Responding to a DOJ Civil Investigative Demand

The U.S. Department of Justice Relies Heavily on Civil Investigative Demands (CIDs) to Obtain Evidence During False Claims Act Investigations

Fraud, waste, and abuse cost the federal government hundreds of billions of dollars each year. To combat fraud under federal contracts and programs, the U.S. Department of Justice (DOJ) relies heavily on the False Claims Act, which allows for civil or criminal prosecution of individuals and entities that submit “false or fraudulent” claims for payment.

When conducting False Claims Act investigations, the DOJ has the statutory authority to issue civil investigative demands (CIDs) to targets, suspects, and witnesses. A CID is a request for records, written responses, or testimony (or all of the above) that the DOJ can enforce in court if necessary. Responding to a DOJ civil investigative demand is a time-consuming and high-risk process, and CID recipients must work closely with their counsel to ensure that they handle their CID responses appropriately.

Former U.S. Attorneys and DOJ Trial Lawyers with Experience on Both Sides of False Claims Act CIDs

At Oberheiden P.C., our federal defense lawyers are highly experienced on both sides of False Claims Act investigations involving the issuance of civil investigative demands. Prior to entering private practice, several of our lawyers served as U.S. Attorneys, Assistant U.S. Attorneys, and trial lawyers at the DOJ. With experience handling investigations targeting defense contractors, healthcare providers, and other entities and individuals on behalf of the DOJ and as defense counsel, we offer strategic insights for effectively managing the DOJ civil investigative demand response process—along with all other aspects of successfully defending against False Claims Act investigations.

Key Considerations for Responding to a DOJ Civil Investigative Demand

The DOJ’s authority to obtain evidence through the issuance of civil investigative demands during False Claims Act investigations is extremely broad. As a result, when served with CIDs, it is imperative that targets, suspects, and witnesses take the necessary steps to ensure a compliant response. But, CID recipients must be careful to protect themselves as well, as failing to negotiate the scope of the CID and/or disclosing information unnecessarily can have significant negative ramifications.

With this in mind, here are some key considerations for responding to a civil investigative demand from the U.S. Department of Justice:

Understanding the Scope of the CID and Its Limits

Upon receiving a DOJ civil investigative demand, the recipient should promptly review the CID with its legal counsel to determine the scope of the recipient’s response obligation. As noted above, DOJ civil investigative demands can (i) require recipients to produce documents (both hardcopy and electronic) for “inspection and copying,” (ii) require written answers to interrogatories “with respect to such documentary material or information,” (iii) require oral testimony, or (iv) require recipient s to “furnish any combination of such material, answers or testimony.”

While DOJ civil investigative demands can be (and usually will be) extremely broad in scope, they are subject to certain limits. For example, 31 U.S.C. Section 3733(b)(1) provides that the DOJ cannot require the production of documents, written answers, or testimony that would be protected under:

• “[T]he standards applicable to subpoenas or subpoenas duces tecum issued by a court of the United States to aid in a grand jury investigation; or
• “[T]he standards applicable to discovery requests under the Federal Rules of Civil Procedure, to the extent that the application of such standards to any such demand is appropriate and consistent with the provisions and purposes of this section.”

When reviewing a DOJ civil investigative demand, one of defense counsel’s first priorities should be to assess whether the demand exceeds the scope of the DOJ’s authority. If it does, defense counsel should then work with the DOJ to ensure that the CID recipient is not held responsible for failing to comply with unreasonable and unjustified demands.

In addition to considering these statutory limitations, defense counsel should also evaluate all other relevant limitations. For example, a DOJ civil investigative demand may be deemed unduly burdensome if it requests voluminous records that are impertinent to the DOJ’s investigation or requests records that are already in the DOJ’s possession. Evaluating these types of issues requires not only a clear understanding of the CID’s scope, but of the universe of responsive records as well. As a result—and given the short deadlines that typically apply—it is critical that CID recipients engage defense counsel promptly.

