United States: Cooperation In The Eye Of The Beholder: DOJ Official Bill Baer Elaborates On Cooperation In False Claims Act And Other Civil Enforcement Matters

SUMMARY

The law is uncertain. One example of this uncertainty is how the "Yates Memo" is to be applied in civil cases—in particular, what constitutes "cooperation" and how cooperation may benefit a company under investigation for False Claims Act violations. On September 29, 2016, the US Department of Justice (DOJ) attempted (for a second time) to address the lack of clarity surrounding cooperation in civil matters.

IN DEPTH

The law is uncertain. One example of this uncertainty is how the "Yates Memo" is to be applied in civil cases—in particular, what constitutes "cooperation" and how cooperation may benefit a company under investigation for False Claims Act violations. On September 29, 2016, the US Department of Justice (DOJ) attempted (for a second time) to address the lack of clarity surrounding cooperation in civil matters. While DOJ provided some more detail on what it viewed as "full cooperation," and indicated that "new guidance" had been issued within DOJ on cooperation in civil enforcement matters, it still failed to give concrete guidance on how such cooperation may benefit a company in a FCA or other civil resolution. In essence, DOJ is saying "Trust us" to companies considering the potential benefits of cooperation.

The Yates Memo

In September 2015, Deputy Attorney General Sally Yates issued the Yates Memo on individual accountability in the context of corporate investigations. The memo was palpably more concerned with criminal matters, but also made clear that the Yates "individual accountability" principles would apply to civil matters as well. The memo provided guidance in a number of areas, including when a company could benefit from "cooperation credit." Cooperation credit has a well-understood role in criminal matters. See, e.g., Principles of Federal Prosecution of Business Organizations (USAM 9-28.700 et seq.). But cooperation credit is not a comfortable fit in the FCA arena. Indeed, the only example the Yates Memo gave on how cooperation might apply in a civil case related to the "reduced damages" provision of the FCA, 31 U.S.C. § 3729(a)(2), which provides for reduced damages where a party "fully cooperates" with the government. Critically, however, this provision only applies if the party furnishes the government with information about a FCA violation before the person had "actual knowledge of the existence of an investigation into such violation." In other words, the only example given in the Yates Memo for how cooperation could benefit a company in the FCA context is in the case of a voluntary disclosure—the very small minority of FCA matters. So this left open the question of what cooperation means and what benefits it will bring in the more typical case, i.e., where a company first learns there may be a False Claims Act issue when it receives the civil investigative demand (CID) or other subpoena.

DOJ has now addressed the application of individual accountability principles to civil cases on two occasions this year in speeches by DOJ official Bill Baer, the first on June 9 and most recently, on September 29. Taken together, the speeches provide an evolving understanding of what DOJ means by "full cooperation," but explain remarkably little about the benefits such cooperation may confer.

The June 2016 Speech: Yates Principles' Application to Civil Cases

In his June 2016 speech, Baer covered the range of issues—not just cooperation—that arise with the application of Yates principles to civil cases, see June 13, 2016, FCA Update, " Acting Associate Attorney General Remarks on Yates Memorandum and False Claims Act." With respect to cooperation, the June speech was notable for what DOJ does not consider cooperation, such as mere compliance with a subpoena and "one-sided presentations and white papers." The speech also gave broad outlines of what would qualify, e.g., disclosure of "all facts relating to the individuals involved in the wrongdoing"; making officers and employees available for meetings, interviews or depositions; disclosing facts gathered during an internal investigation; identifying opportunities to obtain evidence not in the possession of the organization. With respect to the benefits of cooperating, Baer assured the audience that "[w]here a company satisfies the threshold requirement of disclosure as to individuals and otherwise cooperates with the government's investigation, the department will use its significant enforcement discretion in FCA matters to recognize that cooperation." Baer essentially conceded the variability of outcomes in FCA matters, acknowledging the "different damages issues and measures" and range of multipliers and penalties that are potentially applicable, but said that DOJ is "committed to taking into account the disclosures and cooperation provided by defendants and to resolve matters for less than the matters would otherwise have settled for based on the applicable law and facts." No light was shed on how DOJ would quantify the value of cooperation in coming to a resolution.

The September 2016 Speech: Cooperation in Civil Cases

In his September 2016 speech, Baer reiterated the themes of cooperation and its benefits. Significantly, Baer implicitly acknowledged the need for more clarity on what actually does constitute meaningful cooperation in a civil law enforcement investigation, both inside and outside DOJ, stating:

I recently issued new guidance within the department on cooperation in civil enforcement matters. This guidance makes clear that the department encourages productive self-disclosure and cooperation from would-be defendants in civil enforcement matters. The department often has latitude to determine the contours of an appropriate resolution—discretion that can and will be exercised to credit significant and timely cooperation.

