GOVERNMENT CONTRACTING LAW

Transcription

1 AN A.S. PRATT PUBLICATION OCTOBER 2018 VOL. 4 NO. 10 PRATT S GOVERNMENT CONTRACTING LAW REPORT EDITOR S NOTE: COMPLIANCE Victoria Prussen Spears TINA CHANGES IMPACT COST AND PRICING COMPLIANCE Paul E. Pompeo and Amanda J. Sherwood DEPARTMENT OF JUSTICE LEADERSHIP PREVIEWS REFORMS TO FALSE CLAIMS ACT ENFORCEMENT: SIGNIFICANT INCENTIVES FOR COOPERATION AND STRONG COMPLIANCE William S.W. Chang, Laura M. Kidd Cordova, Jason M. Crawford, Mana Elihu Lombardo, and M. Yuan Zhou AN IMPORTANT UPDATE FOR COMPANIES THAT CONTRACT WITH THE NATIONAL CREDIT UNION ADMINISTRATION: NEW DEBARMENT PROCEDURES IN PLACE TO TARGET BAD ACTORS Dominique L. Casimir TWELVE TIPS FOR A SUCCESSFUL DEBRIEFING Keith R. Szeliga DRUG MANUFACTURER PRICING DISCLOSURES: 2018 UPDATE Merle M. DeLancey Jr. VIRGINIA SUPREME COURT PUTS CONTRACTOR TEAMING AGREEMENTS ON LIFE SUPPORT Paul R. Hurst, Kendall R. Enyard, and Thomas P. Barletta

2 PRATT S GOVERNMENT CONTRACTING LAW REPORT VOLUME 4 NUMBER 10 OCTOBER 2018 Editor s Note: Compliance Victoria Prussen Spears 363 TINA Changes Impact Cost and Pricing Compliance Paul E. Pompeo and Amanda J. Sherwood 365 Department of Justice Leadership Previews Reforms to False Claims Act Enforcement: Significant Incentives for Cooperation and Strong Compliance William S.W. Chang, Laura M. Kidd Cordova, Jason M. Crawford, Mana Elihu Lombardo, and M. Yuan Zhou 369 Virginia Supreme Court Puts Contractor Teaming Agreements on Life Support Paul R. Hurst, Kendall R. Enyard, and Thomas P. Barletta 373 An Important Update for Companies That Contract with the National Credit Union Administration: New Debarment Procedures in Place to Target Bad Actors Dominique L. Casimir 381 Twelve Tips for a Successful Debriefing Keith R. Szeliga 385 Drug Manufacturer Pricing Disclosures: 2018 Update Merle M. DeLancey Jr. 390

3 QUESTIONS ABOUT THIS PUBLICATION? For questions about the Editorial Content appearing in these volumes or reprint permission, please call: Heidi A. Litman at Outside the United States and Canada, please call (973) For assistance with replacement pages, shipments, billing or other customer service matters, please call: Customer Services Department at (800) Outside the United States and Canada, please call (518) Fax Number (800) Customer Service Website For information on other Matthew Bender publications, please call Your account manager or (800) Outside the United States and Canada, please call (937) Library of Congress Card Number: ISBN: (print) Cite this publication as: [author name], [article title], [vol. no.] PRATT S GOVERNMENT CONTRACTING LAW REPORT [page number] (LexisNexis A.S. Pratt); Michelle E. Litteken, GAO Holds NASA Exceeded Its Discretion in Protest of FSS Task Order, 1 PRATT S GOVERNMENT CONTRACTING LAW REPORT 30 (LexisNexis A.S. Pratt) Because the section you are citing may be revised in a later release, you may wish to photocopy or print out the section for convenient future reference. This publication is designed to provide authoritative information in regard to the subject matter covered. It is sold with the understanding that the publisher is not engaged in rendering legal, accounting, or other professional services. If legal advice or other expert assistance is required, the services of a competent professional should be sought. LexisNexis and the Knowledge Burst logo are registered trademarks of Reed Elsevier Properties Inc., used under license. Matthew Bender and the Matthew Bender Flame Design are registered trademarks of Matthew Bender Properties Inc. Copyright 2018 Matthew Bender & Company, Inc., a member of LexisNexis. All Rights Reserved. Originally published in: 2015 No copyright is claimed by LexisNexis or Matthew Bender & Company, Inc., in the text of statutes, regulations, and excerpts from court opinions quoted within this work. Permission to copy material may be licensed for a fee from the Copyright Clearance Center, 222 Rosewood Drive, Danvers, Mass , telephone (978) An A.S.Pratt Publication Editorial Office 230 Park Ave., 7th Floor, New York, NY (800) (2018 Pub.4938)

