March 25, 2010

Department of Justice Gives U.S. Attorneys New Power to Issue Civil Investigative Demands

Holland & Knight Alert
John L. Brownlee | Gregory R. Hallmark

In a move that will likely increase the number and severity of federal investigations of government contractors, Department of Justice leadership has authorized the country's 93 United States Attorneys to issue Civil Investigative Demands (CIDs) in False Claims Act (FCA) investigations. That authority rested exclusively with the U.S. Attorney General fewer than 90 days ago. The rule was published in the Federal Register on March 24, 2010.

A CID is a powerful and potentially invasive investigatory tool that permits federal investigators to demand production of documents and records, require written answers to interrogatories, and compel depositions. The government can issue a CID before initiating a lawsuit, and often before a potential defendant is able to conduct its own discovery. Also, the government can share CID information with qui tam relators and federal agencies, including federal prosecutors who are conducting criminal investigations.

When Congress first authorized the Attorney General to issue CIDs in FCA cases in 1986, it included important safeguards limiting the government's use, and potential abuse, of CIDs. Significantly, Congress required that the Attorney General personally approve the issuance of every CID. But in the Fraud Enforcement and Recovery Act of 2009, P.L.111-21 (FERA), Congress rescinded the requirement that the Attorney General personally approve all CIDs and authorized him to delegate his authority to other DOJ officials.1 On January 15, 2010, the Attorney General signed an order delegating his authority to the Assistant Attorney General for the Civil Division. On March 24, 2010, the Assistant Attorney General delegated his authority to issue CIDs to all U.S. Attorneys across the nation. The impact of the delegations will be substantial – with more government contractors subjected to CIDs and more relators gaining access to corporate CID information.

While the delegation order does not expand the scope of the Department of Justice's power to issue CIDs in FCA investigations, it is likely to increase the use of CIDs as a practical matter. Prior to FERA and the Attorney General's delegation, a trial attorney from the Department of Justice who wished to issue a CID had to wade through several layers of bureaucracy to obtain the Attorney General's approval. As a result, the CID was reserved primarily for the most important FCA cases. FERA and the order delegating CID authority to U.S. Attorneys remove all prior protections and permit U.S. Attorneys to issue CIDs without prior approval. The U.S. Attorney must simply provide notice and submit a report.

For a thorough examination of FERA's effect on CIDs under the FCA, see our Client Alert, The “New” Civil Investigative Demand: Congress Pushes for More Aggressive False Claims Act Investigations published on December 2, 2009.

1 Title 31, U.S. Code, Section 3733(a)(1)

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