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00;00;01;09 - 00;00;29;10
Jonathan Porter
Welcome to the second episode of Husch Blackwell's newest podcast, where we're digging into the complex world of the False Claims Act. Our first episode, which dropped the other week, was on whistleblowers and their enormous role in False Claims Act cases. If you missed that one, you can go listen to it. But today's episode is about the primary investigative tool entrusted by statute to the Justice Department for False Claims Act cases, the Civil Investigative Demand, or CID
00;00;29;14 - 00;01;01;13
Jonathan Porter
for short. We'll dig into CIDs and focus on what companies and individuals should do when they receive one in today's episode. Joining me to talk about this is the great Catherine Hanaway. Catherine is a partner in Husch Blackwell's St Louis office and is in the process of completing her term as chair of the firm. Earlier in her career, Catherine was the Speaker of the Missouri House of Representatives and later was appointed by President George W. Bush to be the United States attorney for the Eastern District of Missouri.
00;01;02;00 - 00;01;21;23
Jonathan Porter
Here at Husch Blackwell, I've learned that Catherine is the first call that a lot of companies make when they run into complex legal issues. And federal investigations is definitely one of those complex legal issues that Catherine likes to focus on. So there's no better guest to join us to talk about civil investigative demands and federal investigations than Catherine Hanway.
00;01;22;10 - 00;01;27;25
Jonathan Porter
Catherine, welcome to the firm's newest podcast. Thanks for joining me today and giving this podcast a little bit of credibility.
00;01;28;08 - 00;02;03;07
Catherine Hanaway
Well, thanks so much. It's nice to be on with the great Jonathan Porter and I'm so excited that we have launched this. I think the topics that you're tackling are top of mind for so many people who are in-house and kind of holding back the curtain and giving people an opportunity to sort of see how the Justice Department thinks about these issues and how people who used to be practitioners for the government sort of approach these problems with a little more experience and insight than maybe some people who haven't had that government experience.
00;02;03;10 - 00;02;21;22
Jonathan Porter
Well, thanks, Catherine. That certainly is the goal and we'll see how we do to achieve that goal. So, Catherine, to start off, I think a lot of people know what subpoenas are and I think a lot of people generally know what search warrants are. It's it's hard to stay on top of turn events without having somewhat of a grasp on those two big concepts.
00;02;22;03 - 00;02;37;09
Jonathan Porter
But I don't think that civil investigative demands or SIDS are on that same level of public knowledge. To start, could you just explain the basics of SIDS for us? What are they? Why does the Justice Department use guides? What do you think?
00;02;37;12 - 00;03;15;06
Catherine Hanaway
Well, I think the name actually captures it pretty well, is differentiated from subpoenas and search warrants. This is a civil tool. It's the civil investigative demand. It was created by Congress as part of the False Claims Act. DOJ uses these primary to investigate violations of the False Claims Act, and they are generally broader than subpoenas. For example, a grand jury subpoena can require the recipient to produce documents or testimony before the grand jury, whereas a kid might ask for a whole lot more.
00;03;15;19 - 00;03;40;05
Catherine Hanaway
It can ask for the production of documents and sworn testimony, but it can also ask for answers to interrogatories. So in a lot of ways, for those who are familiar with discovery, in a typical civil case, it's a tool that's much more like that. You and I, when we represented the government and represented the government as prosecute looters, use search warrants and subpoenas.
00;03;40;17 - 00;04;08;26
Catherine Hanaway
And the rights of the other side aren't as fulsome in terms of discovery in those kinds of contexts. Here it is a little more fulsome. Although the weight is still on the side of the government, there's restrictions on how DOJ can use documents that are produced to the grand jury and certainly on testimony. Criminal uses can't just share that grand jury testimony or documents with broadly.
00;04;09;06 - 00;04;32;01
Catherine Hanaway
But documents and answers to interrogatories produced in response to this can be shared a little bit more broadly. And there's some restrictions on DOJ's ability to subpoena individual targets into a grand jury. But there's no such restrictions on sides. So sides are a very powerful tool.
00;04;32;15 - 00;04;54;26
Jonathan Porter
Thanks. And that's a helpful background of what these are. So one of the first questions that I get from clients who've just received some type of either side or subpoena from from DOJ is whether I can state with certainty whether DOJ has a criminal investigation or is this a civil investigation? Is this both? So, Catherine of DOJ is serving a C.I.D.
