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Plenty of questions swirling around FCA's new cooperation credit guidelines
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Category: False Claims Act, Department of Justice, DOJ

Plenty of questions swirling around FCA's new cooperation credit guidelines

05.28.19

The Department of Justice (DOJ) provided a long-awaited update on how it will assign cooperation credit in civil False Claims Act (FCA) cases, but the new guidelines have left defendants with as many questions as answers.

Defendants have wondered for some time whether and how the government gave credit for cooperation in civil FCA cases and section 4-4.112 of the Justice Manual clarifies some of those points. The new policy, intended to “incentivize companies to voluntarily disclose misconduct and cooperate with investigations,” according to the DOJ, establishes guidelines for companies to:

  1. voluntarily disclose FCA violations uncovered internally
  2. cooperate with investigators related to the case
  3. undertake remedial steps towards compliance

While these guidelines build off of previous DOJ initiatives to encourage cooperation, the new guidelines prescribe more specifics to what will, and will not, garner a defendant credit. The DOJ states that “proactive, timely, and voluntary self-disclosure” of misconduct, even if it is misconduct unrelated to an ongoing investigation, is one of the ways in which a company may earn credit. Those companies that cooperate with an ongoing investigation, such as by providing access to data and information that may be difficult for the DOJ to otherwise obtain, and identifying culpable individuals will receive credit. Likewise, a company that preserves relevant documents and information beyond the scope of the initial investigation and beyond legal and business requirements may earn credit. Corrective actions undertaken could also earn a company credit. The DOJ illustrated such remedial measures with examples including analysis of the root cause and remediation to correct it; disciplining and replacing individuals responsible; implementing or improving an effective compliance program.

This is where it gets hazy, however. Outside of the DOJ’s examples of remedial measures and voluntary cooperation there is little clarification on what may and may not qualify a company for credit and that means a defendant will need to weigh the risks of further litigation exposure. There is ambiguity built right into the language of the policy as well, with emphasis on “effective” compliance. While more clarity on how to earn credit in a civil FCA case, is welcome, healthcare organizations will need to consider all the factors of their individual situation. Choosing to voluntarily disclose misconduct or provide access to materials that could expose misconduct has potential consequences for a company. Without firm guidance outside of the handful of examples provided by the department, companies will have to parse this new guidance and make a decision of whether the information or assistance they may be able to provide will garner them some benefit.

That is not the only question that providers and other targets of FCA investigations will be left asking. While the DOJ states that “credit will take the form of a reduction in the damages multiplier and civil penalties,” and could potentially result in the DOJ informing other agencies or the public about a company’s voluntary cooperation in the matter, the latest policy does not outline any standardized benefit a defendant can expect to receive in exchange for credit. While it may advantage a defendant for DOJ to put other agencies on notice of willing corporation, the real hammer of the FCA is monitory. Only time will tell what’s specific reductions DOJ is willing to make to multipliers or damages models for specific actions of an entity under investigation. As it stands, the language of this guidance rightfully begets further questions about whether defendants will be able to count on monetary exposure being reduced by an expected amount.



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