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Responding to a Civil Investigative Demand: The Do's and Don'ts

The False Claims Act,also referred to as the Lincoln Law, is a long-standing federal statue that imposes liability on persons and companies who defraud governmental programs, and as of present, is most frequently used in the health care context. From January 2009 to the end of fiscal year 2016, 19.3 billion dollars have been recovered in health care fraud claims, 57 percent of that is contributed to the False Claims Act - which restores money to federally funded programs such as Medicare, Medicaid, and Tricare. Because of this, the Texas Attorney General and other governmental agencies vigorously pursue possible violations of the False Claims Act.

If the Attorney General, or a designee, has reason to believe that any person may be in possession of any material documents or information relevant to a false claims law investigation, the Attorney General may, (before commencing a civil proceeding under Section 3730(a) or other false claims law), issue in writing and serve a Civil Investigative Demand, requiring such person:

  • to produce such documentary material for inspection and copying,
  • to answer in writing written interrogatories with respect to such documentary material or information,
  • to give oral testimony concerning such documentary material or information, or
  • to furnish any combination of such material, answers, or testimony.

In Texas, the Attorney General, may also issue Civil Investigative Demands as a means to collect testimony and documents for certain types of investigations.

The fact that your business has received a Civil Investigative Demand does not necessarily mean that you are the subject of the investigation. Civil Investigative Demands may be issued to the target of the investigation and they may also be issued to other individuals or entities that have information related to the investigation. However care must be taken in that at first you or your entity may not be the target but based upon the information disclosed, you or your entity could become a target.

The Do’s:

  1. Upon receipt of a Civil Investigative Demand one of the first steps is to engage outside experienced counsel to assist in dealing with the Assistant U.S. Attorney (AUSA) or the State Attorney General depending on who issued the CID.
  2. Second, insure that no documentation is destroyed or deleted. Immediately after contacting experienced outside counsel your entity should take affirmative steps to ensure that no documentation is destroyed or deleted.
  3. Third, act promptly. For a CID issued by the Texas Attorney General you have twenty (20) days from the date of service to file a motion to set aside or modify the CID. With respect to a CID issued pursuant to 31 U.S. Code Section§3733, which is an express demand for any product of discovery, there are twenty (20) days in which to respond. However a request for oral testimony pursuant to a Civil Investigative Demand may provide as little as seven (7) days within which to respond. Further if there are exceptional circumstances a shorter time period may be applicable.
  4. Fourth, through retained counsel open lines of communication with the issuing authority. This is important to define the scope of the documentation requested, determine the claims at issue and what information or documents your company will need to preserve.
  5. Identify what documents or information your company has in its possession, custody or control and further identify which document custodians might have documents responsive to the CID.

In responding to a Civil Investigative Demand it many times is similar to walking a tightrope. It is imperative to be cooperative with the issuing authority but at the same time steps must be taken to protect your interests and the interests of your business. Therefore it is imperative to have counsel that is experienced in dealing with and responding to CIDs to represent you through the process.

The Don’ts:

  1. Don’t attempt to “go it alone”. Experienced counsel is vital to protecting your interests.
  2. Don’t destroy documentation or delete electronically stored information.
  3. Don’t be hostile or combative with the entity issuing the CID. CIDs are specifically authorized and there are appropriate steps and measures for dealing with the scope and burden that may be imposed by a CID.
  4. Don’t be misleading or untruthful. This type of activity can turn what is a civil investigation into a criminal matter.

The manner in which you or your company first address a CID will be critical to the course of dealings with respect to the CID. Experienced counsel such as Hendershot, Cannon, Martin and Hisey, P.C. can lead you through the process working diligently and deliberately to limit the disruption, risk and overall cost to your organization while responding to a CID.