September 17, 2019

September 17, 2019

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September 16, 2019

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DOJ Issues Cooperation Guidance for False Claims Act Matters

On May 7, 2019, the United States Department of Justice (DOJ) issued formal guidance regarding its award of credit to companies and individuals who cooperate in DOJ False Claims Act (FCA) investigations. In conjunction with the announcement, DOJ included a new section in its Justice Manual to reflect the guidance. See Justice Manual § 4-4.112. This guidance explains how companies and individuals can receive credit – in the civil context – for disclosing, cooperating, and remediating matters involving FCA allegations. Assistant Attorney General Jody Hunt explained, “The Department of Justice has taken important steps to incentivize companies to voluntarily disclose misconduct and cooperate with our investigations; enforcement of the False Claims Act is no exception.” See Department of Justice Issues Guidance on False Claims Act Matters and Updates Justice Manual, U.S. Dep’t of Justice (May 7, 2019), available here.

The guidance identifies three distinct ways entities or individuals may receive partial or full cooperation credit. The first – voluntary disclosure – is the primary focus and allows an entity or individual to receive credit if it discloses “previously unknown false claims and fraud,” including additional misconduct discovered during an internal investigation.

The second involves cooperating with the government’s investigation. The new guidance provides a non-exhaustive list of 10 typical categories of cooperation, such as identifying individuals involved in or responsible for the misconduct, disclosing relevant facts, identifying other opportunities for the government to obtain evidence, and making a company’s officers and employees available for interviews, meetings, and/or depositions. The full list is available here. The new guidance emphasizes that the listed measures are not mandatory, and an entity does not have to satisfy all of them to qualify for cooperation credit. Ultimately, when considering whether to provide credit, DOJ will focus on: “(1) the timeliness and voluntariness of the assistance; (2) the truthfulness, completeness, and reliability of any information or testimony provided; (3) the nature and extent of the assistance; and (4) the significance and usefulness of the cooperation to the government.” Justice Manual § 4-4.112.

The final way to receive credit is to remediate the FCA violation. Some remedial actions identified in the guidance include:

  1. Demonstrating a thorough analysis and remediation of the root cause of the underlying conduct;
  2. Implementing or improving an effective compliance program designed to ensure the misconduct or similar problem does not occur again;
  3. Appropriately disciplining or replacing those responsible for the misconduct, as well as those with supervisory authority over the area where the misconduct occurred; and
  4. Taking additional steps that recognize and demonstrate acceptance of the seriousness of the entity’s misconduct, including measures to identify future risks.

Most often, DOJ will award credit by reducing penalties or damages sought. The new guidance does not provide any further clarity on these reductions, i.e., the guidance does not say how much credit will be given for the cooperation activities listed. It only explains that a defendant cannot receive an amount of credit that would result in the government failing to receive full compensation for the losses caused by the defendant’s misconduct. The new guidance does note, however, that DOJ will consider other credit, such as:To receive maximum credit, DOJ urges entities to “undertake a timely self-disclosure that includes identifying all individuals substantially involved in or responsible for the misconduct, provide full cooperation with the government’s investigation, and take remedial steps designed to prevent and detect similar wrongdoing in the future.” DOJ will consider partial credit for undertaking any of these activities to assist the government.

Most often, DOJ will award credit by reducing penalties or damages sought. The new guidance does not provide any further clarity on these reductions, i.e., the guidance does not say how much credit will be given for the cooperation activities listed. It only explains that a defendant cannot receive an amount of credit that would result in the government failing to receive full compensation for the losses caused by the defendant’s misconduct. The new guidance does note, however, that DOJ will consider other credit, such as:

  1. Notifying another relevant agency about an entity’s actions so that the agency in its discretion may consider such factors in evaluating its administrative options, such as suspension, debarment, exclusion, or civil monetary penalty decisions 
  2. Publicly acknowledging the entity’s disclosure, other cooperation, or remediation; and
  3. Assisting the entity in resolving qui tam litigation with a relator or relators.

This new section in the Justice Manual provides DOJ’s Civil Division litigators with metrics to assess cooperation in an FCA matter. It also provides tangible factors to use when engaging the government about reduced penalties and damages. While this guidance is helpful in identifying and acknowledging factors important to DOJ during civil FCA investigations, it remains to be seen how the new guidance will alter investigations and resolutions in the FCA space. 

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David G. Barger Commercial Litigation Lawyer Greenberg Traurig Law Firm
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David G. Barger focuses his practice on white collar criminal defense, government investigations, including Foreign Corrupt Practices Act (FCPA) investigations, corporate compliance, including FCPA compliance, criminal and civil tax and FBAR matters, and complex commercial litigation. His practice includes representing companies and individuals in civil and criminal government investigations often involving government contract issues; and handling complex civil litigation and trials, in both state and federal courts in such areas as commercial transactions, construction, government...

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Nathan J. Muyskens Greenberg Traurig  DC Global White Collar Criminal Defense Practice Foreign Corrupt Practices Act
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Nathan J. Muyskens is Co-Chair of the Global White Collar Criminal Defense Practice and defends corporate and individual clients in criminal grand jury investigations and prosecutions, internal investigations, regulatory inquiries and enforcement matters, and related parallel civil proceedings. Nate defends companies in corruption investigations and other matters related to the Foreign Corrupt Practices Act, and has experience handling government antitrust investigations on behalf of companies in various industries, such as health care, air travel, defense, pharmaceuticals, energy, chemicals, home products, and technology. Nate is active in court and behind the scenes, working with prosecutors to abandon investigations before they have been made public or charges are filed.

Nate’s recent work includes co-leading a white collar defense trial victory in U.S. v. Flotron – the first ever acquittal in a commodities “spoofing” trial. Additionally, he represents numerous executives in the financial industry in a variety of government fraud investigations.  He has also represented a number of individuals and companies in the Special Counsel and Southern District of New York’s investigation into alleged improprieties relating to the 2016 presidential election. 

In addition, Nate has been trial counsel in numerous civil cases throughout the United States, including antitrust and trademark actions.

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Matthew Cannon, Greenberg Traurig Law Firm, Chicago, Litigation Attorney
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Matthew J. Cannon has almost two decades of criminal and civil litigation experience. He has served as the First Chair in numerous federal jury trials and has combined his courtroom skills, his experience as a federal prosecutor with the Department of Justice (DOJ), and his wide-ranging civil litigation skills into a practice that combines anti-corruption compliance work and litigation. Matt’s practice includes implementing and assessing anti-corruption compliance programs throughout the world, including programs focused on the Foreign Corrupt Practices Act (FCPA)...

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Michael J. Schaengold focuses his practice on government contracts litigation and counseling, and on litigation before the U.S. Court of Appeals for the Federal Circuit and the U.S. Court of Federal Claims.

Mike is the Chair of the firm’s Government Contracts & Projects Practice. His substantial government contracts dispute and bid protest experience includes litigation of major cases before the Government Accountability Office (GAO), the Court of Federal Claims, the Court of Appeals for the Federal Circuit and the Boards of Contract Appeals. He has represented clients in...

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Pamela J. Marple Commercial litigation Lawyer Greenberg Traurig Law Firm
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Pamela J. Marple’s practice over 25 years has focused on regulatory and commercial litigation, government investigations, and corporate compliance matters. Ms. Marple has litigated cases and managed responses to government investigations before a broad range of courts and agencies, as a trial attorney for the U.S. Department of Justice, a senior investigative counsel for Congress, and a commercial litigation partner in private practice. Ms. Marple also counsels companies on compliance matters and serves currently as the Compliance Monitor for a global medical device company.

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