In a recent speech, Deputy Attorney General Lisa Monaco announced three important updates to how DOJ attorneys are to approach corporate resolutions (as discussed further here). These changes depart from flexibilities offered by DOJ during the last administration. While the remarks were made against the backdrop of the Deputy Attorney General’s criminal portfolio, these Department-wide policies apply with equal force to the Civil Division’s False Claims Act work. It will be particularly important for companies in the middle of ongoing FCA investigations to reassess their strategies in light of these new policies.
As discussed further here and here, during the Obama administration, DOJ clarified its position on cooperation credit in the so-called Yates Memo, explaining that in order to get any cooperation credit, companies must disclose, “at a minimum, all relevant facts about responsible individuals.” But as discussed here, the Trump administration relaxed this standard. Trial attorneys were given the discretion to consider companies eligible for cooperation credit so long as they “in good faith…identify individuals who were substantially involved in or responsible for wrongdoing” and disclose that information to DOJ. But the Biden administration DOJ will be returning to the Yates Memo policy. It will no longer be sufficient for companies to disclose information only about individuals they determine to have been substantially involved in the misconduct. Instead, companies must turn over all nonprivileged information about individuals involved in the wrongdoing at issue. Deputy Attorney General Monaco characterized the prior administration as giving companies “too much discretion” to decide which information should be disclosed to the government, and her new policy is designed to correct this perceived deficiency with past DOJ practice.
The Biden administration DOJ is also repudiating the Trump administration’s reforms around corporate monitors. DOJ’s enthusiasm for corporate monitors waned in the last administration, culminating in a 2018 policy memo in which DOJ leadership reiterated that “many” corporate cases would not require resolution with a monitor and encouraged line attorneys to weigh carefully the potential costs and benefits of a monitorship. But Deputy Attorney General Monaco explained that to “the extent that prior Justice Department guidance suggested that monitorships are disfavored or are the exception, I am rescinding that guidance.”
Finally, DOJ will also take a more rigid approach toward companies with a history of prior enforcement actions. Instead of focusing on prior enforcement relevant to the alleged misconduct at issue, line attorneys are now to assess a company’s complete civil, criminal and regulatory record, including conduct completely unrelated to the matter before DOJ. This means, for example, that penalties levied against a company for prior environmental or tax issues can be counted as a mark against that company when it is seeking to resolve a healthcare fraud and abuse case. According to Deputy Attorney General Monaco, any prior resolutions are more likely to tar a company as a “recidivist” and adversely affect options for pretrial resolution.
Companies actively engaging with the Civil Division in response to FCA investigations should carefully assess their prior disclosures of individual involvement and gauge whether supplemental disclosures will be necessary to preserve the company’s eligibility for cooperation credit. Those that are close to resolving an FCA matter with the Civil Division should be prepared to discuss the extent to which unrelated prior enforcement matters affect the resolution, including whether compliance remediation can be achieved without external monitoring of compliance commitments.
A copy of Deputy Attorney General Monaco’s speech is available here.