Congressional Investigations: What to Expect from the 116th Congress

Just a month into the 116th Congress, congressional investigations are already proving to be a major focus of both the House of Representatives and Senate. As we noted last November, the oversight agenda will focus in part on ethics-related matters. But a vast array of other topics will be under investigation as well - with Democrats in control of the House for the first time in eight years, and oversight-minded Chairman Charles Grassley leading the Senate Finance Committee, congressional investigations are likely to span across numerous industries and issues. In the House of Representatives, Financial Services Chairwoman Maxine Waters has signaled the committee will conduct extensive investigations of large financial firms. The Committee on Oversight and Reform has held the first of what will be numerous hearings on pharmaceutical prices, and the Ways and Means Committee is likely to do so too, along with tax-related oversight. The Energy & Commerce and Judiciary committees have announced a joint hearing on the merger of T-Mobile & Sprint. In the Senate, Finance Committee Chairman Charles Grassley has indicated he will conduct a series of investigations and likely hearings on pharmaceutical prices, beginning with producers of insulin.

For even the most experienced and well-resourced companies, congressional investigations can be a harrowing experience. While Congress' power to investigate does not appear in the Constitution, courts have long held that Congress' investigative powers extend as broadly as its power to legislate. In reality, this has meant that a congressional committee will investigate virtually any matter it deems appropriate. Many congressional committees have a formidable arsenal by which to conduct investigations, including compulsory subpoenas for documents, staff-led depositions, or witness testimony in a public setting. Each house of Congress can hold an individual in contempt for failure to comply with a subpoena, or refer matters to the Executive Branch for criminal investigation, especially in cases where an individual is believed to have lied to Congress. While most congressional investigations are conducted through voluntary document requests and information meetings, the weapons Congress has to compel compliance, if it so chooses, always loom in the background of any voluntary process.

Congressional investigations often take place very publicly and can start without warning, with the public release of a voluntary document request creating headlines that can harm an individual's or company's reputation and other interests. Unlike civil litigation or Executive Branch investigations, there is no judge or neutral third-party arbiter to resolve disputes and no standard for launching an investigation. In most cases, the only real recourse to resolve disputes over the scope of requests, requests to respect privileges or confidentiality, or efforts to extend response deadlines are through negotiations with the chairperson and committee staff conducting the investigation and decisions on these matters are largely at their discretion. They are, in essence, both prosecutor and judge. The investigative powers of House committees have also vastly expanded since last time Democrats held the gavel, including new powers to conduct staff-led depositions and the ability for a committee chair to issue subpoenas without the agreement of the ranking member, though these rules differ for each committee.

Few sectors are safe from the risk of congressional investigations in the 116th Congress. Most committees in the House of Representatives are expected to conduct extensive oversight and investigations, including the Ways and Means, Energy and Commerce, Judiciary, and Oversight and Reform committees. In the Senate, the Committee on Finance and Permanent Subcommittee on Investigations, under chairman Charles Grassley and Rob Portman, are likely to be very active as well. Chairman Grassley has already pledged to undertake rigorous oversight of health care consolidation, not-for-profit hospitals, and drug prices. Likely subjects of investigation include:

• healthcare price-related investigations, including multiple and overlapping investigations of drug pricing, hospital billing, and industry consolidation
• companies in the healthcare supply chain, including wholesale distributors and pharmacy benefit managers
• companies and organizations related to President Trump and his business interests
• companies that have interacted with the Administration and allegedly received favorable treatment, including federal contractors or licenses and recipients of tariff waivers
• tech and social media companies' use of consumer data and activities around the 2016 election
• data breaches and data security at large repositories of personally identifiable information, such as credit rating agencies and consumer retailers
• telecommunications firms, including industry consolidation and practices related to Net Neutrality
• tax-exempt entities, including tax-exempt hospitals, universities, credit unions, and the use of tax exemption
• activities of the financial sector, including executive compensation, the use of consumer data, and other practices affecting consumers
• ethics matters concerning current and former Administration officials

Any list of likely investigation is bound to come up short of the full scope of matters that will be the subject of congressional oversight during the 116th Congress. Rather than waiting until Congress comes calling, those that may be at risk of congressional investigations should begin by understanding those risks and engaging with experienced counsel who understand how to manage them. Negative outcomes in a congressional investigation can include not only reputation-damaging public hearings, but also criminal liability and damage to one's legislative, regulatory, litigation, and investor interest. This setting is unique, and approaching it as one might approach civil or criminal litigation can lead to disastrous consequences. By treating congressional investigations as the unique political and legal challenge that they are, those who are subject to them can significantly minimize the risks they pose.

Holland & Knight's Congressional Investigations Team is well positioned to handle all aspects of a congressional investigation and related matters. Our Congressional Investigations Team and Political Law practice are seamlessly integrated and consists of professionals who have led congressional investigations as committee chairpersons, key congressional investigations staff, political law experts, white-collar litigators, and public policy professionals.