DOJ Issues New FCA Guidance on Cooperation CreditMay 8, 2019 | Geoffrey R. Kaiser | False Claims Act | Fraud and Abuse | Legislation and Public Policy | Litigation
On May 7, the U.S. Department of Justice (DOJ) introduced important new guidance for government attorneys explaining how DOJ will award credit to defendants who cooperate during a False Claims Act (FCA) investigation through voluntary self-disclosure, remediation (e.g., disciplining wrongdoers or others who failed in oversight, or implementing or improving an effective compliance program) and/or other kinds of cooperation (e.g., providing relevant information, identifying potential witnesses, or identifying those who were substantially involved in or responsible for any misconduct).
Under the new policy, when cooperation credit is warranted, DOJ may reduce the penalties or damages multiplier that would otherwise apply to the defendant, but the amount of the credit may not result in the government recovering less than the full amount of its losses. DOJ may also consider other types of credit, including (a) notifying a relevant agency about a defendant’s disclosure, cooperation or remediation so that the agency might consider such information in evaluating administrative options; (b) publicly acknowledging the defendant’s disclosure, cooperation or remediation; and (c) assisting the defendant in resolving FCA litigation with a relator (whistleblower).
Of special importance, the policy states in a footnote that DOJ, in considering a defendant’s decision to implement or improve a compliance program after an alleged violation, may consider the nature and efficacy of a prior compliance program in determining whether any violation of law was committed “knowingly” and, therefore, whether the defendant is liable at all under the FCA. Cooperation credit will not be granted for disclosing information required by law or merely responding to a subpoena, nor will DOJ award credit to a defendant that conceals involvement in the misconduct.
Moreover, other factors (e.g., the seriousness of and/or harm caused by the violation, the extent of any damages, any history of recidivism, whether a compromise makes sense in light of the government’s interests, litigation risk, and the defendant’s ability to satisfy an eventual judgment) could reduce or eliminate entirely a defendant’s cooperation credit. The availability of cooperation credit will vary with the facts and circumstances of each case and is not conditioned on a defendant’s willingness to waive the attorney-client or work product privileges. The new policy may be found in Justice Manual Section 4-4.112.