00;04;54;27 - 00;05;02;28
Jonathan Porter
Instead of some type of criminal subpoena. Does that mean that DOJ just has a civil investigation and no criminal investigation?
00;05;03;17 - 00;05;33;28
Catherine Hanaway
No, it doesn't. And I wish there was that level of certainty. Usually, if you get us the idea of means that there is only a civil investigation, but it's not definitive. There are often parallel criminal and civil proceedings. Usually the department will start with the criminal investigation and therefore you'll receive a subpoena before you'll receive a ID. But it is critical if you do get a C.I.D.
00;05;33;29 - 00;05;54;03
Catherine Hanaway
You have an experi ence lawyer who can reach out and have a meaningful dialog with the department and get a sense of how mature the investigation is, where the department sees the client in the investigation, and whether there are criminal proceedings going on as well.
00;05;54;11 - 00;06;11;26
Jonathan Porter
Yeah, I think that's right, Catherine. I think a lot of people want to believe that just because it's the CID, there's just a civil investigation. But it's exactly what you said is not a guarantee. I know that when I was in AUSA, I was part of my office's complex, broad group and our group. We ran a lot of parallel investigations, criminal civil investigations.
00;06;12;08 - 00;06;36;15
Jonathan Porter
Typically when we could we lead with a criminal subpoena, something other than grand jury subpoenas so that we could easily share the returns with the civil team in health care. That's pretty easy. It's easily done with what's called a HIPA subpoena. But actually, I recall quite a few investigations where we were investigating something unique, something outside the scope of hip US subpoenas we didn't want to use an agency's admin subpoena for whatever reason.
00;06;37;00 - 00;06;55;20
Jonathan Porter
So instead what we would do, we'd have the agents serve up a side. But we were we would always then quickly alert defense counsel, once defense counsel reached out that we had this parallel criminal investigation because we wanted them to know, hey, there's there's this isn't just a civil investigation. You know, you should be aware that there's a component of this that's criminal.
00;06;56;00 - 00;07;14;04
Jonathan Porter
That's why you have to ask the right questions always through counsel. Don't just reach out by yourself and talk to the U.S., whose names on the Hill investigate. And then you have to ask to have your attorney ask the right questions, find out what you can about DOJ's investigation. That's critical. I think that's pretty much always the first step.
00;07;14;12 - 00;07;23;19
Jonathan Porter
But let's dig in to that part of our inquiry today. What do you think is the first thing companies and individuals should do when they receive one of these kids?
00;07;24;15 - 00;07;48;21
Catherine Hanaway
Well, let's go back to the point you were just making for a second, because too often I see a company that gets the idea and they call their lawyer, but they just they they call their lawyer who they might be using for transactional work or who might do just civil litigation for them. And, you know, the lawyer hasn't had experience.
00;07;48;21 - 00;08;13;27
Catherine Hanaway
And so they reach out to the U.S. attorney's office. And whether it's fair or unfair, they probably don't get as much information as somebody who has worked in the department. And there is just there is a there's a kinship. There's a level of credibility that goes along with having worked at the department, you know, not unlike, you know, people or alumni of the same school.
00;08;13;27 - 00;08;35;05
Catherine Hanaway
I mean, when you're able to pick up the phone, reach out to an assistant U.S. attorney and explain that you have have done time, you've sat on their side of the table, it does give you more credibility. I think that you get more forthcoming answers. And certainly having had experience with a lot of kids, you know, the right questions to ask.
00;08;35;05 - 00;08;56;02
Catherine Hanaway
So kind of pivoting now to what are the first things that you should do? Well, one is call here and if you're calling Blackwell and you're calling the lawyer you always work with, say to them, gee, I'd really like somebody who's worked on these kinds of matters before. And of course, you're going to do some of the things that you do in a normal discovery process.
00;08;56;02 - 00;09;21;24
Catherine Hanaway
The company's going to need to send out a litigation hold. But what you want your lawyer to do is to have that conversation, make an assessment of where you fit in a case, then carefully go through that data and narrow it as much as possible. The kids I've seen recently and as recently as yesterday are getting broader and broader.
