Caldwell Indicates DOJ Criminal Division Will More Heavily Scrutinize Qui Tam Complaints for Criminal Investigation
During a speech at the Taxpayers Against Fraud Education Fund Conference in Washington D.C., on Sept. 17, recently confirmed Assistant Attorney General for the Criminal Division of the DOJ, Leslie Caldwell, announced the formal adoption of a new policy within the Criminal Division, which will require criminal prosecutors in the Criminal Division’s Fraud Section to more closely scrutinize, and more actively investigate civil qui tam complaints filed by private relators under the Federal False Claims Act. According to Caldwell, the Fraud Section will now be expected to take a more active role in the investigation and prosecution of fraud schemes identified by private whistleblowers. The Civil Division, who has ultimate enforcement authority over the False Claims Act, is required to review and assist U.S. Attorney’s Offices around the country in investigating and litigating private whistleblower complaints under the statute. Since at least 2007, prosecutors in the Fraud Section have received and reviewed qui tam complaints forwarded by the Civil Division. However, active prosecutions arising out of this review process have been few and far between. It could be that limited resources arising from several hiring freezes coupled with the Section’s own aggressive enforcement agenda under the Medicare Fraud Strike Forces have inhibited the ability of the Fraud Section to successfully pursue these cases.
The new policy will likely impact FCA defendants in several ways. First, if the Criminal Division will be involved in more cases going forward, settlements may become more challenging to reach, as associated releases from the DOJ will now likely involve more formalized sign off from the criminal division. Second, the new policy raises the risk that Defendants will be faced with increased pressure to cooperate and settle early to avoid more costly, and higher risk criminal investigations. Finally, discovery costs associated with cooperating in parallel investigations can significantly increase the cost of effective defense against fraud enforcement actions. How robust this new policy will actually prove to be, and how much of an impact it will ultimately have remains to be seen. However, healthcare providers seeking reimbursement from federal programs should be aware that the risk of non-compliance has never been greater.