Baer reaffirmed that cooperation meant meeting the "threshold requirement" of the Individual Accountability policy by disclosing "all facts relating to the individuals involved in the wrongdoing, no matter where those individuals fall in the corporate hierarchy." Baer also made clear that full cooperation is more than meeting this requirement and that while effective cooperation will vary from case to case, "certain commonalities" have emerged:

  1. "Cooperation should be proactive; that is, the company should materially assist [DOJ], including by disclosing facts that are relevant to the investigation, even when not specifically asked to do so." This "proactive" cooperation may involve:

    • Describing the conduct at issue and pointing DOJ to "inculpatory documentary evidence, such as emails and text messages";
    • Providing documents or access to witnesses that DOJ might not have obtained through compulsory process;
    • Providing summaries of evidence "prepared specifically to assist the government's investigation";
    • Providing reports to DOJ that "compile data in a manner that is helpful" for DOJ and that it could not "readily achieve on its own";
    • Encouraging individuals with knowledge of the relevant conduct to cooperate with the investigation;
    • Providing information that might otherwise not have been discovered in the ordinary course of the investigation.
  2. Cooperation should be timely. "Cooperation that calls [DOJ's] attention to a problem that [DOJ] previously did not know about at the early stages of an investigation is substantially more helpful than cooperation after [DOJ has] invested significant time and energy in exposing problematic conduct." Importantly, "little or no cooperation credit will be afforded in situations where the supposed cooperation occurs after [DOJ] has completed the bulk of its investigation."
  3. Providing information that "enables the government to pursue conduct that might otherwise have been addressed" can result in being considered for credit. This type of cooperation "may involve detailing relevant conduct by a different party (or parties) participating in the same or similar scheme or that enables [DOJ] to net greater recoveries."
  4. Corporate actions that "lead to a more positive result," such as acknowledgement of responsibility or efforts to assist victims of the alleged conduct.

Baer was at pains to repeat what does not constitute cooperation: compliance with a subpoena; putting the government in the position of building the case "from the ground up"; "one-sided presentations urging the department to decline an enforcement action." Somewhat ominously, Baer elaborated that "[i]ndeed, [DOJ] may view some such activities—including the belated provision of information that an entity was legally obligated to produce—as impediments to investigative work rather than genuine examples of cooperation."

While Baer has disclaimed any suggestion that DOJ's expectations about cooperation amount to expectations that corporate defendants will do DOJ's bidding by effectively building the government's case for it, the examples of cooperation that have been provided certainly raise eyebrows, particularly when viewed in combination with what some might read as a suggestion that legitimate efforts by a corporation to defend itself will be viewed as uncooperative and obstructionist.

With respect to the benefits of cooperation, Baer said:

... a company that offers meaningful cooperation and timely victim relief should be afforded a more favorable resolution than a company that fights kicking and screaming until the end. My internal guidance makes the point that [DOJ] has latitude in deciding how to resolve civil cases—discretion that can be exercised to credit meaningful cooperation, including through an appropriately reduced monetary sanction or penalty. If it's helpful, you can think of this as analogous to a "downward departure" where a criminal defendant has provided substantial assistance to the government's investigation.

Unanswered Questions

All of this leaves clients and defense counsel in an unenviable position, even when there is a desire to "cooperate." For instance, where there is a genuine dispute about conduct or its legal ramifications, will voicing that disagreement be considered a "one-sided presentation urging the department to decline an enforcement action"? If a company omits to provide the government with "inculpatory documentary evidence, such as emails and text messages," has the company forfeited the ability to be viewed as cooperative even if such documents were not responsive to any subpoena or other process? Even if they only barely relate to the subject matter of the government's investigation? While DOJ has said that nothing in the Yates memo requires waiver of privilege, will a decision not to waive nonetheless be a factor in DOJ's assessment of cooperation? It will be the client's decision whether to cooperate or not, but it will be defense counsel's task to find the line between legitimate defense and what might be perceived as a failure to cooperate.