00;09;22;18 - 00;09;44;01
Catherine Hanaway
There's no question in my mind the one I'm looking at right now asks for a lot of the material that we're going to claim privilege, attorney client privilege over, but also the time periods expansive. And it does feel like a fishing expedition in a number of ways. I will say they often the department doesn't intend to go on a fishing expedition.
00;09;44;16 - 00;10;16;29
Catherine Hanaway
The assistant U.S. attorney sort of knows what they want to get to, but often doesn't know precisely what documents to ask for. And so in the spirit of being cooperative, but also of easing the burden on the company, you want to narrow that request as much as you possibly can. And the other thing is that I think we're at talk about this, you can always ask for an extension of time when you do that, you should take into consideration some of the practical aspects of running a business.
00;10;16;29 - 00;10;40;09
Catherine Hanaway
I've encountered this with clients where it was their busy season. It was around the holidays. There were any number of reasons why it was going to be very disruptive to their employees. And if you reach out to the department and sort of lay that out, you usually can get things scheduled on a time frame that will work for the company, and that's important.
00;10;40;09 - 00;11;00;28
Jonathan Porter
Yeah, there's so much wisdom in what you just said. I appreciate it. Yeah, I think you're exactly right. I don't think the DOJ attorneys in general want to receive millions of pages of documents, you know, but it's exactly what you said. They don't know. Oftentimes, they don't know what to ask for in order to prove their case. And so they ere on the side of of asking for a lot of documents.
00;11;01;11 - 00;11;15;27
Jonathan Porter
And that way you can, you know, experienced practitioners like you or like me, we can then say, well, tell me exactly what it is that you're looking for and we'll help you make sure that you're not just buried in documents because we're going to abide by the side that you just said. You're going to get a lot of stuff.
00;11;15;27 - 00;11;44;06
Jonathan Porter
It's going to be impossible to go through. Let us help you figure out the answer and we'll figure out the answer together. Something else that I often tell clients in terms of, you know, what's the first thing to do? I'm surprised how many people when I was with DOJ would immediately start texting or emailing about the investigation. I'm stunned at how often that happened, and I started just sending like a follow up subpoena or the idea or whatever it was saying, you know, give me communications about the investigation.
00;11;44;17 - 00;12;02;19
Jonathan Porter
I'm stunned. So one of the first things I tell people to stop email, like stop texting about the investigation, those are discoverable. You just don't know. You also don't know whether the person that you're talking to could be a whistleblower. And so it's best to just communicate through counsel. You mentioned litigation hold. I think that's critical. It's amazing.
00;12;02;19 - 00;12;22;24
Jonathan Porter
You know, people still do delete stuff. People don't haven't heard the stories of FBI able to go through with their forensics team and figure out when stuff has been deleted. There was a criminal case when I was in my office. A different AUSA handled it again. It was a public corruption started as a public corruption case that ended up being a deleting documents that should have been given the grand jury case.
00;12;23;02 - 00;12;38;27
Jonathan Porter
So the last thing you want to do when you've got a civil investigation is to do something to turn it into a criminal investigation. One more piece of advice I'll throw in. Don't be rude. Don't be rude to the agent who's serving the C.I.D. I was amazed at how often that happened when I was in there. You ask.
00;12;38;27 - 00;13;01;13
Jonathan Porter
People don't realize agents and ACS have tremendous autonomy in their cases. Don't make them hate you. Really? You're going to want some favor from them in terms of, you know, narrowing the scope or something like that. So just being polite when the agent comes to serve it, you know, you have to talk to them. It's not rude to say, I want to talk to my lawyer, but it is rude if you're just, you know, if you start swearing at them.
00;13;01;13 - 00;13;02;24
Jonathan Porter
And that does happen.
00;13;02;24 - 00;13;40;23
Catherine Hanaway
One, things I think that you've shared with me before is that one of the ways that you would have a kid served is to have an agent go out and do a voluntary interview, and then at the end of it, drop a kid, which boy? I'm glad to investigate to many of my clients because that's a tough approach I do see most often now kids being mailed to your point about the fact that the agents and aliases have tons of discretion and there are people right, they're going to have natural reactions to things.
