On June 14, 2018, at the ABA’s National Institute on the Civil False Claims Act and Qui Tam Enforcement, Acting Associate General, Jesse Panuccio, delivered wide-ranging remarks on the False Claims Act. Of particular interest, AAG Panuccio discussed several recent high profile enforcement priorities of the Trump Administration.
With respect to the Department’s affirmative priorities, AAG Panuccio focused on the Department’s commitment to fighting the opioid crisis using both civil and criminal enforcement avenues, stating that the Department would “actively employ … any … available civil or criminal statute, against any entities involved in the opioid distribution chain … from pharmaceutical manufacturers and distributors, to pharmacies, to pain management clinics and physicians.”
AAG Panuccio also reiterated the Administration’s commitment to following “the plain meaning of the [False Claims Act]” and implementing reform efforts such as the ban on certain third-party payments in settlement agreements. In addition to these preexisting efforts, Acting Associate Attorney General Panuccio reported on several new efforts. These new efforts include: (1) changes to the Department’s formal dismissal policy in non-intervened False Claims Act cases; (2) curtailing Department misuse of guidance documents as the basis of potential violations; (3) re-emphasis on the importance of genuine cooperation in False Claims Act investigations; (4) encouraging companies to adopt robust compliance programs and incorporating those compliance programs into company culture; and (5) the practice of multiple law enforcement and regulatory agencies pursuing a particular entity for the same or similar conduct.
A few of the policy reforms should be of particular interest to companies who could potentially face FCA investigations or litigation. First, the Department acknowledged that non-intervened cases, particularly those that lack legal or factual support, nevertheless require that the Department and other federal agencies expend resources overseeing the cases. In particular, AAG Panuccio noted that the Department may be required to participate in discovery in these cases, consuming its limited resources. He further noted that such cases can “impose substantial costs on defendants.” Accordingly, for these reasons, DOJ attorneys have been instructed “to consider whether moving to dismiss an action would be an appropriate exercise of the Department’s prosecutorial discretion” in non-intervened cases. For prospective defendants, this may result in fewer frivolous FCA cases being pursued by relators after a non-intervention decision. AAG Panuccio’s remarks are consistent with the details of a leaked internal DOJ memo, authored by Commercial Litigation Branch Director Michael Granston (previously reported on here).
A second area of reform highlighted by AAG Panuccio was curtailing the misuse of guidance documents to bind those outside the Executive Branch by refraining from using “guidance documents that expand upon statutory or regulatory requirements should not be used by Department attorneys as the basis for contending that legal violations have occurred.” Attorney General Sessions had previously announced that Department attorneys would no longer “issue any kind of binding sub-regulatory guidance.” AAG Panuccio’s remarks are also consistent with prior statements in the Brand memo that prohibit “Department components from issuing guidance documents that effectively bind the public without undergoing the notice-and-comment rulemaking process” (previously reported on here and here). In accord with these announcements, guidance documents will now be used only to explain existing law.
Finally, with respect to the practice of “piling on” – that is multiple law enforcement agencies pursuing the same entity for the same of similar conduct and imposing “unwarranted and disproportionate penalties”– the Department of Justice recognizes that such punishment could undermine the rule of law by obviating “the benefits of certainty and finality ordinarily available through a full and final settlement.” Accordingly, AAG Panuccio explained that the new policy would promote coordination between the Department and other regulators to “apportion penalties and fines” to ensure defendants face “appropriate, not just the highest, level of punishment that is available.” This policy shift should be welcome news to prospective defendants who face concurrent or seriatim investigations by multiple regulators.
The prepared remarks are available here.