Since September 2015, United States Deputy Attorney General Sally Yates’s Memorandum (Yates Memo) has been the topic of intense discussion within the legal community, generating a wide range of views on its impact on FCA investigations and litigation. Acting Associate Attorney General Bill Baer recently delivered remarks at the ABA’s 11th National Institute on Civil False Claims Act and Qui Tam Enforcement, which addressed the Yates Memo and some of the questions it has generated.
Baer opened his speech by highlighting trends in FCA enforcement. The Government and relators filed more than 630 new qui tam matters in 2015 and more than 4,700 qui tam matters since 2009. Since 2009, the Government has recovered over $29.5 billion for all FCA matters, and relators have received awards topping $3 billion for identifying and helping to prosecute FCA violations. Baer used these statistics not only to reaffirm the DOJ’s commitment to FCA enforcement, but also to segue into a deeper discussion of the application of the Yates Memo.
The Yates Memo set forth DOJ’s policy of requiring the investigation of individuals for potential civil and criminal liability. DOJ attorneys now will perform their assessment of individual liability at the front end of any FCA investigation. Baer elucidated on the significance of this shift:
- Qui tam complaints do not have to name specific persons for an individual to become the focus of a DOJ investigation.
- The source of the FCA action—whether by a relator or the government— does not affect whether DOJ will focus its efforts on assessing an individual’s liability for wrongdoing.
- DOJ attorneys will pre-plan assessment of individual liability and will conduct this assessment in tandem with any underlying investigation of company fraud.
- While resolution of the underlying corporate fraud will likely occur prior to DOJ concluding its investigation of individual liability, any previously held expectation of an individual’s release from liability as part of the company’s settlement agreement now is “flipped.” According to Baer, no employee should expect a “get out of jail free” card for wrongdoing because of a company settlement.
- Finally, for any individual against whom DOJ decides not to pursue penalties, DOJ attorneys must memorialize their recommendations.
Essential to the individual accountability principles in the Yates Memo is whether the company accused of the underlying fraud discloses all information, including facts related to individuals participating in the corporate wrongdoing. Corporations will receive cooperation credit only if they meet this threshold. For this reason, Baer used his speech to provide guidance absent from the Yates Memo regarding what the DOJ considers cooperation:
Cooperation is not demonstrated by doing what the law requires with subpoena or other lawful demands. Nor is cooperation shown by one-sided presentations and white papers. A corporation should not earn cooperation credit where it just stops contesting what the government has already discovered and in many cases, disclosed to the defendant; rather, genuine cooperation involves prompt, no slow-walking, and fulsome, no hiding the ball, responses to government requests for information.
Baer’s speech placed significant emphasis on disclosing all information, touting it as a vital part of a company receiving cooperation credit during a settlement. Baer stated that full cooperation by a company may include making former and current officers and employees available to the government, disclosing internal investigation findings, and, in some cases, admission of responsibility. The Government will also look at the timeliness of the cooperation in determining cooperation credit. What is not required for cooperation credit: unrelated, broad, and costly internal investigations; waiver of attorney-client privilege; or characterizing an individual as culpable. As Baer stated, “We are not asking the companies to do our work for us by delivering litigable cases as a condition of cooperation.”
While Baer likened assessing cooperate cooperation in the civil context to cooperation credit in criminal cases, he emphasized that DOJ has no rubric, such as the downward departure in the criminal context, for determining the cooperation credit, stating there is “no magic formula” for determining how meeting these threshold requirements will affect corporate cooperation credit. Baer noted that FCA cases present “unique challenges” related to damages, the range of multiples and penalties, and meeting the statute’s remedial and deterrent purposes.
Baer may have left more questions than answers about how cooperation credit will play out in the FCA context. Even so, Baer confirmed the Government’s commitment to using its “significant enforcement discretion in FCA matters” to recognize full cooperation. Baer concluded his push for cooperation by pointing out the collateral benefits of owning an FCA violation, suggesting, “It is often a good business decision as well.”
A copy of the speech may be found here.