Civil Investigative Demands: How to Respond Compliantly

Mergers and acquisitions in healthcare markets are viewed with heightened scrutiny by the Federal Trade Commission (FTC) and U.S. Department of Justice (DOJ) Antitrust Division. These transactions may require further investigation to determine whether there will be anticompetitive effects, such as higher prices, in the affected market.

As part of these investigations, the DOJ may issue civil investigative demands (CIDs) for documents and statements from third parties that do not have direct involvement in the transaction. The CID process can become a protracted and expensive undertaking if it is not properly managed from the outset by experienced counsel. I would like to offer guidance on how to effectively respond to CIDs in connection with the False Claims Act (FCA) enforcement process.

Currently, I have 5-6 CIDs active. Some are criminal, some are civil. I think of criminal and civil being two separate and individual trains on a track. All investigations start on the civil train. The goal is to stay on the civil train. No one wants to go on the criminal train. The criminal train always fails to “Pass Go!” Do not pass go. Go directly to jail.

However, if you receive a CID, do not freak out. You just need to respond. You can get extensions to deadlines if needed. Like I said, all CIDs start civil. Hence the name, civil investigative demand. Generally, it takes time for the civil investigation to morph to criminal. This is a generalization – but, the more time passes, the more likely it is to transform into criminal. On the civil side, the False Claims Act, the Anti-Kickback Statutes, and the Health Insurance Portability and Accountability Act (HIPAA) are the legal tools the state or federal government may wield.

Many of the CIDs I have seen cover dates of service (DOS) during COVID-19. Because so many exceptions were issued on the federal and state level during the pandemic, these are low-hanging fruit. Providers who took any money during COVID: you have a target on your back, and you are in season, as they say about deer.

Pursuant to the authority at 31 U.S.C. § 3733, the Attorney General, or an appropriate designee, may issue a CID if there is reason to believe that a person or entity is in possession of documents or information relevant to an FCA investigation. Under this authority, the DOJ can use CIDs to demand the following:

• Documents and electronically stored information;
• Written interrogatory responses; and
• Sworn testimony, including “corporate representative” testimony (akin to Rule 30(b)(6) depositions).

CIDs advance the government’s ability to investigate FCA cases by obtaining significant discovery before litigation has even started. The government typically issues CIDs after a qui tam suit has been filed under seal or after a case has been referred to DOJ by another government agency, such as an investigating agency or an Office of Inspector General (OIG). This process advances the DOJ’s ability to evaluate the merits of an FCA case before deciding whether to go “all in” on a specific case.

A civil or criminal investigative demand is similar to a subpoena. If you receive a demand for jury duty, a subpoena, basically anything issued by a court, if you refuse to comply, you go to jail.

How do you keep your investigation on the civil train?

Well, that depends.

If you are innocent and have nothing to hide, then show what you have.