Civil Investigative Demands

The 1986 amendments to the FCA equipped the Civil Division with a powerful investigative device patterned upon the Civil Investigative Demand authority long available to the Antitrust Division. Several dimensions of this authority bear particular notice. First, Civil Investigative Demands (“CIDs”) under section 3733 can consist of (a) a request for the production of documents; (b) a demand for oral or deposition testimony; (c) service of interrogatories requiring written response; and (d) and combination of these devices. Consequently, the CID is a much more potent device than most administrative subpoenas, which usually are limited to requesting documents. Second, CID’s can be utilized until DOJ files a complaint or until it declines or enters a qui tam. Therefore, the government is in the enviable position of being able to conduct investigative discovery prior to any ability of the potential defendant to conduct its own discovery. Finally, one important way in which CID’s differ from administrative subpoenas is that section 3733 imposes substantial limitations upon DOJ’s ability to disclose any of the information it gathers through their use. One helpful feature of section 3733 is that its procedures, limitations, and bases for judicial challenge are all spelled out in precise detail. Therefore, when a CID is received, the first step should be a thorough review of section 3733 which will dispose of most questions that may arise. The existing case authority interpreting section 3733, while growing, is not yet extensive.

Section (a) In general.

This section serves as the basic introduction to CID’s. It is important to note that only the Attorney General can authorize issuance of a CID [subsection (1)]; therefore the AG’s signature (and not that of anyone else) must appear on the CID. The section spells out pertinent timetables and what elements each type of CID must contain in order to comply with the statute [subsection 2]. Substantial deviation from these directions can serve as a basis for challenging a CID. CID’s can also be challenged upon the grounds available for contesting any administrative subpoena. A special provision [subsection (2)(E)] governs material that the recipient of the CID has secured through discovery. Finally, generally an individual can only be deposed once via CID [subsection (2)(G)]. While not specified in the statute, taking a CID deposition of an individual or entity does not foreclose taking further depositions during regular discovery.

Section (b) Protected material or information.

This section categorizes some of the principal bases for challenging a CID for failure to comply with the statute. It is important to bear in mind, however, that CID’s are not discovery devices but “investigative” tools. Therefore, courts may cut DOJ broader discretion in their use than for comparable discovery devices under the Federal Rules of Civil Procedure. Confidentiality orders secured in regular litigation will not foreclose disclosure under a CID.

Section (c) Service; jurisdiction.

This is one of two subsections dealing with service. An important point is that CID’s can be served by, amongst others, “false claims law investigators” (see subsection(i) for the definition of this term). That simply means that the DOJ trial attorney Assistant U.S. Attorney so identified by CID can serve the CID themselves.

Section (d) Service upon legal entities and natural persons.

This subsection is very detailed and explicit. Mail service is permissible.

Section (f) Documentary material.

The main important element of this subsection is that a certificate of compliance must be executed when documents are produced. The certificate in blank should be attached to the CID; it merely needs to be filled out and executed by the appropriate individual. Procedures governing the production of material is written into subsection (2).

Section (g) Interrogatories.

Procedures specified here governing interrogatories are comparable to those under the federal rules.

Section (h) Oral examinations.

It is critical to appreciate the differences between CID “oral examinations” and depositions under the FRCP. These distinctions arise from the fact that Congress intended CID’s to be investigative devices, not discovery tools. Therefore, counsel can face substantial limitations in representing clients during oral examinations. This section should be reviewed carefully and it is helpful to have a copy for reference during a CID oral examination.

For example, only certain designated individuals may attend. DOJ will object to company employees being accompanied by company counsel, either as the witness’ counsel or “representative.” Negotiation is the order of the day when faced with this situation. Similarly, transcripts are not as freely available as are those of depositions; only a right to inspection is specified if the Attorney General, or the Deputy AG, or an Assistant AG so determines “for good cause.”

Subsection (7) is extremely important. It lays out in exceptional detail the role of counsel during the oral examination. Once again, more substantial constraints are imposed than those encountered in the FRCP. Familiarity with these provisions is absolutely essential for effective representation of a client during a CID oral examination. Witness fees are authorized.

Section (i) Custodians of documents, answers, and transcripts.

The primary importance of this section is that it spells out in great detail who has access to materials secured by a CID. Important limitations are specified relative to disclosure. These limitations must be strictly adhered to by DOJ. Some questions are left unanswered–e.g., can the Civil Division share CID materials with the Criminal Division. DOJ has indicated that regulations governing CIDs eventually will be promulgated to resolve these issues. Provision is made for the return of materials. The procedure for designating false claims act investigators and custodians is also found in this section.

Section (j) Judicial proceedings.

Simply stated, here are spelled out the procedures for challenging a CID. Strict adherence to the specified procedures is essential to avoid summary denial of the challenge. There is also provision for an individual or entity who provided material in discovery to challenge the conduct of the custodian. The Federal Rules of Civil Procedure are applicable, but only to the extent “that such rules are not inconsistent with the provisions of this section.” Successful challenges to CID’s are exceptionally rare and should not be casually undertaken.

Section (k) Disclosure exemption.

CID materials are not subject to the Freedom of Information Act.

Section (l) Definitions.

The definitional section is particularly integral to understanding the CID authority. Like the remainder of section 3733, it is spelled out in excruciating detail. But familiarity with the definitions will pay substantial dividends along the way.

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