Finally, and critically, defendants continue to be in the dark about what benefits cooperation genuinely confers. We are told to think of this as a downward departure as to damages—but from what number? And by how much? In contrast to criminal matters, there are no civil guidelines for FCA downward departures, and as Baer himself noted, there is no one model of single damages, no one way to calculate the application of penalties or the range of multipliers. It is also worth noting that the government has historically agreed to more favorable terms when defendants enter into consensual resolutions as opposed to litigating—however, in the past, defendants got those terms without providing the kind of "cooperation" that Baer has now outlined in his speech. So will "full cooperation" result in a "downward departure" from how the government has historically resolved cases? Or will failure to conform to the government's definition of cooperation raise the settlement bar? In other words, how should a lawyer assess what "cooperation" is worth and whether that value offsets cooperation's substantial cost? Given that Baer feels that DOJ attorneys need guidance on these issues, it may be that there are no consistent answers at this point, and the value of cooperation will have to be determined district by district and case by case. Talk about uncertainty.

Cooperation In The Eye Of The Beholder: DOJ Official Bill Baer Elaborates On Cooperation In False Claims Act And Other Civil Enforcement Matters

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.

To print this article, all you need is to be registered on Mondaq.com.

Click to Login as an existing user or Register so you can print this article.

Authors
 
In association with
Related Video
Up-coming Events Search
Tools
Print
Font Size:
Translation
Channels
Mondaq on Twitter
 
Register for Access and our Free Biweekly Alert for
This service is completely free. Access 250,000 archived articles from 100+ countries and get a personalised email twice a week covering developments (and yes, our lawyers like to think you’ve read our Disclaimer).
 
Email Address
Company Name
Password
Confirm Password
Position
Mondaq Topics -- Select your Interests
 Accounting
 Anti-trust
 Commercial
 Compliance
 Consumer
 Criminal
 Employment
 Energy
 Environment
 Family
 Finance
 Government
 Healthcare
 Immigration
 Insolvency
 Insurance
 International
 IP
 Law Performance
 Law Practice
 Litigation
 Media & IT
 Privacy
 Real Estate
 Strategy
 Tax
 Technology
 Transport
 Wealth Mgt
Regions
Africa
Asia
Asia Pacific
Australasia
Canada
Caribbean
Europe
European Union
Latin America
Middle East
U.K.
United States
Worldwide Updates
Check to state you have read and
agree to our Terms and Conditions

Terms & Conditions and Privacy Statement

Mondaq.com (the Website) is owned and managed by Mondaq Ltd and as a user you are granted a non-exclusive, revocable license to access the Website under its terms and conditions of use. Your use of the Website constitutes your agreement to the following terms and conditions of use. Mondaq Ltd may terminate your use of the Website if you are in breach of these terms and conditions or if Mondaq Ltd decides to terminate your license of use for whatever reason.

Use of www.mondaq.com

You may use the Website but are required to register as a user if you wish to read the full text of the content and articles available (the Content). You may not modify, publish, transmit, transfer or sell, reproduce, create derivative works from, distribute, perform, link, display, or in any way exploit any of the Content, in whole or in part, except as expressly permitted in these terms & conditions or with the prior written consent of Mondaq Ltd. You may not use electronic or other means to extract details or information about Mondaq.com’s content, users or contributors in order to offer them any services or products which compete directly or indirectly with Mondaq Ltd’s services and products.

Disclaimer

Mondaq Ltd and/or its respective suppliers make no representations about the suitability of the information contained in the documents and related graphics published on this server for any purpose. All such documents and related graphics are provided "as is" without warranty of any kind. Mondaq Ltd and/or its respective suppliers hereby disclaim all warranties and conditions with regard to this information, including all implied warranties and conditions of merchantability, fitness for a particular purpose, title and non-infringement. In no event shall Mondaq Ltd and/or its respective suppliers be liable for any special, indirect or consequential damages or any damages whatsoever resulting from loss of use, data or profits, whether in an action of contract, negligence or other tortious action, arising out of or in connection with the use or performance of information available from this server.

The documents and related graphics published on this server could include technical inaccuracies or typographical errors. Changes are periodically added to the information herein. Mondaq Ltd and/or its respective suppliers may make improvements and/or changes in the product(s) and/or the program(s) described herein at any time.

Registration

Mondaq Ltd requires you to register and provide information that personally identifies you, including what sort of information you are interested in, for three primary purposes:

  • To allow you to personalize the Mondaq websites you are visiting.
  • To enable features such as password reminder, newsletter alerts, email a colleague, and linking from Mondaq (and its affiliate sites) to your website.
  • To produce demographic feedback for our information providers who provide information free for your use.

Mondaq (and its affiliate sites) do not sell or provide your details to third parties other than information providers. The reason we provide our information providers with this information is so that they can measure the response their articles are receiving and provide you with information about their products and services.

If you do not want us to provide your name and email address you may opt out by clicking here .

If you do not wish to receive any future announcements of products and services offered by Mondaq by clicking here .

