January 28, 2023

Volume XIII, Number 28


January 27, 2023

Subscribe to Latest Legal News and Analysis

January 26, 2023

Subscribe to Latest Legal News and Analysis

January 25, 2023

Subscribe to Latest Legal News and Analysis

False Claims Act Civil Investigative Demands and How to Handle Them

If you or your company receives a civil investigative demand (CID) related to a government investigation under the False Claims Act (31 U.S.C. § 3729 et seq.), or FCA, you need to respond appropriately to insulate yourself from serious legal liability. While receiving a CID does not necessarily mean that you are the one that is under investigation, responding incorrectly can escalate the situation until you are.

Here is what you need to know about handling this potentially dangerous process.

You May Not Be Under Investigation

First and foremost, if you receive a civil investigative demand issued by a law enforcement agency related to a False Claims Act case, it is not a guarantee that you are the target of that investigation or that you are suspected of potential False Claims Act violations or making a fraudulent or false claim for compensation with the federal government. You may just have information that is relevant to a false claims law investigation that targets someone else. 

The CID will rarely say so, though.

That is why it is always a wise move to hire a defense lawyer to represent you or your company and handle the CID. An attorney with experience responding to these demands for information can read between the lines of the CID to determine what your role is in the investigation. The steps that you take and the information that you provide to satisfy the CID should change depending on your role. 

Even if you are not the target, though, a defense lawyer’s legal advice can be essential for ensuring that you continue to be outside the scope of the investigation as it moves forward.

Implementing a Legal Hold Can Prevent Obstruction Charges

One of the most important things that you should do after receiving a CID is to implement a company-wide legal hold of all documents that are even remotely relevant to the information being demanded. Doing so can prevent a situation where relevant information is destroyed in your company’s daily business routine. This can expose you and your company to allegations of spoliation and obstruction of justice and can lead to increased scrutiny if you were not the target of the original investigation.

Law enforcement agents are hardly ever persuaded by the argument that the destruction of information that was subject to a CID was a mistake.

Put Together a Team to Respond to the CID

Civil investigative demands are notorious for demanding huge amounts of information and providing very little time to get it. Establishing a team to deal exclusively with the CID is often necessary to ensure that you comply with its requests.

That team should be composed of your company’s in-house counsel, records personnel, internal subject matter experts, and an outside defense lawyer with experience dealing with CIDs. All communications with this team should flow through one of the lawyers on it so that the attorney-client privilege can be used to insulate these messages from disclosure.

Consider a Motion to Quash the Demand

Civil investigative demands are a form of administrative subpoena. Like other subpoenas, they are requests for information related to an investigation and they carry legal penalties for noncompliance. As administrative subpoenas, though, they do not have to pass through a court or judge to get approved. This means that they can be issued without a showing of probable cause.

Just because they are easy for the U.S. Department of Justice (DOJ) to get does not mean that its power to get one is absolute, though. CIDs can only be obtained through the proper channels, for the proper purposes, and with the appropriate limitations. For CIDs related to False Claims Act investigations, 31 U.S.C. § 3733 governs how they can be used. If the CID that you received violates this law like if it is unrelated to an ongoing False Claims Act investigation, you can file a motion to have it quashed in federal district court.

However, as Dr. Nick Oberheiden, a civil investigative demand and False Claims Act defense lawyer at Oberheiden P.C., often tells clients, “Moving to quash a CID is a tricky process. The Department of Justice hears the case first and is almost certain to dismiss your argument. Only then will it go before a court. Throughout this lengthy procedure, your company should still be working to comply with the demand for information. You do not want a court to reject your motion to quash days before the CID’s deadline, only to turn around and find that your company has not made any progress in complying with it because you put all your eggs in one basket.”

Assemble the Information Well Before the Deadline So It Can Be Reviewed

One of the most difficult things to do with a CID is also one of the most important: You should try to assemble all of the information and documentary material demanded by the CID before the deadlines it provides. This may sound like a way to make a difficult task even harder, but there is a very good reason for beating the deadline: It gives your in-house and CID-defense lawyers the opportunity they need to comb through it and find out what, exactly, is getting handed over to law enforcement. 

Use Privileges to Shield What You Can

During this review process, your in-house and CID-defense attorneys can identify documents and information that could be incriminating or awkward to explain to law enforcement agents. Whenever possible, you should shield that information from disclosure by using a legal privilege, such as the attorney-client privilege. When that is impossible, you may be able to justifiably withhold the information for being outside the scope of the civil investigative demand. 

Even when it is impossible to get around the fact that the information is legally required to be disclosed by the CID, gathering it before the deadline is essential because it allows you to get ahead of the situation. In the disclosure package, you can explain why the information is not as damning as it seems, or explain why it is not incriminating at all. If even that is not possible, it can provide your defense lawyers valuable time in preparing your defense.

Oberheiden P.C. © 2023 National Law Review, Volume XII, Number 342

About this Author

Nick Oberheiden Criminal Defense Attorney Oberheiden PC
Federal Criminal Defense Attorney

Dr. Nick Oberheiden focuses his litigation practice on white-collar criminal defense, government investigations, SEC & FCPA enforcement, and commercial litigation. He has defended clients in PPP Loan Fraud cases and COVID-19 investigations. Nick also directs internal corporate investigations and he leads defense teams in whistleblower actions, corporate defense cases, as well as cases involving national security and elected officials.

Clients from more than 45 U.S. states have hired Nick to seek effective protection against government...