The Assistant Attorney General for the Criminal Division, Leslie Caldwell, announced on September 17, 2014, that criminal prosecutors at the Justice Department in Washington will automatically review all new qui tam (i.e., whistleblower) complaints filed under the civil False Claims Act. In remarks delivered at a meeting of the Taxpayers Against Fraud Education Fund Conference, AAG Caldwell revealed that the Criminal Division recently implemented a procedure so that all new qui tam complaints will be shared by the Civil Division with the Criminal Division as soon as the cases are filed.
According to AAG Caldwell, “[e]xperienced prosecutors in the Fraud Section are immediately reviewing the qui tam cases when we receive them to determine whether to open a parallel criminal investigation. Those prosecutors then coordinate swiftly with the Civil Division and U.S. Attorney’s Offices about the best ways to proceed in the parallel investigations.”
Healthcare companies—no stranger to whistleblower complaints—are likely to receive even more of the Criminal Division’s attention going forward. For some time now, criminal Assistant U.S. Attorneys (through coordination with the Consumer Protection Branch, formerly the Office of Consumer Litigation), have applied close criminal scrutiny to pharmaceutical and medical device companies specifically with respect to putative matters involving the Food, Drug & Cosmetic Act. But other healthcare companies commonly faced with qui tamcomplaints have generally avoided the harshest lens of the Government’s criminal microscope to this point. No longer.
As AAG Caldwell emphasized at the Conference, “We have numerous ongoing corporate health care fraud investigations, and we are determined to bring more.” Now that an early criminal review by Main Justice will be standard operating procedure in every qui tam matter—in addition to potentially concurrent review by criminal Assistant U.S. Attorneys in the district where thequi tam action is filed—False Claims Act defendants (in the healthcare industry and otherwise) may face a greater threat of prosecution. This threat extends to individuals, such as corporate officers; it also intensifies the risk of the collateral consequences that can follow from corporate criminal charges, such as suspension, debarment, or exclusion from Government programs.
Effective immediately, healthcare companies that learn they are under investigation for potential False Claims Act violations should move quickly to evaluate their criminal exposure and take appropriate action to mitigate the distinctive challenges that a criminal investigation can pose. Strategic measures may now include early engagement with the Criminal Division and criminal Assistant U.S. Attorneys, as companies seek to counter or even preempt relators’ advocacy before the Government with their own advocacy about why a full criminal investigation into the conduct at issue is not warranted.