00;13;41;09 - 00;14;12;24
Catherine Hanaway
And one of the things that sets all of them off, besides being rude, is an effort to sort of cover things up. And you cited some examples. Another example that I like to point to, and it was in a criminal context was FBI agent, goes out, does an interview voluntarily and then leaves. And as soon as he leaves, he sort of just drives around the block and comes back and serves a search warrant that he'd had in his pocket the whole time.
00;14;13;10 - 00;14;53;28
Catherine Hanaway
The company, unfortunately, was inside, destroying documents. That's another thing. It's like, don't don't destroy the documents. You're probably going to get caught. But it is so important that you treat those agents and abuses like people. They're going to make decisions and they're going to make decisions unilaterally. That's the thing that I find clients have the hardest time sort of getting over an investigation conducted by the federal government when they're in civil litigation and they get to fight like crazy in front of a judge, and then an independent third party is going to make a decision about what happens next.
00;14;54;13 - 00;15;24;22
Catherine Hanaway
That is not true at all in the criminal context, for the most part, and it's much less true in civil investigations of the False Claims Act than it would be if you were just two competing parties in civil litigation. So having the right dialog. The other one more point. We have smart clients like super smart clients who when they hear one of these civil investigative demands, for the most part, they do reach out to counsel.
00;15;25;04 - 00;15;48;04
Catherine Hanaway
But sometimes they read it and like they conclude for themselves, Hey, I can handle this. It's just some documents, and all I got to do is deliver these documents to the department. No matter how smart our clients are, I would really encourage them to consult with counsel, particularly if they're asked for a voluntary interview or to produce documents.
00;15;48;11 - 00;15;59;11
Catherine Hanaway
We know you haven't done anything wrong. We know you're capable of explaining yourself. There are just some pitfalls that you're not going to be aware of because this hasn't been your primary business.
00;15;59;22 - 00;16;19;21
Jonathan Porter
Yeah, and I think a lot of clients, even lawyers who are in-house, I think a lot of people think that if I get some sort of a white collar, you know, former AUSA, the government might think that I did something wrong, that I have something to hide. I promise you, there is not a single DOJ attorney who thinks that getting a lawyer is evidence of a crime.
00;16;19;21 - 00;16;42;22
Jonathan Porter
That's what everyone does. No one at DOJ is going to judge you for getting a lawyer. Get a lawyer. One who understand how this works. That that's that's great. Great advice. Katherine, let's talk about the CIA itself, the document that actually gets served or mailed. A lot of people don't realize, you know, we talked about how we can have conversations with the U.S. and sort of get a little bit of information about what their investigation is.
00;16;42;22 - 00;17;07;26
Jonathan Porter
But a lot of people don't realize that when you practice in this area regularly, we can tell a lot about DOJ's investigation just by looking at the city itself. A lot of times it'll help us ask the right questions when we're talking to the U.S.. So, Catherine, when a client retains you and you just talked about getting a ID for a client yesterday, when you get a copy of that CID, what exactly are you looking for and what does it tell you about the DOJ investigation?
00;17;08;21 - 00;17;44;12
Catherine Hanaway
Well, so there's a lot of things I'm looking for. First of all, by statute, the Department is required to tell you the nature of their the conduct that they're investigating in a false claims investigation usually. That's right. In the first paragraph of the city. Then what looks to be, you know, often like a letter at the beginning, you can tell you sometimes you can tell whether there's a whistleblower involved by the fact that main justice is investigating versus the local U.S. attorney's office.
00;17;44;12 - 00;18;14;17
Catherine Hanaway
But I'm less and less reliant on that more often now, local U.S. attorney's offices are opening up files where there has been a whistleblower. And the fact that you're getting a civil investigative demand certainly doesn't mean that there's not a whistleblower like the department can be investigating for some time before they unseal the qui tam. And that's important for anyone to know who's under investigation.
00;18;14;17 - 00;18;31;07
Catherine Hanaway
And then, you know, you're going to know who the target is a little bit by going through the definitions section of the C.I.D. And figuring out who they're defining in what way, particularly if it's, you know, a lot of corporate entities versus individuals.
00;18;31;16 - 00;18;50;08
Jonathan Porter
Yeah. Catherine I think that's exactly right. You know, one of the things that we who practiced in this area a lot know is that the DOJ attorneys who are drafting these kids, they're not just drafting them from scratch. They're typically pulling from what's been done before. But there's always something that you can tell has been changed. There's something unique in every idea.
