in all industry sectors for the reporting of numerous issues including, but not limited to, the following:

• Violations of Pertinent Laws, Rules and Regulations
• Fraud, Waste and Abuse
• Workplace Violence
• Workplace Safety
• Sexual Harassment
• Discrimination
• HIPAA Violations
• Substance Abuse
• Conflicts of Interest
• Accounting and Auditing Violations
• Code of Conduct Issues
• Theft of Goods and Services
• Inappropriate Management Activities
• Billing Matters
• Human Resource Issues
• Operational Improvement Suggestions

When reflecting upon 2002, the year in which Time magazine named the “whistleblowers” of the FBI, Enron and WorldCom as the Persons of the Year, it becomes increasingly apparent that the focus on corporate fraud and accountability will not soon diminish.  As such, entities that initially instituted hotlines to fulfill compliance program requirements should now experience further levels of comfort in that their organization’s hotline can also be used to meet the reporting mandates detailed in the various laws, rules and regulations introduced as a result of the corporate fraud schemes uncovered throughout the U.S. in the past several years.

Besides being an integral component of an organizational compliance program, hotlines also represent sound management practices.  Recent legislation like the Sarbanes–Oxley Act and the guidelines adopted by the various stock exchanges are evidence of the government’s heightened scrutiny of corporate America.  Under Section 301 of the Sarbanes-Oxley Act, or the Corporate and Criminal Fraud Accountability Act of 2002, Audit Committees of publicly-traded companies are mandated to establish procedures for the confidential or anonymous submission by employees of concerns regarding questionable accounting or auditing matters.  Although the requirement is only directed at publicly-traded organizations, many ethics-oriented entities are adopting the suggestion as a best practice standard.

Best Practices for Hotlines

Although this article will not delve into whether an organization should implement an internal reporting mechanism or utilize an external third-party hotline service, it is of utmost importance that entities chose a method and make it convenient for intended parties to utilize the chosen reporting mechanism.  Furthermore, the manner in which hotlines are established and publicized can affect their utility.  To that end, employees and others should be routinely advised, via communication tools (posters, wallet cards, magnets, pens, employee news articles) that the organization has a stringent Code of Conduct that must be adhered to by all relevant parties.  In furtherance of that message, individuals should continually be reminded of the organization’s desire to be informed of illegal or unethical behavior via reports to management, the compliance or ethics officer or, in this instance, the hotline.

In addition to ensuring, to the extent possible, that callers are able to remain anonymous and will not be subject to retaliation for good faith reporting efforts, hotline callers should be able to access a live operator 24 hours a day, 365 days a year.  Voice-mail is not advisable for several reasons in the hotline arena.  First, the potential liability for not timely responding to serious issues or, in the worst-case scenario, not responding at all, is possibly devastating.  Second, many individuals will not leave a message on an answering machine for fear that they could be identified at a later time by a voice recording.  Finally, trained specialists, unlike voice mail, are able to illicit important facts that will likely assist in an investigation of possible wrongdoing.  Live operators are also able to afford the caller the opportunity to call back and, by referencing a pre-assigned tracking number, check the status of his or her reported concern.

It is imperative that a hotline be accompanied by tracking or case management systems evidencing the reported matter and its eventual resolution.  It is also advisable to occasionally call your own hotline to “test” the effectiveness of the reporting mechanism and note the placement of the test call in the organization’s hotline log.

Whether attempting to attain compliance with the United States Sentencing Commission, or meeting other regulatory directives, your entity’s hotline should, at a minimum, include (or not include) the following:

• 24/7 Toll-Free Accessibility
• Language Translation Services Which Are Immediately Available
• No Voicemail or Recording Devices
• Confidentiality Assured
• No Caller ID
• Immediate Report Dissemination
• Non-Retaliation Assured
• Communication Tools That Are Routinely Publicized
• Case Tracking System Allowing Callers The Option To Check On
• Progress Of Investigation
• Repeated Testing Of System

In closing, the proper and efficient operation of a hotline will not only evidence a provider’s commitment to ethical behavior but, in most instances, greatly reduce organizational liability.  In an unparalleled era of corporate scrutiny, the implementation of a hotline is the most effective and cost-efficient means to demonstrate an organization’s commitment to fraud control, compliance and due diligence.

About the Author:

Andrew S. Quinn, Esq. is a principal with Compliance Concepts, Inc., the parent organization of ComplianceLine, a hotline-reporting device with more than 33,000 client locations worldwide. Previously, Andrew served as an Assistant U.S. Attorney with the Justice Department and prosecuted health care fraud matters throughout the U.S.

For more information, contact:
Andrew Quinn, Esq.
800-327-3014
aquinn@ccius.com