FCA UPDATE
FCA UPDATE
Exploring Recent Developments in False Claims Act Litigation, Enforcement and Compliance
FCA UPDATE
Exploring Recent Developments in False Claims Act Litigation, Enforcement and Compliance
cooperation credit
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DOJ Preserves Its Options in Cooperation Credit Guidance

By and on Jun 21, 2019
Posted In

Last month, the Civil Division of the Department of Justice (DOJ) announced the release of formal guidance to DOJ civil attorneys on how to award “cooperation credit” to defendants who cooperate with the Department during a False Claims Act (FCA) investigation. The formal policy, added to the Justice Manual Section 4-4.112, identifies the type of cooperation eligible for credit.

As announced by Assistance Attorney General Jody Hunt, DOJ believes the guidance reflects “important steps to incentivize companies to voluntarily disclose misconduct and cooperate with our investigations … False Claims Act defendants may merit a more favorable resolution by providing meaningful assistance to the Department of Justice—from voluntary disclosure, which is the most valuable form of cooperation, to various other efforts, including the sharing of information gleaned from an internal investigation and taking remedial steps through new or improved compliance programs.”

Under the policy, cooperation credit in FCA cases may be earned by 1) voluntarily disclosing misconduct unknown to the government, 2) cooperating in an ongoing investigation or 3) undertaking remedial measures in response to a violation. The first type of cooperation is straightforward: self-disclosure before a government investigation begins.

The second type of cooperation has two flavors. First, where the government has already initiated an investigation, a company may receive credit for disclosing other misconduct uncovered by the company through the course of its internal investigation that is unknown to the government. Second, DOJ lists 10 examples of other cooperative activities for which a company may earn credit for undertaking during an investigation, including

  • Identifying individuals substantially involved or responsible for the conduct;
  • Admitting liability or “accepting responsibility” for the conduct; or
  • Assisting the government in its investigation by, for example, preserving relevant documents and information beyond existing business practices or legal requirements, identifying individuals who are aware of relevant information or conduct, and facilitating review and evaluation of data or information that requires access to special or proprietary technologies.

The third type of cooperation involves taking into account remedial actions that a company has taken in response to a FCA violation. Such remedial measures may include

  • Undertaking a thorough analysis of the root cause of the misconduct;
  • Implementing or improving an effective compliance program designed to ensure the misconduct or similar problem does not occur again;
  • Appropriately disciplining or replacing those responsible for the misconduct;
  • Accepting responsibility for the violation; and
  • Implementing or improving compliance programs to prevent a recurrence.

(more…)



Updated Yates Memo Still Has Force In Civil Domain

By and on Jan 24, 2019
Posted In ,

In September 2015, Deputy Attorney General Sally Yates issued the Yates memo on individual accountability in the context of corporate investigations. It is no understatement to say that this memo created a near-cottage industry of articles and panels on the memo’s impact on government investigations and officer/director liability.

After the change in administration, a favorite parlor game of the defense bar was wagering on the memo’s survival. And after Deputy Attorney General Rod Rosenstein revealed, in September and October 2017, that the Yates memo was under active reconsideration, discussions turned serious about whether the memo would be preserved, diluted or outright reversed and whether the distinctions between criminal and civil False Claims Act matters would receive needed nuance.

Click here to read the full article as published in Law360.



Cooperation in the Eye of the Beholder: DOJ Official Bill Baer Elaborates on Cooperation in False Claims Act and Other Civil Enforcement Matters

By and on Oct 18, 2016
Posted In ,

The law is uncertain. One example of this uncertainty is how the “Yates memo” is to be applied in civil cases — in particular, what constitutes “cooperation” and how cooperation may benefit a company under investigation for False Claims Act violations. On September 29, 2016, DOJ attempted (for a second time) to address the lack of clarity surrounding cooperation in civil matters. While DOJ provided some more detail on what it viewed as “full cooperation,” and indicated that “new guidance” had been issued within DOJ on cooperation in civil enforcement matters, it still failed to give concrete guidance on how such cooperation may benefit a company in a FCA or other civil resolution. In essence, DOJ is saying “Trust Us” to companies considering the potential benefits of cooperation.

Read the full article here.



Insuring Against Yates: The Impact on D&O Insurance

By and on Jul 12, 2016
Posted In ,

The Yates Memo has many landscape-changing implications for corporate investigations, including the need for enhanced Upjohn warnings and the potential suppression of joint-defense agreements between corporations and their constituents (officers, directors, employees, shareholders). This new terrain exists because in order to receive cooperation credit from the government, companies must investigate and disclose all facts about corporate wrongdoers. With the spotlight shining on corporate actors from the outset, there will be an inevitable increase in individuals seeking to have independent counsel represent them early in the investigatory process. Defense costs will surely escalate under the new Yates directive. This has several important implications for D&O liability insurance coverage.

Read more here.



The Yates Memo’s “All Relevant Facts” Requirement Leaves Privilege Protections in Flux

By and on May 25, 2016
Posted In

The Individual Accountability for Corporate Wrongdoing Memorandum (the Yates Memo), issued by the US Department of Justice (DOJ) on September 9, 2015, lays out a new, six-part policy relating to the investigation and prosecution of individuals involved in corporate wrongdoing. Perhaps the most significant aspect of the new policy requires that a company must provide the government with “all relevant facts relating to the individuals responsible for the misconduct” in order for the company “to be eligible for any cooperation credit.” Historically, “cooperation credit was a sliding scale of sorts” for companies allowing them to receive “at least some credit for cooperation, even if they failed to fully disclose all facts about individuals.” Under the new policy, “providing complete information about individuals’ involvement in wrongdoing is a threshold hurdle that must be crossed” before the DOJ will consider any cooperation credit. This all-or-nothing requirement begs many unanswered questions about the consequence to the attorney-client and work product privileges as part of both the corporation’s internal investigation process and the government’s cooperation credit analysis. (more…)



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