While the most-severe consequences of facing a civil investigative demand (CID) flow from the potential outcomes of a federal investigation, having an investigation become public can have significant practical implications for health care providers and other businesses as well. If it comes to light that your business or practice is being targeted in a federal investigation, this can have significant public relations ramifications in addition to affecting relationships with patients, customers, hospitals, vendors, and other entities.
The good news is that civil investigative demands are not public documents. As a result, the simple fact that your business or practice has received a CID does not mean that your investigation (assuming that you are the target of the investigation, which is not always the case) will be made public. However, there are circumstances in which this can change, and documents submitted in response to a CID may be subject to exposure as a function of the investigative process.
When Can a Civil Investigative Demand Be Made Public?
When you receive a civil investigative demand, you have three primary options. You can (i) fully comply with the demand, (ii) seek to negotiate the scope or timing of the demand with appropriate agency personnel, or (iii) formally challenge the demand through legal channels. The second option is generally best for a variety of reasons; though, of course, each company should carefully assess its compliance burden and the alternatives to full compliance on a case-by-case basis.
While formally challenging a civil investigative demand is an option, this option is not as attractive as it may initially seem. One reason is that such challenges are rarely successful. Federal agencies have broad authority to make use of civil investigative demands to aid in their investigations, and initial challenges are generally heard by officials within the agency issuing the demand. If your challenge goes to court, the federal judge will most likely defer to the agency’s judgment, unless there is clear evidence of an abuse of the CID process.
Another reason why a formal challenge may be undesirable is that your challenge (or, more specifically, the denial of your challenge) may become public record. If a company challenges a civil investigative demand from the Consumer Finance Protection Board (CFPB), for example, the challenge goes to the CFPB’s director for consideration. If the director rejects the challenge, this rejection becomes public unless the challenging company files a successful request for confidential treatment. While a company may have any of a number of legitimate reasons for challenging a civil investigative demand, once a rejection has been published, not only does the investigation become public, but some may also interpret the challenge as evidence that the CID recipient has something to hide.
Importantly, the ability to request confidentiality of a challenge to a CID is currently unique to the CFPB. As stated in a recent report from the CFPB’s Office of Inspector General:
“[Although] the Federal Trade Commission’s [FTC] CID authority is similar to the CFPB’s . . . the FTC does not have a process whereby petitioners can request confidentiality for an entire petition; rather, a petitioner can request confidential treatment of certain data and information, but the redacted petition is public record.”
The report, which is dated September 20, 2017, also notes that, “[t]he CFPB has not granted in full any requests for confidential treatment. Three requests were granted in part.”
When Can Documents Produced in Response to a CID Be Publicly Exposed?
Under the U.S. Department of Justice’s (DOJ) civil investigative demand statute (15 U.S.C. Section 1313), documents and interrogatory answers provided in response to a CID are subject to a certain amount of confidentiality. The law states, in relevant part:
“The custodian may cause the preparation of such copies of such documentary material, answers to interrogatories, or transcripts of oral testimony as may be required for official use by any duly authorized official, employee, or agent of the Department of Justice under regulations which shall be promulgated by the Attorney General. Notwithstanding paragraph (3) of this subsection, such material, answers, and transcripts may be used by any such official, employee, or agent in connection with the taking of oral testimony pursuant to this chapter.”
“(3) Except as otherwise provided in this section, while in the possession of the custodian, no documentary material, answers to interrogatories, or transcripts of oral testimony, or copies thereof, so produced shall be available for examination, without the consent of the person who produced such material, answers, or transcripts, and, in the case of any product of discovery produced pursuant to an express demand for such material, of the person from whom the discovery was obtained, by any individual other than a duly authorized official, employee, or agent of the Department of Justice. Nothing in this section is intended to prevent disclosure to either body of the Congress or to any authorized committee or subcommittee thereof.”
In other words, while civil investigative demand responses are largely protected from disclosure, this protection is not absolute. Specifically, documents and answers submitted in response to a CID may be used “in connection with the taking of oral testimony” of a third party during the DOJ’s investigation.
“I cannot promise to notify you in advance if a document [Company Name] provided will be used in a CID deposition of a witness not affiliated with your client. The Division is authorized to use CID material without the consent of the producing party in ‘connection with the taking of oral testimony. . . .’ Although it is occasionally useful to use CID materials in a deposition of a third party where the third party has already seen the materials, or is at least generally aware of their substance, it is rarely necessary to use CID materials in connection with a deposition of a third party that is unfamiliar with the contents of those materials. Moreover, the Division has an interest in seeing that competitors do not receive access to each other’s confidential information, is sensitive to confidentiality concerns, and does not unnecessarily reveal such information.”
“You have also represented that [Company Name] considers certain information requested in the CID to be . . . confidential business information . . . . ‘Confidential business information’ means trade secrets or other commercial or financial information (a) in which (the company) has a proprietary interest, and (b) which (the company) in good faith designates as commercially or financially sensitive.”
“It is the Department’s policy not to use confidential business information in complaints and accompanying court papers unnecessarily. The Department, however, cannot provide assurance that confidential business information will not be used in such papers, and cannot assure [Company Name] of advance notification of the filing of a complaint or its contents.“
What Can CID Recipients Do to Limit Public Exposure?
As the above discussion suggests, there may ultimately be little that health care providers and other companies can do to mitigate the risk of public disclosure in relation to a civil investigative demand. To the extent that opportunities to limit disclosure exist, they will generally be best approached through tactful negotiations with the agency that issued the CID. While general complaints and sweeping requests for confidential treatment are unlikely to receive serious consideration, agency officials and federal attorneys will often be open to considering limited and demonstrably-justified requests, at least in part.
Similar to all other aspects of responding to a civil investigative demand, dealing with concerns related to confidentiality and publicity is a matter best entrusted to experienced legal counsel. At The Criminal Defense Firm, our attorneys have decades of experience dealing with civil investigative demands. Several of our firm’s senior defense lawyers are former prosecutors with the DOJ, and all of the attorneys in our federal practice have proven track records of successfully defending clients during federal investigations. Meet our federal defense team.
When Should a CID Recipient Seek Legal Representation?
If anyone within your business or practice has been served with a civil investigative demand, it is essential to hire outside counsel immediately. Civil investigative demand often have extremely short deadlines (for example, the first deadline following receipt of a CFPB CID comes 10 days after service), and companies need to assess their compliance burdens as quickly as possible. Companies must also institute legal holds in order to prevent the destruction of potentially-responsive documents, and engaging with agency personnel early will usually provide the greatest opportunity to negotiate a much-needed modification or time extension.
Contact the Skilled Federal Defense Lawyers at The Criminal Defense Firm
If you need legal representation for responding to a civil investigative demand from the CFPB, DOJ, FTC, or another federal agency, we encourage you to contact us promptly for a free initial case assessment. Our federal defense lawyers represent health care providers and other entities nationwide. To schedule an appointment as soon as possible, please call (888) 452-2503 or inquire online now.
Dr. Nick Oberheiden is a national litigation and trial criminal defense attorney who practices exclusively in the area of federal law.