Whenever you receive correspondence with letterhead from the Department of Justice, Attorney General’s office, you know it’s important and you better take note.

A Civil or Criminal Investigative Demand is serious. Getting any communication from the U.S. Department of Justice can be a bit unnerving. That’s particularly true for Medicare and Medicaid providers receiving a Civil Investigative Demand (“CID”) for documents and testimony.  

A CID is a tool used by the Justice Department (“DOJ”) to investigate potential violations of the False Claims Act (“FCA”). See blog. The DOJ can issue a CID whenever the DOJ 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.” The bottom line is that the DOJ uses CIDs to obtain documents and identify potential witnesses so they can bring FCA suits against the recipient or others.

What is the False Claims Act anyway?

It’s a broad statute that punishes many things, one of which is making false statements to the government in connection with a claim for payment from the government. The DOJ often uses CIDs to investigate medical providers who seek payment from Medicare and Medicaid. 

Just because the Investigative Demand is labeled “civil” does not mean that the investigation is only civil; it could take a turn towards criminal. In other words, something sparked the DOJ’s attention, but, perhaps there were no allegations of criminal action, the investigation could start and the investigator could uncover something they consider criminal. An investigation earmarked as civil can turn criminal with the uncovering of one document.

On the other hand, the investigator could review all the documents and conclude that there is not even a civil violation. Very rarely, do the investigators contact you to tell you that the investigation is over and no violation was found. Most of the time, you are put on notice that you are being investigated, then hear nothing from the investigator in perpetuity.

Recently, I had an investigator inform me that the review of. my client was complete, and the file was being closed. But that’s the only time in 22 years that I was informed that nothing noncompliant was found. Usually, time just passes.

If you are found to have violated the FCA, the government can triple the amount of penalties, so the numbers get very high very quickly.

The Justice Department obtained more than $5.6 billion in settlements and judgments from civil cases involving fraud and false claims against the government in the fiscal year ending Sept. 30, 2021. This is the second largest annual total in False Claims Act history, and the largest since 2014. Settlement and judgments since 1986, when Congress substantially strengthened the civil False Claims Act, now total more than $70 billion.

A much lesser known provision of the FCA is the reverse one. Not to blow everyones’ minds, but there is also a “reverse false claims” provision of the False Claims Act.  The reverse false claims provision permits the government or relators to pursue defendants who are alleged to have hidden or reduced an obligation to pay the government through false statements, or who have violated the 60-day payment rule’s obligation to return “identified overpayments.”   These claims typically have been raised in the context of cost reporting, Medicare Part C, or related to alleged failures to fulfill obligations under the 60-day payment rule.  The government and relators have increasingly relied on the reverse false claims provision to support stand-alone claims or have used it in conjunction with affirmative false claims.  However, because the reverse false claims provision is very lightly used compared to affirmative false claims provisions, there is a dearth of case law defining it or exploring its parameters.   The case law that does exist is primarily from district courts and, as the survey of case law contained herein illustrates, there is little guidance from the Circuit Courts or the U.S. Supreme Court.

Intent or deliberate disregard is required to prove the false claims act – reverse and regular.

Failure to respond to a CID completely could warrant criminal contempt. This is especially important to note, as civil investigate demand sounds much less important than a subpoena. But a CID is, in essence, a subpoena. Immediately, implement a “legal hold” upon receipt of the CID, and don’t forget to avoid producing privileged documents.

After the investigation is complete, if there are violations of the FCA uncovered, you will receive correspondence that states in “all-caps” and bold font:

Rule 408 FOR SETTLEMENT PURPOSES ONLY 

FRE 408 prohibits the use of settlement negotiations as evidence. After reviewing the offer, get with your legal counsel to discuss next steps.