4 Editor-in-Chief, Editor & Board of Editors EDITOR-IN-CHIEF STEVEN A. MEYEROWITZ President, Meyerowitz Communications Inc. EDITOR VICTORIA PRUSSEN SPEARS Senior Vice President, Meyerowitz Communications Inc. BOARD OF EDITORS MARY BETH BOSCO Partner, Holland & Knight LLP DARWIN A. HINDMAN III Shareholder, Baker, Donelson, Bearman, Caldwell & Berkowitz, PC J. ANDREW HOWARD Partner, Alston & Bird LLP KYLE R. JEFCOAT Counsel, Latham & Watkins LLP JOHN E. JENSEN Partner, Pillsbury Winthrop Shaw Pittman LLP DISMAS LOCARIA Partner, Venable LLP MARCIA G. MADSEN Partner, Mayer Brown LLP KEVIN P. MULLEN Partner, Morrison & Foerster LLP VINCENT J. NAPOLEON Partner, Nixon Peabody LLP STUART W. TURNER Counsel, Arnold & Porter WALTER A.I. WILSON Senior Partner, Polsinelli PC iii

5 PRATT S GOVERNMENT CONTRACTING LAW REPORT is published twelve times a year by Matthew Bender & Company, Inc. Copyright 2018 Reed Elsevier Properties SA., used under license by Matthew Bender & Company, Inc. All rights reserved. No part of this journal may be reproduced in any form by microfilm, xerography, or otherwise or incorporated into any information retrieval system without the written permission of the copyright owner. For permission to photocopy or use material electronically from Pratt s Government Contracting Law Report, please access or contact the Copyright Clearance Center, Inc. (CCC), 222 Rosewood Drive, Danvers, MA 01923, CCC is a not-for-profit organization that provides licenses and registration for a variety of users. For subscription information and customer service, call Direct any editorial inquires and send any material for publication to Steven A. Meyerowitz, Editor-in-Chief, Meyerowitz Communications Inc., Grand Central Parkway Suite 18R, Floral Park, New York 11005, smeyerowitz@meyerowitzcommunications.com, Material for publication is welcomed articles, decisions, or other items of interest to government contractors, attorneys and law firms, in-house counsel, government lawyers, and senior business executives. This publication is designed to be accurate and authoritative, but neither the publisher nor the authors are rendering legal, accounting, or other professional services in this publication. If legal or other expert advice is desired, retain the services of an appropriate professional. The articles and columns reflect only the present considerations and views of the authors and do not necessarily reflect those of the firms or organizations with which they are affiliated, any of the former or present clients of the authors or their firms or organizations, or the editors or publisher. POSTMASTER: Send address changes to Pratt s Government Contracting Law Report, LexisNexis Matthew Bender, 630 Central Avenue, New Providence, NJ iv

6 Department of Justice Leadership Previews Reforms to False Claims Act Enforcement: Significant Incentives for Cooperation and Strong Compliance By William S.W. Chang, Laura M. Kidd Cordova, Jason M. Crawford, Mana Elihu Lombardo, and M. Yuan Zhou * Acting Associate Attorney General Jesse Panuccio has announced various reform projects concerning how the Department of Justice will pursue cases under the False Claims Act. The authors of this article discuss the reform projects. In an address at the American Bar Association s 12th National Institute on the Civil False Claims Act and Qui Tam Enforcement, Acting Associate Attorney General Jesse Panuccio announced various reform projects concerning how the Department of Justice ( DOJ ) will pursue cases under the False Claims Act ( FCA ). The associate attorney general is the third in command after the attorney general and deputy attorney general. And the associate attorney general oversees all of the DOJ s affirmative-civil-enforcement litigation, including FCA actions. COOPERATION REFORMS TO FALSE CLAIMS ACT ENFORCEMENT Three of the reform projects address how cooperation, compliance measures, and multiple-agency actions can impact FCA damages and penalties. Under the FCA, the government can recover up to three times the amount that had been paid under the alleged false claims in addition to statutory penalties between $11,181 and $22,363 per claim. The statute provides that full and timely cooperation may reduce treble damages to double damages. Mr. Panuccio made perfectly clear that those who fully cooperate can expect even greater incentives. In exchange for genuine cooperation, DOJ will exercise its tremendous enforcement discretion with respect to structuring settlements while also providing a material discount. Mr. Panuccio identified key features of such cooperation, including: (1) voluntary disclosure, which he stressed was the most valuable form * William S.W. Chang (wchang@crowell.com) and Laura M. Kidd Cordova (lcordova@crowell.com) are partners at Crowell & Moring LLP. Jason M. Crawford (jcrawford@crowell.com) and Mana Elihu Lombardo (melombardo@crowell.com) are counsel and M. Yuan Zhou (yzhou@crowell.com) is an associate at the firm. 369

