Resolving corruption problems found during international mergers and acquisitions should be more certain in the New Year. Potential problems under the Foreign Corrupt Practices Act (FCPA) can be handled in light of guidance provided by the Department of Justice (the DOJ). Continue Reading
The federal government’s recoveries for false claims during FY2018 topped $2.8 billion. The Department of Justice (DOJ) recently released this and other statistics for its civil False Claims Act recoveries since 1986. Although the most numerous and lucrative recoveries occurred in the health care industry, the DOJ reported 35 new qui tam cases involving the Department of Defense during FY2018. For a fuller discussion of the statistics, see our post here in the Triage blog.
The U.S. Department of Justice (“DOJ”) has softened its policy known as the “Yates Memo.” That policy required companies to produce all relevant information on individuals involved in misconduct in order to be eligible to receive any cooperation credit with DOJ attorneys. Rather than the prior “all or nothing” approach, the new policy requires the company to “identify all individuals substantially involved in or responsible for the misconduct at issue.”
The new policy is incorporated into the DOJ’s revised Justice Manual (formerly US Attorneys’ Manual) in the section on the DOJ’s Principles of Federal Prosecution of Business Organizations, particularly 9-28.700 (The Value of Cooperation).
DOJ Deputy Attorney General Rod J. Rosenstein announced the revised policy in a speech to the American Conference Institute’s International Conference on the Foreign Corrupt Practices Act on November 29. During the same speech, Rosenstein explained the rationale for the policy change, advising that the Yates Memo had unrealistic consequences, saying “we learned that the policy was not strictly enforced in some cases because it would have impeded resolutions and wasted resources,” and that “[o]ur policies need to work in the real world of limited investigative resources.” He further said, “[w]hen we allow only a binary choice –full credit or no credit – experience demonstrates that it delays the resolution of some cases while providing little or no benefit.”
The Yates Memo, introduced in 2015, drove a hard line. Its “all-or-nothing” approach required that a company undertake a careful analysis before beginning cooperation to determine whether it could meet the threshold to earn credit. The approach also exacerbated prosecution conflicts between a company and its employees.
In addition, the Deputy Attorney General explained that DOJ civil attorneys will have more discretion to resolve litigation. “When criminal liability is not at issue, our attorneys need flexibility to accept settlements that remedy the harm and deter future violations, so they can move on to other important cases.” He added, “[o]ur civil litigators simply cannot take the time to pursue civil cases against every individual employee who may be liable for misconduct, and we cannot afford to delay corporate resolutions because a bureaucratic rule suggests that companies need to continue investigating until they identify all involved employees and reach an agreement with the government about their roles.”
The change marks a shift similar to the manner in which the DOJ handled corporate cooperation from 2006 to 2015. It appears that DOJ expects that these changes will increase companies’ willingness to cooperate with the DOJ and lead to more efficient prosecution efforts.
On October 26, 2018, the Centers for Medicare and Medicaid Services (CMS) issued a proposed rule that will, among other initiatives, allow CMS to recover higher dollar amounts of improper payments made to Medicare Advantage.
To read more about this ruling and what it might mean for you, click here to read a recent Squire Patton Boggs alert on the subject.
The Indian Parliament amended the Prevention of Corruption Act (“POCA”) on July 19, 2018. This legislation marks an important step for India towards checking political graft. Below are some highlights of the changes.
Several interesting cases this year involve waiver and privilege jurisprudence. Perhaps none more sharply underscores the importance of a well-written proffer agreement when making disclosures to the government than a decision by the Fourth Circuit. The court’s analysis depends in part on the operation of Fed. R. Evid. 502.
In August 2018, in an effort to battle corruption, Brazil enacted Decree-Law No. 9,468/18, which provides broader power to the Public Transparency and Anti-Corruption Council. The Council’s purpose is to discuss ideas and suggestions to improve policies and strategies aimed at combating corruption and impunity within the Federal Public Administration.
For a closer look at this issue and others impacting the Latin America region, please visit our Latin America Legal Blog.
Third Circuit Clarifies Public Disclosure Bar in False Claims Act
In United States v. Omnicare, Inc., the Third Circuit clarified the operation of the public disclosure bar in the False Claims Act (FCA). The court held that publicly available information “could not have reasonably or plausibly supported an inference” of fraud. This information included government reports of known fraud schemes and a 10-k financial disclosure by the defendant company. The Third Circuit rejected application of the bar because the relator used non-public information to “make sense of publicly available information.”
The Second Circuit’s recent decision in United States v. Hoskins may impact enforcement of U.S. economic sanctions programs. The Hoskins decision precludes the government from charging a foreign national acting abroad with violating the Foreign Corrupt Practices Act (“FCPA”) through theories of conspiracy and accomplice liability. This holding is equally applicable to U.S. sanctions law.
The UK Sanctions and Anti-Money Laundering Act signifies major changes to the UK’s anti-money laundering and sanctions regimes. Britain’s overseas territories, often criticized as tax havens, are now required to establish public registries of beneficial corporate ownership by December 31, 2020. The Act also includes a Magnitsky Amendment, modeled on U.S. law, enabling sanctions against foreign government officials implicated in gross human rights abuses.
