DOJ’s enforcement policy for the False Claims Act (FCA) has largely been static for 30 years or maybe since the forgotten 1998 Holder memo that set out guidelines to assure the FCA was not recklessly deployed for provider billing mistakes. In the last year or so, however, the policy guidance has been astonishing, insightful, and suggests a new attitude is afoot. First, we had the popularly described “Granston Memo” in 2018 on the criteria for seeking dismissal of declined whistleblower suits, which is now part of the Justice Manual and, in fact, there has been an increase in DOJ dismissals as there should be in this practice area.
Now, guidance to the Justice Manual specific to FCA matters announces detailed criteria for cooperation credit. There is much that is practical and routine in the guidance but also some big departures from prior “policy” or practices. Big picture, it seems DOJ is trying to proactively lead and manage the appropriate use of this highly punitive statute. This objective may be a challenge in the face of the whistleblower bars’ view that the statute’s prerogatives are their own. The guidance gives DOJ counsel considerable leeway to address the most appropriate track for investigations. More practically, the cooperation credit guidance gives a roadmap for companies under investigation to navigate to the best result possible in any FCA investigation.
A few notable points:
The guidance heavily emphasizes voluntary disclosure as the key action to obtaining cooperation credit but also states that there can be no cooperation credit for doing something required by law. This suggests health safety and overpayment disclosures may be exempt from the guidance. Nevertheless, partial credit is authorized and there are significant incentives for partial credit with transparent and collaborative approaches to the FCA investigation if the initial disclosure did not occur.
Compliance program improvements during an investigation may be considered in assessing cooperation or the most appropriate remedy. This position is sensible and also in direct conflict with the HHS OIG position in healthcare fraud matters that compliance improvements during an investigation carry no weight in evaluating “risk” for potential imposition of a corporate integrity agreement (CIA).
Cooperation is not just a potential monetary reduction but may be proactive assistance with parallel agency matters and “assisting the entity or individual in resolving qui tam litigation with a relator or relators.” This position is a welcomed and big departure from DOJ’s historic practices and more in line with the true objective of DOJ managing agency parallel proceedings. DOJ may also consider remedial efforts undertaken by the company to address the underlying wrongful conduct, including termination of employees. There are clear incentives to clean house for those responsible for the wrongful conduct.
So often in FCA practice the government conference room discussions focus on policies about what can or cannot be done in reaching creative resolutions or decisions in FCA matters. This written guidance on cooperation credit signals that government attorneys have broad discretion to be creative in FCA matters if the right circumstances materialize. It’s up to the entities and FCA practitioners to try and make it happen.