The Justice Department on Tuesday gave companies new guidance to obtain greater leniency in False Claims Act investigations and limit their potential liability.
False Claims Act cases in the healthcare industry grew to 506 in 2018 from 291 in 2008, and companies and physicians shelled out $2.5 billion in FCA settlements and judgments in fiscal 2018, making them a potentially costly concern.
Now the Justice Department has suggested that companies could lower their damages and penalties by cooperating with prosecutors. The guidance said that could include disclosing misconduct early or beyond the ongoing investigation, preserving relevant documents and identifying people who are aware of the misconduct.
Voluntary disclosures are "the most valuable form of cooperation," Assistant Attorney General Judy Hunt said in a statement. Companies can also take remedial steps and participate in compliance programs to gain cooperation credit, she said.
Providers can look at the guidance as a checklist, especially for potential overpayments, according to Mike Matthews, a partner at Foley & Lardner and chair of the firm's False Claims Act litigation group.
The Justice Department emphasized that replying to subpoenas or investigative demands for information won't count as cooperation because that is a company's legal obligation. That could mean that overpayment disclosures are not part of the guidance, according to the law firm Morgan Lewis.
Negotiations and cooperation have always been a part of civil False Claims cases, but now it is official, one attorney said.
"For people who have done these kinds of cases, one of the things you negotiated with the U.S. attorney's office was how much should the multiplier be for the damages," said Jonathan Feld, an attorney with the firm Dykema who has tried FCA cases. "It is nice to see, in my opinion, the civil division commercial branch put something into writing."
FCA penalties can jump up to triple the amount of the underlying allegations. Normally, cooperation can lower that liability to double the damages. The guidance hints that the Justice Department could lower those penalties even more for some cases, Matthews said.
The guidance comes after Deputy Attorney General Rod Rosenstein announced in November 2018 that the agency would change how it considers whether a company has cooperated with an FCA investigation. The agency extended the credit to new areas of cooperation, including if a company identifies individual wrongdoers.
"There is no longer an 'all or nothing' approach to awarding credit for cooperation in civil cases," Deputy Associate Attorney General Stephen Cox said in January. "You don't have to boil the ocean in an effort to identify every employee who played any role in the conduct in order to receive any credit for cooperating."
Feld added that the guidance is part of this growing trend of the Justice Department reaching out to resolve cases faster.
"I wonder if it will increase the number of voluntary disclosures," he said. "It is nice to see the policy and they certainly gave you enough to start with."