00;18;50;19 - 00;19;07;03
Jonathan Porter
And that's how I think if you see enough of these, you realize what's a little bit different, what's the part that sort of stands out from the standard request? And you can always then use that to follow up with the U.S. when you're talking to and kids. They also you'd mentioned this earlier, they have a list, a deadline.
00;19;07;24 - 00;19;23;05
Jonathan Porter
It's usually not very far out. I know that when I talk to clients about who just received a kid, they're always panicking. How in the world are we going to come up with a million pages of documents in 20 days? In your experience, how firm is that deadline? How do you go about extending the deadline?
00;19;23;05 - 00;19;45;19
Catherine Hanaway
Yeah, you know, I think the best thing to do is just be very forthright. You know, it's a conversation for me. I do try and incorporate some of the reason why the deadline is too tight, either the volume of documents or, as I previously mentioned, that it's going to interrupt the business operations because it's the busy season. It's a holiday.
00;19;45;19 - 00;20;12;27
Catherine Hanaway
The person who knows the most about these documents is on vacation. It's a good way to start to engage in real conversation with the AUSA and sort of get them talking because you're sharing a little bit with them about what's going on with your client. I do think it's part of the discussion you should have right away. Don't roll up on the deadline and then ask for an extension that seems more like the dog ate my homework.
00;20;12;27 - 00;20;13;06
Catherine Hanaway
Right.
00;20;13;26 - 00;20;36;14
Jonathan Porter
So, Catherine, you and I have done enough of these where I think we've experienced the range of complexity in these investigations. Sometimes DOJ will take dozens and dozens of testimonial kids. They'll ask for millions of pages, documents. They'll ask for all of these intricate tables to be created in response to interrogatories. Or, you know, sometimes DOJ will just send a side and say, look, you don't give us any documents.
00;20;36;23 - 00;20;58;25
Jonathan Porter
What we really want you to do is go and figure out the answer and then come back to us and present. There really is a range of what DOJ wants to do. So Catherine, what are some of the strategies that you use in crafting a response to False Claims Act investigation? And what is it worth conducting your own internal investigation into the conduct that DOJ is investigating?
00;20;59;11 - 00;21;36;11
Catherine Hanaway
Well, as we've talked about, it is really important to have a conversation with the AUSA and try and get an understanding of whether they're really investigating your client or whether they believe your client has some information that will be helpful to them in bringing a case against someone else. And that's a really important place to start. If you think that the investigation is of your client, then most often I do think you want to do an internal investigation so that you can figure out what DOJ knows.
00;21;36;29 - 00;22;13;07
Catherine Hanaway
The issue of whether you hand DOJ a lot of documents and have them work their way through them, whether you produce sort of a presentation and what DOJ through that depends a little bit on the quality of the story that you have to tell and the complexity of what's happening. It is really important, I think, to make sure that DOJ understands the business that your client is in and how that business operates.
00;22;13;22 - 00;22;50;11
Catherine Hanaway
Often in investigations, I've seen DOJ make certain presumptions about how things work, and often that they are less complex than the business actually is, and that once you're able to sort of walk DOJ through some of that complexity, it becomes more evident why particularly a certain billing practices operated the way they did. But it takes a beat. You know, we represent lots of folks who are in very complicated businesses.
00;22;50;16 - 00;23;14;05
Catherine Hanaway
And DOJ, even the health care specialists are still mostly generalists. There's so many layers to how health care is delivered today that I think getting in and having a fairly early conversation about the basics and making it an ongoing conversation is the best way to go when you have a particularly complicated case.
00;23;14;15 - 00;23;44;22
Jonathan Porter
Catherine I totally agree. The people just assume that DOJ attorneys know everything and sometimes they don't. They're very sharp attorneys, but they're getting a very small glimpse into a corporation or up or person or whatever it is. I think it's important to know more than DOJ does, because if DOJ starts to assume something incorrectly which does happen, it's important that you know the story and you can help guide DOJ away from from drawing assumptions that just aren't true.
00;23;44;23 - 00;24;02;07
Jonathan Porter
So you can't do that without doing your own internal investigation and knowing the facts even better than the Justice Department does. I know it's not a cheap thing to run an internal investigation, but I think it pays dividends. Otherwise, you risk DOJ drawing some conclusions and you not knowing enough to correct them when you need to correct them.
