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 Justice Department Opens New Path for Reporting False Claims Act Violations

The U.S. Justice Department has issued new guidance outlining how companies accused of defrauding the federal government can receive credit, or greater leniency, if they cooperate through voluntary disclosures. 

Guidance addresses specific changes tied to the False Claims Act, a law that has affected health care providers from all parts of the industry in recent years in the form of stiff fines and penalties.

Now, the Civil Division of the Justice Department said it has identified the type of cooperation eligible for credit to defendants in such cases (Justice Manual Section 4-4.112).

“The Department of Justice has taken important steps to incentivize companies to voluntarily disclose misconduct and cooperate with our investigations; enforcement of the False Claims Act is no exception,” Assistant Attorney General Jody Hunt said. “False Claims Act defendants may merit a more favorable resolution by providing meaningful assistance to the Department of Justice—from voluntary disclosure, which is the most valuable form of cooperation, to various other efforts, including the sharing of information gleaned from an internal investigation and taking remedial steps through new or improved compliance programs.” 

Under the policy, the department said cooperation credit in False Claims Act cases may be earned by voluntarily disclosing misconduct previously unknown to the government, cooperating in an ongoing investigation, or undertaking remedial measures in response to a violation. 

“Even if the government already has initiated an investigation, for example, a company may receive credit for making a voluntary self-disclosure of other misconduct outside the scope of the government’s existing investigation that is unknown to the government,” the Justice Department said.

Also, a company may earn credit by preserving relevant documents and information beyond existing business practices or legal requirements, identifying individuals who are aware of relevant information or conduct, and facilitating review and evaluation of data or information that requires access to special or proprietary technologies.

Under the new policy, the Department of Justice said all of these factors will be taken into account when determining corrective action that a company has taken in response to a False Claims Act violation. “Such remedial measures may include undertaking a thorough analysis of the root cause of the misconduct, appropriately disciplining or replacing those responsible for the misconduct, accepting responsibility for the violation, and implementing or improving compliance programs to prevent a recurrence,” the department said.

The form of the cooperation credit most likely will be in the form of a reduction in the damages multiplier and civil penalties. “If appropriate, the department may also notify a relevant agency about the company’s voluntary disclosure, cooperation, or remediation so that the agency can take those actions into account in deciding how to apply administrative remedies. And the department may publicly acknowledge the company’s cooperation,” the guidance said.

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