The U.S. Department of Justice (DOJ) released guidelines for evaluating self-disclosures and awarding cooperation credit in False Claims Act (FCA) cases. As expected, these guidelines set forth several key factors anticipated in our previous blog post, Cooperation Credit in False Claims Act Cases. The guidelines, which are codified in DOJ's Justice Manual, 4-4.11, Guidelines for Taking Disclosures, Cooperation, and Remediation into Account in False Claims Act matters (2019), provide a comprehensive list of activities and factors that may qualify for cooperation credit and identifies the types of benefits DOJ is willing to offer in exchange. In short, an entity or individual seeking to earn maximum credit should generally 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.
Self-disclosure. DOJ specifically noted that entities or individuals that make proactive, "timely," and voluntary self-disclosure to the Department about misconduct will receive credit during the resolution of a FCA case. DOJ declined to define or provide parameters around the concept of timeliness. DOJ, however, indicated it would also award cooperation credits to entities that discover additional misconduct going beyond the scope of any known concerns and voluntarily self-disclose.
Cooperation: Aside from voluntary disclosures, DOJ confirmed that there are other steps that entities or individuals can take to earn cooperation credit during an ongoing government investigation, including:
In determining the value of any voluntary disclosure or additional cooperation, the government will consider the following factors:
It also noted that eligibility for credit on voluntary disclosures and other forms of cooperation is not predicated on waiver of the attorney-client privilege or work-product production, as none of the guidelines require such a waiver.
Remedial Action. The government will continue to take into account whether the entity has taken appropriate remedial actions in response to the FCA violation, such as:
The benefit of cooperation will primarily come in the form of reducing the penalties or damages multiple sought by the Department. According to the guidelines, the maximum credit that a defendant may receive may not exceed an amount that would result in the government receiving less than full compensation for the losses caused by the defendant's misconduct (including the government's damages, lost interest, costs of investigation, and relator share). Even where the entity does not qualify for the maximum credit, DOJ indicated they may receive partial credit if they have meaningfully assisted the government's investigation by engaging in conduct qualifying for cooperation credit. In appropriate circumstances, DOJ may also consider additional benefits such as:
DOJ presented several considerations that cut against cooperation credit. DOJ indicated that cooperation does not include disclosure of information required by law. This means disclosures pursuant to the healthcare overpayment rule or the FAR mandatory disclosure rule will not qualify.
Nor is credit available for merely responding to a subpoena, investigative demand, disclosure of information that is under an imminent threat of discovery or information, or other compulsory process for information. DOJ also will not award any credit to an entity or individual that conceals involvement in the misconduct by members of senior management or the board of directors, or to an entity or individual that otherwise demonstrates a lack of good faith to the government during the course of its investigation.
DOJ also cautioned that not all cases are candidates for cooperation credit. It noted that in resolving FCA cases, DOJ makes several considerations, some of which may "reduce the credit available to an entity or individual, or in egregious circumstances, may render the entity or individual ineligible for any credit" including:
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