How to Earn Important “Points” in False Claims Act Investigations

The U.S. Department of Justice (DOJ) has issued “Guidelines For Taking Disclosure, Cooperation and Remediation into Account in False Claims Act Matters.” These Guidelines identify factors that will be considered and credits that will be provided by the DOJ when providers voluntarily self-disclose misconduct that may serve as the basis for False Claims Act (FCA) violations, take other steps to cooperate with investigations and settlements, or take adequate and effective remedial measures.

The DOJ first emphasizes that it has the discretion to take a variety of factors into account when evaluating appropriateness of resolution of FCA violations. It also has the discretion to reduce credits available to providers or to decide that providers are ineligible for any credits.

Voluntary Disclosures

The DOJ has a strong interest in incentivizing providers to voluntarily disclose violations of the FCA. According to the Guidelines, providers that make “proactive, timely, and voluntary self-disclosures” to the DOJ will receive credit during the resolution of FCA cases. If providers discover additional misconduct during internal investigations, the voluntary self-disclosure of additional misconduct may also qualify providers for credit.

Other Forms of Cooperation

Providers can also earn credit by cooperating with ongoing government investigations in a variety of ways, depending on the factual and legal circumstances of particular violations.

Examples of other forms of cooperation include:

  • Identifying individuals substantially involved in or responsible for the misconduct
  • Disclosing relevant facts and identifying opportunities for the government to obtain evidence related to the investigation that is not in the possession of providers or not otherwise known to the government

Remedial Measures

The DOJ will also consider whether providers have taken appropriate remedial action in response to FCA violations. Examples of appropriate remedial action include:

  • Demonstrating a thorough analysis of the cause(s) of the underlying conduct and, if appropriate, taking remedial action to address the cause(s)
  • Implementing or improving an effective compliance program designed to ensure the misconduct or similar problem does not recur

Credit for Disclosure, Cooperation, and Remediation

If the conduct of providers warrants credits, the DOJ has the discretion to reward them. Most often, credits will be given in the form of reductions in penalties or multiples of damages sought by the DOJ. The maximum credit that providers may earn may not exceed an amount that would result in the government’s receipt of less than full compensation for the losses caused by providers’ misconduct, including the government’s damages, lost interest, costs of investigation, and any shares of settlements awarded to relators or whistleblowers.

The DOJ emphasizes that credits awarded to providers are discretionary, not entitlements.

Other Considerations

The DOJ will not award any credit to providers that conceal involvement in misconduct by members of senior management or the Board of Directors, or to providers that otherwise demonstrate a lack of good faith during investigations.

In the midst of investigations of FCA violations, providers usually need all of the help they can get! The DOJ has now provided a clearer “path” to limitations on adverse consequences of such investigations.

©2019 Elizabeth E. Hogue, Esq. All rights reserved.

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