At a conference earlier this year, Deputy Associate General Stephen Cox offered further guidance on a number of topics central to the DOJ’s enforcement attitude in FCA actions over the past several years. Cox’s comments help provide further clarity and color to several recent memorandums authored by the DOJ and provide guidance on the DOJ’s initiatives and perspectives.
Granston Memo – In a January 2018 memorandum authored by Michael Granston, the Director of the DOJ’s Civil Fraud Section, the DOJ issued internal guidance on the factors that it considers when deciding to exercise its authority to dismiss meritless FCA actions. Cox reaffirmed the underlying principles of the Granston Memo, explaining that even non-intervened cases (which constitute about 80% of all qui tam actions) consume resources and time and that part of the DOJ’s gatekeeping role includes curbing cases that are “non-meritorious, abusive, or contrary to the interests of justice[.]” Cox clarified that the Granston Memo is not a pronouncement of a new policy; rather, it is an effort towards ensuring that the factors enumerated therein are applied more consistently.
Brand Memo – In another January 2018 memorandum, this one authored by then Associate Attorney General Rachel Brand, the DOJ clarified its position on the use and impact of subregulatory guidance, explaining that the violation of such guidance cannot be used to establish a violation of law as it does not have the force or effect of law. A year later, in discussing the Brand Memo, Cox succinctly noted that “agency guidance should educate, not regulate.” Cox elaborated that while an agency’s interpretation of a particular regulatory requirement can be “probative,” it is not binding.
Yates Memo – While not specifically identifying the Yates Memo, Cox’s remarks touched on a couple of the policies central to the September 2015 memorandum. For instance, Cox highlighted the DOJ’s focus on, and recovery from, individuals alleged to have violated the FCA, noting that in 2018 the DOJ had recovered $114 million from three individuals engaged in a kickback scheme.
Cox, however, also elaborated upon the DOJ’s recent clarification on the criteria for a company to receive cooperation credit. These clarifications, which were initially announced in November 2018 by Deputy Attorney General Rod Rosenstein, explained that the ability for a company to receive cooperation credit is not a bright-lined test and that companies are no longer required to admit the civil liability of every individual employee to receive credit. Cox elaborated on this point, explaining that cooperation credit is not an “all or nothing” concept and that DOJ attorneys hold significant discretion in determining the amount of credit to be provided to a company based on its level of cooperation. Building on this point, Cox explained further that when a company meaningfully assists the government’s investigation, the DOJ has discretion to award some credit even if the company does not qualify for maximum credit.
Cox’s remarks provide helpful clarifications and elaborations to the DOJ’s viewpoints on several key issues in the FCA arena and help provide the FCA defense bar with guidance on the DOJ’s areas of focus.