DOJ Provides Guidelines for Reducing False Claims Act Settlements through Cooperation

Government Enforcement Update

Client Alert

Author(s) ,

This week, the Department of Justice (DOJ) formalized and expanded its guidance for how defendants can earn cooperation credit in False Claims Act (FCA) cases and thereby reduce settlement amounts. New section 4-4.112 of the Justice Manual outlines three ways entities and individuals facing FCA claims can potentially earn credit—through voluntary disclosures, cooperation, and remedial measures. The credit allotted can take the form of a reduced damage multiplier, reduced penalties, or DOJ assistance in dealing with agencies and relators.

Voluntary Disclosures

The policy values voluntary self-disclosure of false claims, both in the first instance as well as when additional misconduct is discovered during the course of the internal investigation. In announcing the new policy, Assistant Attorney General Jody Hunt stated, “The Department of Justice has taken important steps to incentivize companies to voluntarily disclose misconduct and cooperate with our investigations; enforcement of the False Claims Act is no exception. False Claims Act defendants may merit a more favorable resolution by providing meaningful assistance to the Department of Justice.” Hunt referred to voluntary disclosure as “the most valuable form of cooperation.”


The policy provides an illustrative list of measures FCA defendants can take in an effort to receive more favorable treatment. While noting that a “comprehensive list of activities that constitute . . . cooperation is not feasible because of the diverse factual and legal circumstances involved in FCA cases,” the list provides examples of 10 cooperative actions FCA defendants can take in an effort to obtain credit. The list includes:

  • Identifying individuals substantially involved in or responsible for the misconduct;
  • Disclosing relevant facts and identifying opportunities for the government to obtain evidence relevant to the government’s investigation that is not in the possession of the entity or individual or not otherwise known to the government;
  • Preserving, collecting, and disclosing relevant documents and information relating to their provenance beyond existing business practices or legal requirements; 
  • Identifying individuals who are aware of relevant information or conduct, including an entity’s operations, policies, and procedures;
  • Making available for meetings, interviews, examinations, or depositions an entity’s officers and employees who possess relevant information;
  • Disclosing facts relevant to the government’s investigation gathered during the entity’s independent investigation (not to include information subject to attorney-client privilege or work product protection), including attribution of facts to specific sources rather than a general narrative of facts, and providing timely updates on the organization’s internal investigation into the government’s concerns, including rolling disclosures of relevant information;
  • Providing facts relevant to potential misconduct by third-party entities and third-party individuals;
  • Providing information in native format, and facilitating review and evaluation of that information if it requires special or proprietary technologies so that the information can be evaluated;
  • Admitting liability or accepting responsibility for the wrongdoing or relevant conduct; and
  • Assisting in the determination or recovery of the losses caused by the organization’s misconduct.

Not surprisingly, the government will also consider the additional factors of (1) the timeliness and voluntariness of the assistance; (2) the truthfulness, completeness and reliability of any information or testimony provided; (3) the nature and extent of the assistance; and (4) the significance and usefulness of the cooperation to the government in evaluating both voluntary disclosures and other methods of cooperation. The government does not require the waiver of attorney-client privilege or work product protection in order to receive cooperation credit.

Remedial Measures

In addition to cooperative acts, the policy mandates that the government consider remedial measures when determining whether and how much credit is warranted. Examples include:

  • Demonstrating a thorough analysis of the cause of the underlying conduct and, where appropriate, remediation to address the root cause;
  • Implementing or improving an effective compliance program designed to ensure the misconduct or similar problem does not occur again;
  • Appropriately disciplining or replacing those identified by the entity as responsible for the misconduct either through direct participation or failure in oversight, as well as those with supervisory authority over the area where the misconduct occurred; and
  • Any additional steps demonstrating recognition of the seriousness of the entity’s misconduct, acceptance of responsibility for it, and the implementation of measures to reduce the risk of repetition of such misconduct, including measures to identify future risks.

The inclusion of an existing compliance program is worth noting, especially in light of the revised corporate compliance guidance issued by DOJ on April 30, 2019. Having a robust and evolving compliance program remains vitally important to defending an FCA claim.

Credit Available

The policy explains that cooperation and/or remediation by FCA defendants will most commonly be rewarded with reduced penalties or damages multiple. Partial credit is explicitly authorized, and, regardless of the extent of the cooperation, the policy caps the credit available at a level not to “exceed an amount that would result in the government receiving less than full compensation for the losses caused by the defendant’s misconduct,” including damages, lost interest, costs of investigation and relator share. Therefore, even fully cooperating defendants should still expect to pay more than single damages. The government also outlines other avenues of relief potentially available to cooperating defendants, including proactive assistance from the government in parallel agency matters, public acknowledgement of disclosures, cooperation or remediation, and assistance with resolving qui tam litigation with a relator or relators.

The new policy provides a wide-ranging checklist for entities and individuals hoping for favorable treatment in FCA cases. Because government attorneys are purposefully left with broad discretion and flexibility in complying with DOJ policy, the door is open for cooperating defendants to use these factors to propose innovative settlements.