Principal Deputy Associate Attorney General Discusses DOJ's Corporate Enforcement Priorities, Focus on Corporate Compliance
Jaime L.M. Jones and Whitney Nebolisa
Compliance, Enforcement, FCA Liability, Knowledge/Scienter
At the recent Compliance Week Annual Conference, Principal Deputy Associate Attorney General Claire McCusker Murray delivered extensive remarks on DOJ's corporate enforcement priorities. Of particular note, Murray discussed a number of policy reforms focused on promoting and incentivizing corporate compliance and cooperation.
With respect to the Department's affirmative corporate enforcement priorities, Murray highlighted recent policy reform that promotes and incentivizes cooperation in civil and criminal actions. In the criminal context, she acknowledged the expansion of the Corporate Enforcement Policy, which now extends cooperation credit to defendants in FCPA cases and criminal enforcement actions. Murray also announced the False Claims Act cooperation policy, which awards cooperation credit to companies for "voluntarily disclosing misconduct, cooperating in an ongoing internal investigation or undertaking remedial measures such as implementing or improving compliance programs." This cooperation credit, which was previously reported on here, can be demonstrated in a number of forms, including disclosures outside the scope of a current government investigation or corrective actions taken in response to the FCA violations.
Of particular interest to companies potentially facing FCA investigations or litigation is the FCA Cooperation Policy's impact on DOJ enforcement actions. Murray announced that the new policy allows the government to "take into account the nature and effectiveness of the company's compliance program" as evidence of intent in the government's assessment of FCA liability. Stated differently, the presence of a robust compliance program, at the time of the conduct at issue, could demonstrate a lack of scienter or otherwise be a strong mitigating factor in the government's assessment of FCA liability. She cautioned, however, that this policy does not create a "compliance defense," nor does it award credit to "fig-leaf" compliance systems used by companies to circumvent or ignore potential fraud complaints. Nevertheless, this is a significant development for prospective defendants, as this could result in less risk of FCA liability where the company has made concerted, good-faith efforts to identify and address potential issues through its compliance program and policies.
Murray also underscored the Department's efforts to curb the overuse and enforcement of subregulatory guidance in both civil actions and criminal prosecutions by refraining from "treating a party's noncompliance with subregulatory guidance as itself a violation of applicable statutes or regulations." Murray's remarks are consistent with the Brand Memo, now codified in the Justice Manual, prohibiting "Department components from issuing guidance documents that effectively bind the public without undergoing the notice-and-comment rulemaking process" (previously reported on here and here). To further clarify these announcements, Murray offered guidance on the applicability of subregulatory guidance for corporate compliance, noting that compliance officers should complete "good-faith risk calculations" when determining whether to adhere to subregulatory guidance, or whether it is more effective to follow another lawful approach.
To underscore the Department's commitment to promoting corporate compliance, Murray announced the Civil and Criminal Division's new recruiting and training initiatives, which are aimed at hiring government lawyers with in-house compliance experience and educating government lawyers on effective compliance programs. It is Murray's hope that the Department, armed with corporate compliance proficiency, will be able to fully assess the effectiveness of corporate compliance programs at the time of the conduct at issue.
The prepared remarks are available here.
Whitney Nebolisa
wnebolisa@sidley.com
https://fcablog.sidley.com/wp-content/uploads/sites/5/2022/08/sidleyLogo-e1643922598198.png 0 0 Jaime L.M. Jones https://fcablog.sidley.com/wp-content/uploads/sites/5/2022/08/sidleyLogo-e1643922598198.png Jaime L.M. Jones2019-06-12 11:43:412019-06-12 11:43:41Principal Deputy Associate Attorney General Discusses DOJ's Corporate Enforcement Priorities, Focus on Corporate Compliance
September 2022 Fourth Circuit En Banc Vacates Application of Safeco to FCA Cases
The Fourth Circuit, evenly divided while sitting en banc, recently unwound a panel decision finding that Safeco's "reckless disregard" standard applies to the False Claims Act ("FCA").
In January 2022, a panel of the Fourth Circuit held, joining every other circuit to have considered the issue, that when allegations of false claims are premised on violations of ambiguous laws or regulations, the defendant's scienter is properly assessed using the standard for "reckless disregard" established by the Supreme Court in Safeco Insurance Company of America v. Burr, 551 U.S. 47 (2007). Under Safeco, courts ask whether a defendant's interpretation of the ambiguous law or regulation at issue was objectively reasonable and whether authoritative guidance might have warned the defendant away from that interpretation. As discussed here, applying Safeco, the panel affirmed the district court's dismissal of the case.
4th CircuitKnowledge/Scienter