Information Collection and Use

We require site users to register with Mondaq (and its affiliate sites) to view the free information on the site. We also collect information from our users at several different points on the websites: this is so that we can customise the sites according to individual usage, provide 'session-aware' functionality, and ensure that content is acquired and developed appropriately. This gives us an overall picture of our user profiles, which in turn shows to our Editorial Contributors the type of person they are reaching by posting articles on Mondaq (and its affiliate sites) – meaning more free content for registered users.

We are only able to provide the material on the Mondaq (and its affiliate sites) site free to site visitors because we can pass on information about the pages that users are viewing and the personal information users provide to us (e.g. email addresses) to reputable contributing firms such as law firms who author those pages. We do not sell or rent information to anyone else other than the authors of those pages, who may change from time to time. Should you wish us not to disclose your details to any of these parties, please tick the box above or tick the box marked "Opt out of Registration Information Disclosure" on the Your Profile page. We and our author organisations may only contact you via email or other means if you allow us to do so. Users can opt out of contact when they register on the site, or send an email to unsubscribe@mondaq.com with “no disclosure” in the subject heading

Mondaq News Alerts

In order to receive Mondaq News Alerts, users have to complete a separate registration form. This is a personalised service where users choose regions and topics of interest and we send it only to those users who have requested it. Users can stop receiving these Alerts by going to the Mondaq News Alerts page and deselecting all interest areas. In the same way users can amend their personal preferences to add or remove subject areas.

Cookies

A cookie is a small text file written to a user’s hard drive that contains an identifying user number. The cookies do not contain any personal information about users. We use the cookie so users do not have to log in every time they use the service and the cookie will automatically expire if you do not visit the Mondaq website (or its affiliate sites) for 12 months. We also use the cookie to personalise a user's experience of the site (for example to show information specific to a user's region). As the Mondaq sites are fully personalised and cookies are essential to its core technology the site will function unpredictably with browsers that do not support cookies - or where cookies are disabled (in these circumstances we advise you to attempt to locate the information you require elsewhere on the web). However if you are concerned about the presence of a Mondaq cookie on your machine you can also choose to expire the cookie immediately (remove it) by selecting the 'Log Off' menu option as the last thing you do when you use the site.

Some of our business partners may use cookies on our site (for example, advertisers). However, we have no access to or control over these cookies and we are not aware of any at present that do so.

Log Files

We use IP addresses to analyse trends, administer the site, track movement, and gather broad demographic information for aggregate use. IP addresses are not linked to personally identifiable information.

Links

This web site contains links to other sites. Please be aware that Mondaq (or its affiliate sites) are not responsible for the privacy practices of such other sites. We encourage our users to be aware when they leave our site and to read the privacy statements of these third party sites. This privacy statement applies solely to information collected by this Web site.

Surveys & Contests

From time-to-time our site requests information from users via surveys or contests. Participation in these surveys or contests is completely voluntary and the user therefore has a choice whether or not to disclose any information requested. Information requested may include contact information (such as name and delivery address), and demographic information (such as postcode, age level). Contact information will be used to notify the winners and award prizes. Survey information will be used for purposes of monitoring or improving the functionality of the site.

Mail-A-Friend

If a user elects to use our referral service for informing a friend about our site, we ask them for the friend’s name and email address. Mondaq stores this information and may contact the friend to invite them to register with Mondaq, but they will not be contacted more than once. The friend may contact Mondaq to request the removal of this information from our database.

Security

This website takes every reasonable precaution to protect our users’ information. When users submit sensitive information via the website, your information is protected using firewalls and other security technology. If you have any questions about the security at our website, you can send an email to webmaster@mondaq.com.

Correcting/Updating Personal Information

If a user’s personally identifiable information changes (such as postcode), or if a user no longer desires our service, we will endeavour to provide a way to correct, update or remove that user’s personal data provided to us. This can usually be done at the “Your Profile” page or by sending an email to EditorialAdvisor@mondaq.com.

Notification of Changes

If we decide to change our Terms & Conditions or Privacy Policy, we will post those changes on our site so our users are always aware of what information we collect, how we use it, and under what circumstances, if any, we disclose it. If at any point we decide to use personally identifiable information in a manner different from that stated at the time it was collected, we will notify users by way of an email. Users will have a choice as to whether or not we use their information in this different manner. We will use information in accordance with the privacy policy under which the information was collected.

How to contact Mondaq

You can contact us with comments or queries at enquiries@mondaq.com.

If for some reason you believe Mondaq Ltd. has not adhered to these principles, please notify us by e-mail at problems@mondaq.com and we will use commercially reasonable efforts to determine and correct the problem promptly.