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“Counterintuitive” but Perhaps Not “Absurd?”—Supreme Court Hears Argument on Whether Relators Can Take Advantage of Three-Year Tolling and Government Knowledge in FCA Cases
It has been a busy week for False Claims Act watchers at the Supreme Court. The appetizer was the Court’s certiorari denial yesterday in Prather, the other potential vehicle for a second look at Escobar, and today’s entrée was oral argument in Cochise Consultancy, Inc. v. United States ex rel. Hunt, where the Supreme Court will decide whether relators, like the government, can take advantage of the three-year tolling provision of 31 U.S.C. § 3731(b)(2), and if so, whether it is the relator’s knowledge that counts. As Justice Kavanaugh observed at oral argument, allowing relators to take advantage of tolling, while at the same time pinning the tolling on the government’s knowledge, might be counterintuitive, but is it such an absurd reading that the Court might depart from the statutory text?
On March 6, 2019, at the American Bar Association’s National Institute on White Collar Crime, James McDonald, head of the U.S. Commodity Future Trading Commission’s Enforcement Division discussed the CFTC’s growing focus on cases involving violations of the Commodity Exchange Act related to foreign corrupt practices, and announced a new self-reporting and cooperation advisory for related conduct.
In the ever-evolving False Claims Act (FCA) arena, the Government told the court that it intends to move to dismiss a whistleblower suit against United Health Group’s Executive Health Resources, Inc. (EHR) for allegedly assisting hospitals in overcharging for outpatient care. The Granston Memo, issued by Department of Justice (DOJ) in January 2018, directs government lawyers to consider seven factors when contemplating possible dismissal: (1) Curbing Meritless Qui Tams; (2) Preventing Parasitic or Opportunistic Qui Tam Actions; (3) Preventing Interference with Agency Policies and Programs; (4) Controlling Litigation Brought on Behalf of the United States; (5) Safeguarding Classified Information and National Security Interests; (6) Preserving Government Resources; and (7) Addressing Egregious Procedural Errors. DOJ gave no specific reason for dismissing the suit against EHR beyond a general reference to “the interests of the United States,” but the history of contentious discovery battles in the case suggests that Granston factor 6, Preserving Government Resources, might have been an important consideration.
Following the Escobar decision, contractors have pursued discovery from government agencies on materiality issues, including information about whether payments were made with knowledge of the alleged violation. Despite the Granston memo and the decision to dismiss the case against EHR, DOJ has warned contractors that pursuing discovery to make litigation seem onerous will not lead to dismissal, absent other considerations. Contractors nevertheless should take heart that DOJ is engaging in a meaningful cost-benefit analysis under the Granston memo and is actively dismissing qui tam cases in appropriate circumstances.
Anti-corruption attorney Ronak D. Desai warns that a recent $25 million settlement between Cognizant Technology Solutions and the SEC resolving bribery allegations in India is an effective reminder that traditional FCPA enforcement against U.S. companies and their executives is still a concern, and underscores the immense corruption risk India poses to foreign companies conducting business there.
Many experts expected FCPA prosecutions to fall under the current administration, and others wondered whether the statute would be used increasingly to target foreign companies as a way to advance the president’s “America first” agenda.
This case demonstrates that enforcement against U.S. companies remains a real possibility. And despite the appeal of India’s anglophone democracy as a market, its culture of corruption poses an equally real risk.
Guideposts for Successful Internal Investigations: Part 2 – Commencing and Concluding the Investigation
David A. Nenni of Jackson Lewis continues writing about how to effectively conduct internal investigations, following up with what to do after beginning one. His next five steps focus on conducting and concluding the investigation, and will help guide a company during the actual investigation, after establishing its framework.
- Gather Information. This includes assessing the complaint, gathering policies, and interviewing the complainant and witnesses.
- Prepare findings and conclusions. An organization may choose an oral report, a written executive summary, or a detailed factual findings and analysis.
- Take remedial measures (if necessary). This could include discipline of employees, policy changes, additional training, or a report to a government agency.
- Follow-up with the complainant to close the investigation. This will build rapport and show the complainant that the company took her complaint seriously.
- The investigator should prepare a file of conclusions, notes, and documents reviewed in reaching its conclusion.