Negotiating the Civil Investigative Demand with the DOJ

Even if a civil investigative demand does not exceed the limitations on the DOJ’s authority, it may still be prudent—if not necessary—to negotiate the scope of the CID with the DOJ. Generally speaking, the DOJ will consider reasonable and substantiated requests to modify the scope of civil investigative demands based on issues such as impracticality and avoiding the production of records that are irrelevant to the Department’s investigation.

Crucially, negotiating with the DOJ presents its own unique set of risks. For example, the DOJ may ask probing substantive questions that themselves require carefully measured responses. Additionally, any information disclosed during negotiations may be considered admissible evidence unless the DOJ agrees to treat it as inadmissible pursuant to the “compromise negotiations” provision of Rule 408 of the Federal Rules of Evidence. As a result, it is imperative that the CID recipient’s defense counsel handle these negotiations as well.

Preserving Documents and Privileges

Upon receiving a DOJ civil investigative demand, the recipient should promptly institute a legal hold. The purpose of this legal hold is to preserve all responsive documents so that they will remain available for production. Failure to institute a legal hold can lead to allegations of destruction, spoliation, or impeding a federal investigation—all of which can have legal consequences regardless of the focus and veracity of the DOJ’s underlying inquiry.

In addition to preserving all relevant documents, CID recipients must also be extremely careful to preserve their privileges. This includes preserving the attorney-client privilege and the privilege against self-incrimination. While DOJ civil investigative demands necessarily relate to civil inquiries, these inquiries can lead to criminal charges under the False Claims Act if the DOJ determines that such charges are warranted.

Conducting an Internal False Claims Act Compliance Investigation

To determine what records and information they need to disclose and what records and information they can—and should—protect, DOJ CID recipients must promptly conduct an internal False Claims Act compliance investigation. The purpose of this internal investigation is twofold: (i) to identify all relevant records for purposes of submitting a compliant response, and (ii) to assess the CID recipient’s risk and identify possible defenses as necessary. Civil investigative demand recipients should work with their outside counsel during this part of the CID response process as well, as mistakes and oversights can frustrate the purpose of the internal investigation.

Preparing the DOJ Civil Investigative Demand Response

With a clear understanding of the scope of the recipient’s compliance burden and the risks presented by the DOJ’s investigation, the recipient can shift its focus to preparing its CID response. Recipients should work with their defense counsel to produce all responsive (and non-privileged) records in a manner that satisfies the CID’s requirements—and that is consistent with any terms negotiated with the DOJ. Recipients should rely on their counsel to craft any written responses and assist with preparing their representatives’ oral testimony as well.

Put our highly experienced team on your side

Dr. Nick Oberheiden

Founder

Attorney-at-Law

Lynette S. Byrd

Former Department of Justice

Brian J. Kuester

Former U.S. Attorney
Former DA

John W. Sellers

Former Senior Trial Attorney
U.S. Department of Justice

Local Counsel

Joanne Fine DeLena

Former Assistant U.S. Attorney

Local Counsel

Joe Brown

Former U.S. Attorney & Former District Attorney

Local Trial & Defense Counsel

Amanda Marshall

Former U.S. Attorney

Local Counsel

Aaron L. Wiley

Former Federal Prosecutor

Local Counsel

Roger Bach

Former Special Agent (OIG)

Michael Koslow

Former Supervisory Special Agent (FBI)

Chris Quick

Former Special Agent (FBI & IRS-CI)

Ray Yuen

Former Supervisory Special Agent (FBI)

FAQs: Responding to a CID from the U.S. Department of Justice

Speak with a DOJ Defense Attorney at Oberheiden P.C. in Confidence

Our firm provides nationwide defense representation for recipients of DOJ civil investigative demands. To discuss your company’s response with a senior DOJ defense attorney in confidence, call 888-680-1745 or request a confidential consultation online now.