The DOJ Recovers More Than $3 Billion in Civil Fraud Settlements in 2010
The United States Department of Justice (“DOJ”) recently announced its success in using civil investigative demands to recover more than $3 billion in fraud proceeds in the 2010 fiscal year, the second highest amount it has ever recovered. Civil investigative demands (usually in the form of subpoenas) allow the DOJ to demand documents and sworn testimony from a potential civil defendant prior to filing a complaint or joining a whistleblower lawsuit. This tool is particularly effective because it allows the DOJ to conduct discovery before a defendant can engage in its own fact-finding, giving the government a distinct advantage in any prospective litigation.
The announcement came from Assistant Attorney General Tony West, who now has the authority to issue civil investigative demands. Previously, civil investigative demands could only be issued with approval from the United States Attorney General. That rule changed with the passage of the Fraud Enforcement Recovery Act of 2009, which amended the False Claims Act (31 U.S.C. §§ 3729-3732). The amended law allowed Attorney General Eric Holder to delegate the authority to issue civil investigative demands to the Assistant Attorney General and to individual United States Attorneys throughout the country. With this more broadly distributed authority, the DOJ issued six-times the number of civil investigative demands in 2010 than it had before the amendment.
Based on the DOJ’s success in 2010, and the greater ease with which civil investigative demands can be issued, their use will only increase in the future. This development should remind government contractors to be more cautious than ever when submitting claims to the government.
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