Investigative Tools in the Government’s Arsenal: Civil Investigative Demands

By Sherrie R. Savett and Jonathan Z. DeSantis

When investigating potential violations of the False Claims Act (“FCA”), the Government has a powerful tool at its disposal known as civil investigative demands (“CID”). CIDs permit the Government to require a person or entity to produce documents, provide written answers to interrogatories, or provide oral testimony. The Government can utilize this information to evaluate whether to pursue claims under the FCA.

The Basics

Generally speaking, the FCA prohibits the knowing presentation of false claims involving Government funds and various other related acts of misconduct.[1]  The FCA authorizes both the Government itself and private individuals, known as qui tam relators, to pursue claims under the FCA.[2] When a lawsuit is filed by a relator, the Government is provided an opportunity to investigative the relator’s claim to determine whether it wants to formally participate (known as intervention) in the lawsuit.[3]

The Government may issue a CID when it “has reason to believe that any person may be in possession, custody, or control of any documentary material or information relevant to a false claims law investigation.”[4]  The term “false claims investigation” is broadly defined to include “any inquiry conducted by any false claims law investigator for the purpose of ascertaining whether any person is or has been engaged in any violation of a false claims law.”[5]

CIDs typically arise in two circumstances:

  1. Before an FCA lawsuit is filed, the Government believes that there is a possibility that a person or entity is violating the FCA. The Government uses the information obtained through a CID to evaluate whether the person or entity actually violated the FCA and thus whether to file an FCA lawsuit on its own behalf.
  2. After a relator files an FCA lawsuit, the Government utilizes a CID during its investigation of the relator’s claims. The Government uses the information it learns through the CID as part of its decision whether to intervene in the relator’s lawsuit.[6]

A CID “functions as a prefiling information-gathering tool to perceive widespread fraud against the government” and “provides the government with a means to assess quickly, and at the least cost to the taxpayers or to the party from whom information is requested, whether grounds exist for initiating a false claim suit.”[7]

What the Government Can Obtain

A CID may be served on a person or corporate entity.[8] Importantly, a CID may be served on “any” person or entity believed to have relevant information about FCA violations.[9] Put differently, the Government is not limited to serving CIDs on a person or entity that is believed to have actually committed a violation of the FCA.

A CID may request any combination of the following: the production of documents, the provision of written answers to interrogatories, and the provision of oral testimony.[10] Generally speaking, the recipient of a CID is not required to produce any information until 20 days after he or she is served with it.[11] However, in practice, recipients are given substantially more time to respond and work collaboratively with the Government to identify a reasonable response date.

CID Limitations

While the Government can obtain a broad array of information through a CID, there are some limitations. The most significant limitation is that a CID “may not require the production of any documentary material, the submission of any answers to written interrogatories, or the giving of any oral testimony if such material, answers, or testimony would be protected from disclosure under . . . the standards applicable to subpoenas . . . to aid in a grand jury investigation” or “the standards applicable to discovery requests under the Federal Rules of Civil Procedure.”[12]

Thus, for example, the recipient of a CID can claim that the requested information is irrelevant to the Government’s investigation.[13] Similarly, the recipient of a CID may contend that certain documents the Government is requesting are protected from disclosure by the attorney-client privilege or other privileges.

Challenges to and Failure to Comply With a Civil Investigative Demand

If the recipient of a CID does not comply with it, the Government may initiate an enforcement proceeding in the federal district court where the recipient resides.[14] Likewise, if the recipient of a CID wants to challenge it as improper, the recipient can file a petition to set aside or limit the CID.[15] The district court may compel the recipient to respond to the CID, set aside the CID, or decide that the CID is enforceable in part and unenforceable in part.

If the FCA case is under seal, the enforcement proceeding by the Government would also have to be litigated under seal in the district court where the case is pending.

[1] 31 U.S.C. § 3729(a)(1).

[2] 31 U.S.C. § 3730(b)(1).

[3] 31 U.S.C. § 3730(b)(2)-(4).

[4] 31 U.S.C. § 3733.

[5] 31 U.S.C. § 3733(I)(2).

[6] See e.g. United States v. Chalhoub, No. 16-CR-23, 2017 WL 2568919, at *2 (E.D. Ky. June 13, 2017) (“In response to the qui tam complaint . . . the Government sent a Civil Investigative Demand.”). On the other hand, courts have held that the Government may not use a civil investigative after it has filed its own FCA lawsuit. See e.g. Avco Corp. v. U.S. Dep’t of Justice, 884 F.2d 621, 623 (D.C. Cir. 1989) (“Both parties concede—and it is evident to anyone reading the statute—that the Attorney General may not employ the power granted by this section after he has commenced a false claims action.”).

[7] United States v. Kernan Hosp., 2012 WL 5879133, at *3 (D. Md. Nov. 20, 2012) (internal quotation marks and citation omitted).

[8] 31 U.S.C. § 3733(d).

[9] 31 U.S.C. § 3733(a)(1).

[10] 31 U.S.C. § 3733(a)(1)(A)

[11] 31 U.S.C. § 3733(a)(2)€.

[12] 31 U.S.C. § 3733(b)(1).

[13] See e.g. In re Civil Investigative Demand 15-439, 2016 WL 4275853, at *7 (W.D. Va. Aug. 12, 2016).

[14] 31 U.S.C. § 3733(j)(1).

[15] 31 U.S.C. § 3733(j)(2).

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By | 2018-07-03T11:36:15+00:00 July 3rd, 2018|False Claims Act Information|