It’s no secret that the Department of Justice has made the False Claims Act (“FCA”) a priority for years. Last month, we discussed why regulatory changes in response to Covid-19 (e.g., STARK waivers) could provide additional bases for the government to bring FCA cases. This post addresses the basics of cooperation credit for defendants who cooperate with the Department of Justice during an FCA investigation.
Cooperation credit refers to a DOJ policy intended to incentivize the voluntary disclosure of misconduct and cooperation with DOJ investigations. For the formal DOJ policy, see Justice Manual Section 4-4, 112. Most commonly, cooperation credit results in a reduction of damages and civil penalties in FCA actions, though other benefits may be available to a cooperating defendant.
Cooperation credit in FCA cases may be earned by voluntarily disclosing misconduct or cooperating in an ongoing investigation. As a general rule, the DOJ awards cooperation credit for disclosures of previously unknown conduct, though it is not required that conduct be disclosed prior to the commencement of an investigation. For example, a company may receive credit for disclosing unknown misconduct outside the scope of an existing investigation. Cooperation credit may also be earned by undertaking remedial measures in response to an FCA violation, such as an analysis of the root cause of the misconduct, discipline of responsible persons, and improving compliance programs.
Cooperation credit can be a useful means for a company to lessen its liability in the wake of an FCA matter. Seeking cooperation credit should always be done through qualified counsel who can advise on the best means of cooperation, propose appropriate remedial measures, and generally facilitate a good working relationship with the DOJ.