00;24;02;07 - 00;24;17;00
Jonathan Porter
Because a lot of times these things, what will happen quickly? DOJ will say, well, we want your company plead guilty and you got 48 hours to make a decision. You got to know what to what the facts are. In order to do that. You'd be surprised how often that happens, where you do want you to make a pretty quick decision.
00;24;17;00 - 00;24;34;03
Jonathan Porter
So, Catherine, one last question, and this seems to be, you know, I've been in private practice a little bit over a year now, and I'm surprised how often I get this question because I never got it as an essay, but I get a lot from clients now. How long is this going to take, Catherine? How long do these investigations take?
00;24;34;11 - 00;25;01;14
Catherine Hanaway
And they take a long time. So this is the hardest question to answer for any client. I have certainly encountered a U.S. who's saying the statute of limitations is their only deadline, particularly in these civil cases. And that is very frustrating for clients. That means these investigations can drag on for years and you can't assume that no news from the government is good news.
00;25;02;00 - 00;25;33;01
Catherine Hanaway
You might get an investigative demand, you might respond to it in your mind. You may think you satisfied all their interest. And in point of fact, the government has gone off to other cases or gone down other lines of investigation related to yours. It's complete silence, maybe for a year, maybe for eight months. And then the government comes back around and you are indeed the target of their investigation and now they're bringing their claims against you.
00;25;33;15 - 00;25;57;11
Catherine Hanaway
It's really hard on clients. And I had one client who wanted to meet every Friday for a year and a half, and we did. It was super tough because most Fridays it was like there's kind of nothing to report. And fortunately in that situation we got a great result. But it was a long year and a half, I got to tell you.
00;25;57;11 - 00;26;24;05
Catherine Hanaway
And it did give me some insight into how much all of this weighs on our clients, because I was seeing it in such real time, like, we think we know how much anxiety it's causing them. And because you and I worked for the department, we don't get that same terror come over us as our clients do who've never had an encounter with the department before.
00;26;24;14 - 00;26;47;15
Catherine Hanaway
The other point I want to follow up on that you made that is related to timing is back to the agents and AUSA is are people in their incentives are different than the private sector right. They don't get paid more money. If they do a great job, they get their sort of pride and their motivation for making a good case.
00;26;47;15 - 00;27;19;23
Catherine Hanaway
And because they are people, the longer it goes on, the more resources they invest in it, the more invested they get in having an outcome that is either a big award or a monitor ship or something that really is a sign that they've made a great case. And so for me, it's important that I get in front of those agencies early and start to change their mind about who my client is and what they've done.
00;27;20;05 - 00;27;25;10
Catherine Hanaway
I don't want them going down that path for a long time and getting super invested in their case.
00;27;25;10 - 00;27;44;26
Jonathan Porter
Got it. That's exactly right. Dealing with AUSA is largely an art, but a lot of it is. You can't. If we were to, we could spend days on this podcast talking about how to deal with AUSA. There's not a one size fits all way of dealing with AUSA in order to get them to a spot that you think is the right result.
00;27;44;26 - 00;28;03;21
Jonathan Porter
It just takes experience. It takes people who are experienced in these investigations who have all of the years of being exposed themselves or U.S. attorneys and and understanding exactly what they're looking for, what they could be thinking. I think that's why it's important to have someone experience on your side in these investigations, because. Exactly it's exactly what you said.
00;28;04;02 - 00;28;17;00
Jonathan Porter
These are oftentimes very worrying things for our clients. And and sort of knowing that you're in good hands is, to me, priceless. So, Catherine, thanks for offering your wisdom to our listeners today. I hope you'll come back and join us again.
00;28;17;10 - 00;28;40;24
Catherine Hanaway
Thanks so much, Jonathan, and thanks for putting together this podcast. I think we're only going to see a lot more activity out of the department and these are tough cases at times to explain to AUSA. They're tough cases sometimes for our clients to understand. So I think everything you're doing to sort of raise the bar on understanding of the False Claims Act is just outstanding.
00;28;40;28 - 00;28;41;17
Catherine Hanaway
So thank you.
00;28;41;22 - 00;28;47;16
Jonathan Porter
Thank you, Catherine. And thanks for thanks for everyone listening. We'll see you next time.