DOJ Rolls Out Incentive Structure for Self-Reporting Civil FCA Violations

Earlier this week, the Department of Justice issued “Guidelines for Taking Disclosure, Cooperation, and Remediation into Account in False Claims Act Matters” (the FCA Guidelines), intended to incentivize self-disclosure, cooperation and remediation in civil FCA investigations. This is the latest in a string of recent updates to DOJ policies which have potentially significant consequences on corporate enforcement. These include: (1) the November 2018 revision to the Individual Accountability for Corporate Wrongdoing Policy; (2) the March 2019 update to the FCPA Corporate Enforcement Policy; and (3) the April 2019 update to the Evaluation of Corporate Compliance Programs. The FCA Guidelines, like the majority of policy changes announced over the last 1-2 years, have been formalized and memorialized in the Justice Manual, here found at the newly added Section 4-4.112. The stated purpose of the new section is to clarify “the manner in which the Department of Justice awards credit to defendants who cooperate with the Department during a False Claims Act Investigation,” although it is equally clear that the DOJ’s goal in issuing such guidance is to encourage the threshold step of disclosing misconduct. Although only applicable to civil enforcement, like the criminal FCPA Corporate Enforcement Policy (CEP)—upon which this latest guidance clearly is modeled— the FCA Guidelines set forth the factors that DOJ attorneys will consider in deciding whether or not to accord credit for assisting in a civil FCA investigation and those ways in which an entity or individual can claim full or partial credit.

I. Factors for Consideration -

The three hallmarks of credit in the civil FCA context, discussed in more detail below, are consistent with those that criminal prosecutors in the FCPA space and beyond have been touting in recent years: voluntary self-disclosure, cooperation, and remedial action. The FCA Guidelines also make clear that DOJ attorneys analyzing an FCA matter will look at the timeliness of any information provided, the truthfulness, completeness, and reliability of the information, as well as the nature and significance of the assistance provided by an entity or individual seeking credit.