7 GOVERNMENT CONTRACTING LAW REPORT of cooperation ; (2) sharing information from an internal investigation; (3) making witnesses available; and (4) assistance with identifying culpable individuals, which re-emphasizes the Yates Memorandum s commitment to seeking accountability for individual wrongdoing. COMPLIANCE On compliance, Mr. Panuccio echoed recent remarks by Deputy Attorney General Rod Rosenstein noting, Things go wrong in every organization, even those with strong compliance measures. Mr. Panuccio assured companies that when fraud occurs, the DOJ will give the greatest consideration to companies that have incorporated compliance into the corporate culture. MULTIPLE-AGENCY ACTIONS Consistent with the anti-piling-on policy recently added to the United States Attorneys Manual, Mr. Panuccio explained that DOJ FCA attorneys will coordinate with DOJ s criminal prosecutors as well as other regulators to apportion penalties and fines where appropriate, to ensure that defendants are subject to the appropriate, not just the highest, level of punishment that is available. POTENTIAL REWARDS FOR COOPERATION AND COMPLIANCE Those DOJ reform projects have the potential to significantly reshape FCA enforcement by increasing the rewards for cooperation and compliance. While Mr. Panuccio did not elaborate on what those rewards would entail, under current DOJ policies and practices for parallel criminal-fraud cases, the greatest consideration can include (1) declining to bring an action against the company, and instead charging culpable individuals only; (2) a 50 percent reduction from the low end of the fine range for the company, and (3) no independent corporate monitor. If applied to the FCA context, those principles can translate to a lower (below double) multiplier or no multiplier to damages, a significant reduction from the low end of the FCA per-claim penalties calculation, and a recommendation of no Corporate Integrity Agreement. Together with the anti-piling-on policy, companies with strong compliance measures may face even less exposure in exchange for full and timely cooperation. GUIDANCE According to Mr. Panuccio, the DOJ is in the process of formalizing those reform policies. In the meantime, companies can find detailed guidance in 370

8 REFORMS TO FALSE CLAIMS ACT ENFORCEMENT several DOJ policies that govern the same considerations in the criminal context as well as recent announcements by Mr. Rosenstein, Acting Assistant Attorney General of the Criminal Division John Cronan, and officials of the Criminal Division s Fraud Section. Given the significant parallels and several overlapping considerations in FCA and criminal-fraud prosecutions, it is expected that the DOJ s formalized reform policies for FCA enforcement will borrow heavily from those sources. Two of the other reform projects involve qui tam dismissals and the impermissible use of sub-regulatory guidance, which have been the subject of the Granston and Brand Memoranda respectively. QUI TAM DISMISSALS With respect to qui tam dismissals, Mr. Panuccio acknowledged that the DOJ has rarely used that authority in the past, but the DOJ has now instructed [its] attorneys to carefully consider whether such dismissal is appropriate in each case where the DOJ declines to intervene. Those statements together with similar statements by Deputy Associate Attorney General Stephen Cox 1 and Director of Civil Frauds Michael Granston strongly signal the DOJ s appreciation for the need to exercise its dismissal authority more frequently. SUB-REGULATORY GUIDANCE As for the Brand Memorandum, Mr. Panuccio reiterated that DOJ attorneys pursuing affirmative-civil-enforcement actions may not rely on sub-regulatory guidance that expands upon statutory or regulatory requirements as the basis for contending that legal violations have occurred. Importantly, Mr. Panuccio added that the DOJ hope[s] that other agencies will follow this example, because that policy keeps government restrained and promotes the rule of law, fair notice, and due process. The attorney general had expressed similar views in his November 2017 Memorandum regarding the Prohibition on Improper Guidance Documents. 2 DOJ s top leadership has now essentially communicated to all federal agencies that using sub-regulatory guidance to expand statutory and regulatory requirements is inconsistent with promoting the rule of law, fair notice, and due process. That carries significant weight. The DOJ is often the litigating counsel for federal agencies including the U.S. Department of Health and Human

9 GOVERNMENT CONTRACTING LAW REPORT Services, which oversees the laws, regulations, and sub-regulatory guidance that are often at issue in the majority of FCA actions. And several of President Trump s appointments to the federal bench have espoused similar views, including Associate Justice Neil Gorsuch. 3 Also, the Office of Legal Counsel ( OLC ) resides in the Department of Justice. That office s legal interpretations bind all federal agencies. Therefore, the DOJ s hope, which has gained traction in the federal courts and could result in an OLC opinion, may carry even more force when dealing with federal agencies under the Trump administration