DOJ Begins Memorializing Basis for Cooperation Credit in FCA Settlement Agreements
Recently, DOJ quietly began implementing what appears to be a new policy to memorialize in FCA settlements the basis for the settling company earning credit for various forms of cooperation.
First, in June 2023, DOJ announced a settlement with a diagnostic laboratory billing company that allegedly submitted false claims to Medicare for medically unnecessary diagnostic panels run on individuals who received COVID-19 tests. The settlement agreement documented that the billing company “has been credited in this settlement under the Department of Justice’s Guidelines for Taking Voluntary Disclosure, Cooperation, and Remediation into Account in False Claims Act Matters, Justice Manual § 4-4.112.” Furthermore, the settlement agreement described that “[t]he cooperation [the company] provided included performing and disclosing the results of an internal investigation, disclosing relevant facts and material not known to the government but relevant to its investigation, providing information relevant to potential misconduct by other individuals and entities, and admitting liability.” See VitalAxis Settlement, ¶ C.
Earlier this month, DOJ announced a settlement with a telephone and data communications company for allegedly failing to satisfy cybersecurity requirements in connection with services the company provided to federal agencies. The settlement agreement similarly cited to Justice Manual § 4-4.112 and explained that the company had “cooperated with the Government’s investigation…in several respects, including but not limited to, identifying individuals involved in or responsible for the issues; preserving, collecting, and disclosing relevant documents and information relating to the issues; disclosing facts gathered during its independent investigation, with attribution of the facts to specific sources; providing regular updates on its independent investigation, including rolling disclosures of relevant information; and assisting in the determination and recovery of the losses caused by the issues.” Furthermore, after “identifying the issues,” the company “promptly took steps to develop and implement significant mechanisms to remediate the issues.” See Verizon Settlement, ¶¶ C–E.
DOJ’s Civil Division released Justice Manual § 4-4.112 in May 2019. Although senior leadership has since extolled the virtues and values of cooperation in various public remarks, until now, DOJ had not previously memorialized the existence of, and basis for, cooperation credit in FCA settlement agreements. The Civil Division’s apparent decision to now begin doing so emerged not long after DOJ’s Criminal Division updated its Corporate Enforcement Policy to include a more concrete framework outlining the benefits of cooperation and voluntary self-disclosure earlier this year. See Justice Manual § 9-47.120. DOJ’s actions provide some response to longstanding calls from highly regulated industries to make the benefits of cooperation more transparent and predictable.
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