What is some advice that you would provide to a client that is responding to a Civil Investigative Demand (CID) or subpoena?
READ THE SUBPOENA AND DO NOT DELAY
I like to remind clients that the CID itself will provide some useful information. It will include the basis of the investigation and whether the matter is being handled as a delegated matter managed primarily by a local U.S. Attorney’s Office or as a matter handled jointly by a U.S. Attorney’s Office and DOJ (generally matters where the gross amount of the original claim exceeds $10 million). I would also advise clients to not delay in retaining counsel and formulating a plan of action as there are tight statutory response deadlines of a minimum of twenty days for the production of documents and information, and seven days for the provision of oral testimony under oath.
ESTABLISH EARLY COMMUNICATION
Clients should also be proactive when dealing with a CID or subpoena and have counsel reach out to the prosecutor as soon as possible and meet with them, preferably face-to-face. Prosecutors often write very broad requests, in case they need to move to compel, but are usually willing to work with defense counsel to narrow and prioritize the document universe, limit discovery burdens and costs (e.g., search terms and focused, iterative custodian lists) and establish reasonable timelines. They will also tend to be generous with extension requests so long as defense counsel remains communicative and demonstrates good faith efforts to respond (“feed the beast”). This early proactive communication can also hopefully provide clients more information about the basis of the investigation.
GET AHEAD OF THE FACTS
I would also recommend conducting a thorough internal investigation as quickly as is prudent to get your arms around what transpired and catch up to and get ahead of the government’s investigation. This will help in formulating a defense and potential-litigation strategy going forward and may enable the client to self-disclose to the government and earn cooperation credit that can reduce the size of a potential settlement.
NURTURE PRODUCTIVE DIALOGUE WITH THE INVESTIGATION TEAM
It is a good idea to establish a healthy dialogue and rapport with the prosecutors as early as possible. The vast majority of FCA cases end in a declination or a pre-litigation settlement, so there is “play in the joints” and open and honest dialogue with prosecutors is crucial. In communicating with prosecutors, clients should be as transparent and forthcoming with the government to the extent that it makes sense, and in most cases that will make sense. But simultaneously, defense counsel should advocate and persuade by providing necessary context. Prosecutors have very large caseloads and will appreciate defense counsel doing much of the heavy lifting of culling, reviewing and organizing information. If they view the targets as being cooperative and helpful, most prosecutors will give a respectful and open-minded hearing to defense counsel as they provide context and a narrative for the information produced, so long as they do not think they are being dealt with dishonestly or their intelligence is being insulted. Doing so allows defense counsel some potential control and influence over the direction of the investigation and the government’s intervention decision or settlement. Bottom line, in the FCA context there is a lot of room for persuasion because the government declines most cases (and even dismisses some whistleblower complaints).
RETAIN EXPERIENCED FCA COUNSEL
The process of producing responsive information in a cooperative fashion while also advocating for your client and attempting to sway the prosecutors is a delicate dance and requires a careful and nuanced approach. False Claims Act matters are not criminal matters, where an implausible but theoretically possible explanation may be enough to avoid liability under a reasonable doubt standard. Nor are they run of the mill civil litigation cases such as a contract dispute between private parties. These are civil enforcement cases where a preponderance of the evidence standard applies and the vast majority of cases are either dismissed or resolved by a financial settlement. A thoughtful and effective approach to a civil enforcement matter needs to be informed by this context and these realities and should be calibrated to them. The experienced FCA counsel here at McGuireWoods can help deftly navigate these challenges and ensure a favorable resolution.