Panel Topic: Investigation of an FCA Case
Editor’s Note: The rest of the posts about the FCA Institute will divide the comments on the topics into three categories: the defense view; the relators’ view; and the government’s view (recognizing that none of the government lawyers who attended had any authority to speak on behalf of the government).
• Relators must be careful about privilege and work-product protection issues—especially in sharing information with the government. Exposing government lawyers to possibly privileged documents can result in ethical and disqualification issues for the government lawyers they hope to work with.
• Relators’ and their counsels’ credibility is vitally important. Counsel should evaluate the following, among other issues:
o What is the relator’s motivation?
o Did the relator attempt to report it internally?
o Does the relator have a personal axe to grind?
o What was the relator’s participation in the scheme?
o What would the relator’s personnel file show?
o What is the relator’s employment and criminal history?
o Does the relator have any psychiatric issues?
• Collection of documents by relators: relators should be allowed to share documents that come to them in the ordinary course of their jobs—but having them search for or take documents from sources they don’t normally have access to is not a good idea.
• Relators’ counsel must understand that their credibility is at stake when they file a complaint. Improper screening of the case will damage their credibility. Think about the next case—maintaining credibility is critical to fostering a good reputation with government lawyers.
• The qui tam complaint is key to the government’s investigation—it should include a clear description of the scheme and an identification of what evidence exists and where it might be found.
• Civil Investigative Demands (CID): the FERA amendments expanded their usefulness. CID examinations fell like depositions, but they are different. Overly aggressive defense tactics at CID investigations are counterproductive. The investigator is going to make the first-line decision about whether to go forward, so attempting to prevent them from obtaining information signals a problem. “Needless antagonism” at the CID stage does not help the defendant’s position.
• Government’s decision about which discovery mechanism to use depends on lots of factors. CIDs are easier for US Attorneys to enforce, but some OIG subpoena procedures are very favorable to the government.
• Early discussions about the scope of the government’s discovery requests between the defendant’s counsel and the government attorney can be helpful when the scope seems too broad. The government does not know the defendant’s system as well as the defendant, so a dialogue about what information the government is after can help narrow the request for information.
• Sealing and Relator Activities: It is important to stress to relators that they cannot talk about the lawsuit when it is under seal, regardless of what the defendant has said or done in public. The DOJ is often willing to discuss the requirements with the relator if having government lawyers amplify the message will help control a client’s activities.
• Government lawyers want to get to the heart of the matter, which requires production of requested information by defendants openly and forthrightly. Such practices will accelerate the government’s investigation and decision-making.
• Partial lift of the seal: While it can be helpful, defendants can get too focused on the relators’ complaint. Instead, the defendant should care about what the government thinks.
• Defendants often focus too much on the identity of the relator—it doesn’t usually matter, it can be a distraction for the defendants and their investigation, and it can lead to improper retaliation problems.
• Government does not want relators to undertake any investigation beyond what they would do in the ordinary course of their jobs—they shouldn’t go look for documents, interview witnesses, etc. Sharing information that the relator has access to by virtue of their positions in the defendant company is perfectly fine, but going beyond that raises concerns, particularly when the information could implicate privilege issues.
• Is there a release that might cover the claims? Are releases in FCA cases enforceable? It used to be that releases that purported to cover FCA cases were not enforceable, but the law is evolving on this topic. The Fourth Circuit has found one to be enforceable.
• Defendants take a different view of what documents a relator may share with counsel and the government. Confidentiality agreements and policies are key to such arguments.
• The type of subpoena a defendant receives can shed light on the type of case the government is pursuing: HIPAA subpoenas are only available in criminal cases; CIDs can be used in both civil and criminal investigations. CID responses require broad certifications of compliance, but many defense lawyers refuse to provide them because they are far too broad.
• CIDs have been litigated on privilege and other issues. There aren’t many decisions on these issues, but they do exist.
• There are lots of ethical traps for defense counsel during the investigation stage.
o Does the defendant’s employee need independent counsel?
o Who is the target?
o Should the 5th Amendment be invoked?
o Similar issues for voluntary self-disclosure: does disclosing voluntarily expose employees to criminal liability? Was the employee told that during internal interview?
• Sharing of information by government with relator raises lots of practical and legal questions.
• Allowing the government to maintain the seal while conducting massive investigations implicates the defendants’ rights.
• Understanding the scope of exposure is very important for defendants—it will determine strategy and tactics. The quality of the internal investigation triggered by the first notice of a government investigation is crucial to determining exposure scope.
• While clients often focus on the identity of the relator—which is often an emotional reaction—it is more often than not a disservice to the development of a defense strategy.