Defendants in federal False Claims Act cases can receive greater leniency by self-disclosing misconduct and violations and cooperating with government investigators, according to new guidelines issued by the U.S. Department of Justice (DOJ).
Federal officials developed the False Claims Act changes to give companies more incentive to “voluntarily disclose misconduct and cooperate with our investigations,” the DOJ said in a statement.
Although any company can benefit from these changes, hospitals, pharmacies, drug makers, and other health care providers are the most affected by the False Claims Act – a federal law that allows private individuals to file whistleblower lawsuits on behalf of the U.S. in cases of suspected and well-documented fraud. Military and other government contractors will also be largely impacted by the changes.
False Claims Act penalties can be extremely costly for health care providers. If a False Claims Act case goes to trial, judgments against the defendant normally call for the three times the actual damages. Most False Claims Act lawsuits are settled before they go to trial for this reason.
Now violators can receive credit for their self-disclosures, cooperating with federal investigations, and taking remedial measures to correct violations.
“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,” Assistant Attorney General Jody Hunt said.
The DOJ said that companies may receive credit “even if the government already has initiated an investigation” by voluntarily disclosing other misconduct “outside the scope of the government’s existing investigation.”
The new policy also allows violators to receive credit for preserving documents and other information beyond existing business practices and legal requirements; identifying individuals with knowledge that could be relevant to the investigation, such as familiarity with the company’s operations, policies, and procedures.
False Claims Act violators may also get credit for facilitating the review and evaluation of data that requires access to special or proprietary technologies.
Remedial measures that may qualify violators for credit 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 DOJ said.
Credit for cooperating under the False Claims Act changes will usually be given in the form of a reduction in the damages multiplier and civil penalties, according to the DOJ’s statement.
“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.
Beasley Allen has a whistleblower litigation team experienced in handling these often complex cases. If you feel you have first-hand knowledge of fraud being committed against the government, you may be able to bring a claim. It is important to talk to a lawyer before you take any action. Contact Lance Gould, Larry Golston, Leslie Pescia or Tyner Helms in our Consumer Fraud Section for a confidential evaluation of your claim.