DOJ Releases Cooperation Credit Guidelines in False Claims Act InvestigationsPDF
Whether to cooperate with the government is one of the most important decisions an entity or individual must make when facing investigation by the U.S. Department of Justice into potential False Claims Act violations. Cooperation is not required, but purposeful cooperation may lead the government to agree to a reduction in penalties or damages, or to offer other forms of credit.
Recently, the DOJ issued guidelines explaining how entities or individuals may obtain cooperation credit and what form the credit may take.
Forms of Cooperation
The guidelines focus on three different forms of cooperation.
Voluntary Disclosure. Voluntary disclosure occurs when an entity or individual voluntarily discloses false claims or fraud that were previously unknown to the government. This includes disclosure of additional misconduct learned during the course of an internal investigation into the government's concerns that goes beyond those concerns. Disclosure must be voluntary, proactive and timely.
Other Forms of Cooperation. The guidelines identify a non-exhaustive list of steps an entity or individual can take to cooperate with an ongoing investigation. The guidelines state that an entity or individual does not have to satisfy all of these measures to qualify for cooperation credit. Other forms of cooperation include:
- Identifying individuals responsible for or substantially involved in the misconduct;
- Disclosing relevant facts and identifying opportunities for the government to obtain evidence relevant to the government's investigation that is not in the possession of the entity or individual or not otherwise known to the government;
- Preserving, collecting and disclosing relevant documents and information beyond legal requirements or existing business practices;
- Identifying individuals who have relevant knowledge;
- Making company officers and employees with relevant information available for meetings, interviews, examinations or depositions;
- Disclosing facts relevant to the government's investigation gathered during the entity's independent investigation;
- Providing information concerning potential misconduct by third parties;
- Providing information in its original format and facilitating review of the information;
- Admitting liability and accepting responsibility for misconduct; and
- Assisting in the determination and recovery of losses caused by the misconduct.
For both voluntary disclosure and other forms of cooperation, the DOJ will consider the value of the cooperation by reference to: (1) the timeliness and voluntariness of the assistance; (2) the truthfulness, completeness and reliability of the information provided; (3) the nature and extent of the assistance; and (4) the usefulness of the cooperation.
Remedial Measures. The DOJ also will consider whether an entity has taken appropriate remedial actions in response to the alleged FCA violation, such as:
- Thoroughly analyzing the cause of the alleged violation and, where appropriate, remediating the cause;
- Implementing or improving a compliance program so the misconduct does not reoccur;
- Disciplining or replacing responsible employees; and
- Taking any additional steps demonstrating recognition of the seriousness of the misconduct, acceptance of responsibility for it and implementation of measures to reduce the chance of reoccurrence.
Forms of Credit
To earn maximum cooperation credit, an entity or individual should undertake a timely and complete self-disclosure, fully cooperate with the government's investigation and take appropriate remedial steps.
Even if an entity or individual does not qualify for maximum credit, it may receive partial credit if it has meaningfully assisted the government's investigation through its cooperation.
Where cooperation by the entity or individual warrants credit, the DOJ has discretion to award it. Most often, credit will take the form of a reduction in penalties or damages. However, the maximum credit available to an individual or entity may not exceed an amount that would cause the government to receive less than full compensation for its losses caused by the misconduct.
Additional forms of credit may include: (1) the government notifying a relevant agency about an entity's or individual's cooperation so that the agency may consider that cooperation in evaluating its administrative options; (2) publicly acknowledging the cooperation; and (3) helping the entity or individual in resolving qui tam litigation.
The DOJ guidelines highlight some additional and important points.
First, cooperation does not include disclosing information required by law, merely responding to a compulsory process (e.g., a subpoena or investigative demand), or disclosing information that is under an imminent threat of discovery or investigation. But cooperation may include disclosing additional relevant information or proactively helping the government understand the context or significance of documents or information.
Second, the DOJ will not award credit to an entity or individual that conceals involvement in the misconduct by senior officers or directors or that otherwise shows a lack of good faith to the government during the government's investigation.
Third, entities and individuals are entitled to assert their legal rights and (unless required to do so by law) do not have to cooperate with a government investigation.
Fourth, cooperation credit is not predicated on a waiver of the attorney-client privilege or work product protection.
Finally, the guidelines are just that – guidelines – and do not create any enforceable rights. The guidelines caution that the DOJ takes into account "many considerations" when evaluating how to resolve FCA matters, including the nature and seriousness of the violation and the harm or risk the violation creates. The guidelines note that some of these considerations may reduce or eliminate the cooperation credit available to an entity or individual.
For more information about how entities or individuals may obtain cooperation credit from the DOJ in connection with FCA investigations, please contact a member of Robinson Bradshaw's Governmental and Internal Investigations Practice Group.
This article was prepared with the assistance of Atiana J. Johnson, a rising 2L student at Howard University School of Law.