When investigating health care providers and other companies suspected of overbilling the government or defrauding consumers, or engaging in anti-competitive practices, federal agencies have a number of tools at their disposal. Some of these tools are more effective than others; and under federal rules and regulations, some can be used only in certain narrowly-defined circumstances.
The civil investigative demand does not fall into this latter category. As its name suggests, a civil investigative demand (or “CID”) is a request for records and information in connection with a federal civil investigation. However, unlike other investigatory tools (such as grand jury subpoenas), a federal agency does not have to appear in court and prove its case for issuing a civil investigative demand. To the contrary, authorities such as the U.S. Department of Justice (DOJ) have broad authority to issue civil investigative demands on their own accord; and, when a CID is challenged in court, federal judges have consistently deferred to judgment and law enforcement expertise of the DOJ and other agencies.
Since the power to issue civil investigative demands is created by statute, CIDs from different agencies have their own rules and requirements. For example, if you receive a civil investigative demand from the Consumer Finance Protection Board (CFPB), you must “meet and confer” with agency personnel within 10 days, and you will waive your right to challenge the CID unless you file a petition within 20 days of service. In all cases, however, the penalties for failing to appropriately respond to a CID are severe. So, upon receiving a CID, it is critical to begin formulating a response strategy as soon as possible.
Served with a CID: 10 Steps to Protect Your Interests and Meet Your Legal Obligations
1. Understand the Nature of the Investigation
Which federal agency issued the civil investigation, and why? Upon being served with a civil investigative demand, these are two of the first questions you need to have answered. Identifying the agency that issued the CID will help narrow down the potential list of issues, but you will need to dig deeper to find out exactly what civil violations are being alleged.
For example, the DOJ and its offices (such as the Antitrust Division) investigate issues ranging from Tricare fraud to violations of the Sherman Act. A CID from the Federal Trade Commission (FTC) could be targeting an apparent antitrust violation, or it could be seeking information about a company’s online privacy practices. The CFPB’s jurisdiction is limited to financial transactions affecting consumers, but this includes everything from credit card fees to private lending services. In order to determine the scope and nature of the investigation (and whether you are being targeted), you need to hire experienced legal counsel who can engage with the agency that issued the CID as soon as possible.
2. Determine the Scope of Your Disclosure Obligation
Next, you need to quickly assess the scope of your disclosure obligation. In what format(s) is the DOJ, FTC, CFPB, or other agency requesting that the information be produced? Do you need to collect volumes of electronic or hard-copy records? Do you need to prepare written answers to interrogatories? Do you need to prepare key stakeholders or record custodians to provide testimony? Complying with a civil investigative demand will often require a substantial investment of time and resources, and you need to make sure you formulate a plan that enables you to produce a timely response.
In this vein, keep in mind that you will also need to institute an appropriate “legal hold” in order to prevent the destruction of potentially-responsive documents. Once again, this is a specialized task that is best undertaken with the advice and supervision of legal counsel.
3. Explore Any Potential Alternatives to Full Compliance
Once you have assessed your compliance burden and the potential legal implications of compliant disclosure you can then assess whether any alternatives may be available. Depending upon the circumstances, the nature of the investigation, and the specific agency involved, these could include:
- Seeking clarification in order to reduce the amount of records that need to be disclosed
- Negotiating with agency officials to modify the scope of the civil investigative demand
- Filing a petition to modify or quash the civil investigative demand
Efforts to fully quash a civil investigative demand are likely to be met with strong resistance. So once you receive a CID, you can generally expect to maintain your obligation to disclose. But to what extent can you lessen your compliance burden? That becomes the next most important question. While formal legal action is an option, most often you will find more success engaging in cooperative discussions with high-level agency personnel. These people are typically amenable to reasonable requests to limit any overly broad CIDs.
4. Avoid Making Assumptions
When responding to a civil investigative demand, it is important to avoid making assumptions. For example, you should not assume that a seemingly-ambiguous request is limited in scope, nor should you assume that you are required to hand over everything in response to what appears to be an overly-burdensome demand. You should also not assume that your employees have sufficient independent knowledge to institute a compliant legal hold or prepare responsive documents without clear and specific guidance. When responding to a CID, communication is key, and this applies equally within and outside of your organization.
5. Avoid Making Mistakes
Lack of communication is just one of numerous mistakes that need to be avoided. With severe penalties for failing to adequately respond and the potential for civil liability, if your response reveals a violation of federal law, you need to take a strategic and measured approach. Company executives, in-house counsel, and other points of contact should work closely with outside counsel throughout the response process, and any questions or concerns should be addressed as soon as possible.
6. Assemble Your Team
Responding to a civil investigative demand can require a herculean effort. It is not a task for anyone employee or department to handle independently, and it cannot be ignored until the response deadline looms around the corner. In order to ensure that your company’s obligations are satisfied, you must quickly assemble a team of appropriately-skilled and informed personnel, and you should ensure that your team has the adequate reach to all areas of the business.
7. Integrate Your Defense Strategy
If your business or professional practice is the target of the investigation, you need to adopt an integrated defense strategy that addresses the government’s allegations from all angles. However, there is good news. Since you are under investigation, this means that the DOJ has not yet filed formal charges.
If at all possible, you want to keep it this way. While under investigation, you have more options and far less risk than when you are forced to defend against federal charges. At The Criminal Defense Firm, we have a consistent track record of resolving our clients’ investigations without federal prosecution. We rely on our extensive prior experience as federal prosecutors to develop comprehensive defense strategies, relying on statutory safe harbors, constitutional protections, established case law, and other authorities to convince the government’s attorneys that further action is unwarranted.
8. Seek Experienced Legal Counsel
Federal civil investigative demands present unique issues and challenges, and responding appropriately requires a thorough understanding of the various laws, rules, and regulations that apply. Hiring a firm with attorneys who have both experiences in federal investigative practice and deep knowledge of the substantive law underlying the government’s inquiry is a must. The Criminal Defense Firm is a team of experienced federal defense attorneys and former federal prosecutors who have handled investigations involving allegations of health care fraud, antitrust violations, consumer finance fraud, and a wide range of other civil matters. We can use this experience to your advantage, and we will work with the agency that is conducting the investigation in order to pursue a favorable resolution as quickly and cost-effectively as possible.
9. Stay On Track
When facing a strict deadline to respond to a civil investigative demand, it is imperative that all members of the response team stay on track. With a business to run and everyday jobs to manage, as the days tick by, it can be easy for other priorities to shift focus away from ensuring full compliance. While companies certainly should not ignore their day-to-day operations or their obligations to clients and customers, they also need to make sure that they do not let preparing their CID response to linger until it is too late.
10. Reassess, Reevaluate, and Remain Patient
Responding to a federal investigation requires constant reassessment and reevaluation of the circumstances at hand. Federal authorities’ priorities change, new evidence obtained from other sources can shift an investigation’s trajectory, and you may find that the investigation appears to stall after you submit your response to the government’s civil investigative demand. While it is easy to get anxious when dealing with federal authorities (particularly if you are under investigation), it is important to stick to an informed defense strategy with your company’s long-term interests in mind.
Schedule a Free Consultation With the Decisive Federal CID Attorneys at The Criminal Defense Firm
If you need to speak with an attorney about a civil investigative demand from the DOJ, FTC, CFPB, or any other federal agency, you can contact The Criminal Defense Firm for a free initial consultation. To speak with our team of experienced defense attorneys and former federal prosecutors in confidence, please call (888) 452-2503, or inquire online today.
Dr. Nick Oberheiden is a national litigation and trial criminal defense attorney who practices exclusively in the area of federal law.