Services / View All / False Claims Act Defense — Civil Investigative Demands

False Claims Act Defense — Civil Investigative Demands

At Elliott Sauter, we understand the business and personal implications of responding to a False Claims Act investigation. We help clients navigate complex parallel criminal and civil investigations, and our experience as former prosecutors gives us valuable insight in preparing defense strategies that allow our clients to minimize criminal exposure and mitigate financial harm resulting from civil enforcement actions.

The False Claims Act (“FCA”) is one of the most powerful tools in the DOJ’s arsenal. Under the FCA, individuals or entities that knowingly or recklessly submit false claims for payment to the government are subject to treble damages and significant penalties for each separate claim submitted.

FCA cases often originate with the filing of a qui tam lawsuit by private individuals. The government incentivizes the filing of such lawsuits by offering a percentage of recovery to the filing relators. The other major point of origination of FCA cases is contractor referral as the result of audit findings or data analytics.

FCA cases are filed under seal, and in most cases, a case will proceed for months or years before the target of an investigation receives notice of the case. Often, when the company does receive notice of an investigation, that notice is indirect – the company may hear that current or former business partners have received visits from federal investigators.

Time is of the essence in responding to FCA investigations. In many instances, prompt corrective action can be taken, and even when that is not possible, establishing early contact with the USAO can help the company avoid problematic procedural developments, like public service of a civil investigative demand, which can cause reputational injury and damage employee morale.

In many instances, FCA allegations result in parallel criminal and civil investigations. It is critical to retain counsel that understand the interplay between these investigations. Missteps in responding to civil process can substantially increase the likelihood of criminal enforcement action, and defendants often have viable procedural mechanisms to delay civil process pending criminal resolution. At Elliott Sauter, we prioritize mitigating or eliminating criminal exposure, and then focus our efforts on achieving our clients’ financial and civil goals.

FCA Actions by Industry

Any company that contracts with or receives funds from the federal government may be subject to the FCA, but the vast majority of FCA actions are brought against healthcare or defense companies. Healthcare FCA cases are commonly focused around payments received from federal programs like Medicare, Medicaid, or Tricare. Whereas defense FCA cases generally focus on misrepresentations made in the process of fulfilling complicated procurement contracts.

Most FCA Investigations Start with Either Government Investigation or a Qui Tam Lawsuit:

Government Investigation

When the government finds billing abnormalities, there is reason to suspect fraud. From there, the process of investigation begins. The government has relied heavily on data analytics to determine who/what is an outlier when it comes to billing certain codes or servicing a specific patient population.

Qui Tam Lawsuit

FCA cases may also start with a qui tam lawsuit. A qui tam lawsuit is when a whistleblower exposes a fraudulent act and files a lawsuit with the intent of the government joining in that lawsuit and investigating the alleged conduct in that individual’s complaint.

The Civil Investigative Demand (CID)

Qui tam investigations are filed under seal, and in many instances, the company and individuals that are the subject of the qui tam are entirely unaware of the government’s investigation for months or even years. In some instances, a company may hear rumors of the government’s investigation (like learning that former employees have been contacted by the government), but in many cases, receipt of a civil investigative demand is the first notice a company receives that it is under investigation. A CID, authorized under 31 U.S.C. § 3733(a)(1), is a request for documents and other evidence that may be relevant to an ongoing FCA investigation. These requests are often expansive, and compliance with the CID can be difficult and expensive. An experienced attorney can assist in limiting the scope of the CID and its response.

Responding to a Civil Investigation

Whether you have just received a CID, become aware of a qui tam, or have other reason to believe that your company is under investigation, it is vital that you contact an attorney. Your attorney can help you conduct an internal investigation and address any issues that are discovered. If necessary, they can assist you in modifying the scope and responding to any CIDs.

Both founders of Elliott Sauter have served in various capacities for the Department of Justice working on health care cases. Surround yourself with a seasoned, experienced law firm who can help you navigate through your health care civil defense case.