Deputy Associate Attorney General Provides Government Perspective on Revised FCA Enforcement Policies and Suggests More to Come
WHAT: Deputy Associate Attorney General Stephen Cox discussed current issues in civil False Claims Act enforcement and signaled further developments to DOJ’s cooperation credit policy.
WHEN: Mr. Cox delivered his remarks on January 28, 2019.
WHAT DOES IT MEAN FOR INDUSTRY: Mr. Cox oversees commercial litigation at the Department of Justice (DOJ), including civil False Claims Act (FCA) litigation and regulatory reform. As a Department leader who helped develop and implement many of DOJ’s recent FCA policy changes, he provided valuable insight into those reforms and what they mean for companies during his remarks at the American Conference Institute’s Advanced Forum on False Claims and Qui Tam Enforcement. Wiley Rein partner Roderick L. Thomas, who co-chaired the Conference, introduced him. Mr. Cox reiterated DOJ’s commitment to enforcing the FCA and prefaced more to come—urging the public to “stay tuned” with respect to how the Department will evaluate cooperation credit in False Claims Act cases.
Other key takeaways from his remarks include:
- Focus on the Health Care Industry
- DOJ recovered $2.8 billion in fiscal year 2018. $2.5 billion came from enforcement actions involving the health care industry, including pharmaceutical and medical device companies, managed care providers, pharmacies, hospitals, and doctors.
- Fiscal year 2018 was the ninth consecutive year in which DOJ secured over $2 billion from health care fraud actions.
- Qui Tam Dismissals
- DOJ continues to promote the policy of dismissing qui tam actions laid out in the Granston Memo.
- DOJ acts as the “gatekeeper” for qui tam actions and will move to dismiss cases that waste Government resources, risk creating bad law, or contradict the interests of the United States.
- DOJ has moved to dismiss “about two dozen cases” since 2017. Cox noted that the Department “will use this tool more consistently” in the future but its “exercise of this authority will remain judicious.”
- Sub-regulatory Guidance
- Cox explained that “agency guidance should educate, not regulate.”
- As announced in the Brand Memo, DOJ no longer prosecutes violations of sub-regulatory guidance, although such guidance may still be “probative,” for example, “to show the defendant’s awareness of an agency’s interpretation of a particular requirement or the agency’s views on the materiality of that requirement.”
- DOJ also will not issue its own binding guidance without undertaking the notice-and-comment rule-making process.
- Piling On
- Consistent with prior statements from DOJ officials, the Department is implementing a policy to avoid imposing multiple penalties against a single entity or individual for the same or similar conduct.
- Cox provided the example of the Department’s $680 million settlement with Société Générale for violations of the Foreign Corrupt Practices Act (FCPA) and LIBOR manipulation. DOJ credited $292 million that the company had paid to French Authorities toward the settlement.
- Cooperation Credit
- As we detailed earlier this year, DOJ has revised its policies on awarding cooperation credit. Cox explained, “there is no longer an ‘all or nothing’ approach to awarding credit for cooperation in civil cases.”
- To earn maximum credit, a company must identify all persons “substantially involved in or responsible for” wrongdoing. A company may still receive partial credit, however, if it “honestly does meaningfully assist the Government’s investigation.”
- Cox highlighted the spectrum of helpful cooperation: “from voluntary disclosure, which is the most valuable form of cooperation, to other efforts such as sharing information gleaned from an internal investigation and making witnesses available.”
- Cox reminded companies that “strong compliance programs are good for business and fair competition, they raise awareness of legal obligations, they mitigate risk of legal jeopardy, and they promote reporting up.
- “Stay tuned…”: “[DOJ] has significant discretion under the False Claims Act to resolve cases in a way that provides a material discount based on cooperation while still making the government whole. Stay tuned on this front.”
Conclusion: Mr. Cox’s remarks provide helpful guidance for companies that may face FCA liability. First and foremost, companies should implement robust compliance programs and foster a culture of compliance to prevent potential FCA violations. In the event of an FCA allegation, companies should work with counsel to determine how best to cooperate with the Government to obtain maximum cooperation credit and avoid piling on. Finally, everyone should stay alert to the changing contours of DOJ’s cooperation credit policy. Although the Department has detailed what it takes to obtain credit, it is still unclear how credit will be quantified and what the ultimate benefits of cooperation will be. In criminal cases, DOJ has indicated that it will use the FCPA corporate enforcement program as guidance. Under that program, adequate cooperation may result in a declination or a reduced sentence up to fifty percent off the federal guidelines. In civil cases, however, the value of cooperation is less defined. Credit could be applied toward penalties or damages. If credit is used to reduce damages, it may be applied after the total damages are calculated or it could alter the multiplier, for example by allowing only single or double, rather than treble, damages. The FCA already contains a provision for reducing the multiplier, permitting courts to assess double damages against defendants who disclose violations within 30 days of obtaining the relevant information. The 30-day deadline is challenging, however, and this provision is rarely used. Whether DOJ will track this framework or take its revised cooperation credit policy in an entirely different direction remains to be seen. As Mr. Cox said, “stay tuned.”