DOJ To Increase Criminal Fraud Probes

Earlier this month, the Justice Department announced that federal prosecutors are increasing their scrutiny of whistleblower complaints that allege fraud against the government, in order to discover evidence of criminal conduct.

Previously, the criminal division had concentrated its efforts through a “strike force” in nine cities deemed to have the worst healthcare fraud problems. Lauding the successes of these efforts, Assistant Attorney General Leslie Caldwell, in a speech before the Taxpayers Against Fraud Education Fund, announced that DOJ was “stepping up” its analysis of whistleblower complaints so that it can “move swiftly and effectively to combat major fraud involving government programs.”

To do so, the criminal division will now review “all new qui tam complaints . . . as soon as they are filed.” By DOJ policy, the civil division will maintain supervisory authority over all False Claims Act cases with damages exceeding $1 million, but the criminal division will no longer be reliant on referrals from civil authorities for potential prosecution. Going forward, “[e]xperienced prosecutors in the Fraud Section are immediately reviewing the qui tam cases . . . to determine whether to open a parallel criminal investigation.”

Ms. Caldwell promised that the Department would be “committing more resources to this vital area.” In addition to earlier review by criminal prosecutors, the additional resources will allow for more coordination between Main Justice and local United States Attorney’s offices. Ms. Caldwell further encouraged whistleblower lawyers to “reach out to criminal authorities in appropriate cases” because “the sooner [prosecutors] on the criminal side learn about potential conduct, the sooner [the criminal division] can investigate.”

The Justice Department’s focus on criminal fraud prosecutions, particularly in the healthcare sector, is an increasing trend that shows no sign of slowing down. This makes careful responses more vital anytime a company is the subject of a whistleblower lawsuit or subject to a civil investigative demand or subpoena from DOJ. Even if a case begins as civil in nature, one can be sure that criminal prosecutors will be reviewing it closely for any evidence of criminal misconduct.