Responding to Civil Investigative Demands

Federal civil investigations, including the recent increase in False Claims Act healthcare investigations, are typically initiated through Civil Investigative Demands (“CIDs”). The increase in the use of CID’s is noted in a recent article by Dean Mead’s White Collar Law Team, “The Rise of Civil Investigative Demands in White Collar Investigations” (January 2016).

CID’s are judicially enforceable demands for documents, written answers to interrogatory questions, and deposition testimony. There are many considerations a company or individual should keep in mind when responding to a CID by a governmental agency. This article is intended as an overview of some of those considerations.

CID Requesting Documents or Written Interrogatories

The recipient of a CID for production of documents or written interrogatories is obligated not only to provide information to the requesting agency, but also encumbered with the associated duty to immediately preserve information. Those duties attach upon service to the CID recipient. For companies, this means litigation holds should be issued promptly and detailed instructions should be given to IT and other corporate staff to preserve information.

Multiple time-intensive issues are presented. CID’s typically have abbreviated response deadlines. Those deadlines can expire in a very short period after service of a CID. A CID recipient should immediately consult with experienced counsel to develop a comprehensive response strategy and timetable. Promptly assessing the extent and time necessary for complete production is required so that counsel can then effectively communicate with the government agency to, for example, negotiate an appropriate extension for response to the CID.

If the investigative agency issues a CID that seeks clearly irrelevant information, or the material requested is not described with specificity, an objection to quash or limit the scope of a CID may be necessary because the broad production requested is unduly burdensome. A petition to quash or limit the CID must “set forth all factual and legal objections to the civil investigative demand, including all appropriate arguments, affidavits, and other supporting documentation.”[1] Thus, if the CID recipient wishes to make factual objections about the heavy burden and cost of compliance or object about the scope of information sought being overly broad, the recipient must be prepared to support these claims with testimonial and/or documentary evidence.

Sometimes counsel for the CID recipient can effectively negotiate with the agency to limit otherwise broad production requests, avoiding the need to litigate. This, again, requires a prompt assessment of the parameters of the CID, so that such negotiations are timely initiated.

The scope of a CID also may call for the production of trade secrets, confidential information, or other privileged information. The act of production of documents, for example, may itself be subject to at least a limited privilege. Counsel must help assess these privilege issues promptly. Production, or parts thereof, in response to a CID may also be protected from disclosure under standards applicable to a civil subpoena.[2] Failure to timely raise objections to production based on privilege can constitute a waiver to those objections. [3]

Counsel for a CID recipient also should assess the need for a confidentiality agreement with the requesting agency, to help insure that information that is produced is not disclosed to other entities, and to avoid the risk of waiver in the event that privileged or confidential material is inadvertently produced. Similar confidentiality agreements may also be required with, for example, third party IT or other vendors employed by the CID recipient to assist in responding to the CID.

CID Requesting Oral Testimony

Similar to civil case subpoenas, a CID may also demand oral testimony through a deposition. A CID deponent is entitled to the same witness fees and mileage as is paid to subpoenaed witnesses in federal District Courts.[4] The deposition must be taken before an officer authorized to administer oaths and affirmations, and the testimony must be taken stenographically and transcribed. [5] Typically, only the person testifying, his or her counsel, the investigators conducting the deposition and the stenographer taking the testimony may be present.[6] CID statutes typically do not provide for questioning by the witness’s counsel at the close of the agency investigator’s questions; in this respect, CID depositions differ from depositions taken pursuant to a civil case subpoena.[7]

Although CID’s are issued in the civil investigative arena, rather than in a criminal investigation, a CID deponent may have constitutional privileges to protect before testimony is given. For example, the deponent may refuse to respond to a question on the basis of that individual deponent’s Fifth Amendment privilege against self-incrimination. As a CID deposition is part of a “proceeding before . . . an agency of the United States” as contemplated in 18 U.S.C. § 6002(2), the Department of Justice may compel the testimony of the CID deponent under a grant of immunity in accordance with 18 U.S.C. § 6004.[8]

The compulsion order granting the CID deponent immunity should contain language similar to the following: “[n]o testimony or other information compelled under this order (or any information directly or indirectly derived from such testimony or other information) may be used against you in a criminal case, except a prosecution for perjury, giving a false statement, or otherwise failing to comply with this order.”[9]

The investigative agency has no obligation to grant immunity to a CID recipient.[10] Whether the investigative agency decides to seek any form of immunity may indicate the CID deponent’s status; that is, whether the agency considers the deponent as a subject of the investigation or as a potential witness. If the CID deponent knows that he or she will invoke the Fifth Amendment right to not answer questions at deposition, it may be prudent for deponent’s counsel to notify the appropriate investigative agency of that position before the deposition takes place, to allow for effective negotiation as to an appropriate immunity order before the deposition proceeding is undertaken.

In summary, given the government’s extensive use of CID’s in white-collar crime investigations, it is important for companies and individuals served with a CID to seek experienced legal assistance as early as possible after receipt of the CID. Identifying and assessing issues at an early stage will, in turn, give recipient’s counsel the opportunity to safeguard important rights, potentially avoid the need for litigation, and aid timely and complete response to the CID.

 

[1] See, e.g., In re PHH Corp., 2012-MISC-PHH Corp.-0001, *6 (CFPB 2012) (stating “in order to meet its legal burden, the subject must undertake a good-faith effort to show ‘the exact nature and extent of the hardship’ imposed, and state specifically how compliance will harm its business”).

[2] See 31 U.S.C. § 3733(b)(1).

[3] See 31 U.S.C. § 3733(j)(2)(A)(i).

[4] See 31 U.S.C. § 3733(h)(8).

[5] See 31 U.S.C. § 3733(h)(1).

[6] See 31 U.S.C. § 3733(h)(2).

[7] See Fed. R. Civ. 30.

[8] See 31 U.S.C. § 3733(h)(7)(B);  see also Department of Justice, U.S. Attorneys’ Manual, Section 9-23.000 – Witness Immunity, available at: https://www.justice.gov/usam/usam-9-23000-witness-immunity.

[9] See Department of Justice, U.S. Attorneys’ Manual, Criminal Resource Manual, section 718, available at:  https://www.justice.gov/usam/criminal-resource-manual-718-derivative-use-immunity.

[10] See United States v. Markwood, 48 F.3d 969 (6th Cir. 1995) (acknowledging that the “statute regarding grant of immunity to person refusing to give testimony after issuance of false claims investigative demand merely allows, and does not require, government to grant immunity to any person refusing to give testimony on grounds of self-incrimination”).

 

About the Authors:
Robert S. Griscti is Of Counsel in Dean Mead’s Gainesville office and a member of the Litigation department.  Mr. Griscti practices in cases involving corporate compliance and integrity, government investigations, white collar law, criminal defense, asset forfeiture, appeals, regulatory and administrative law, and related civil matters. He represents clients in proceedings before the Florida Bar, the Florida Board of Medicine, and other professional licensing agencies and has appeared on behalf of administrators, faculty and students in disciplinary, career, tenure, and related matters at universities, colleges and schools. He also assists clients with expungement, sealing, and record correction issues that affect employment, academic standing and professional reputation. He may be reached at rgriscti@deanmead.com.

Jake Huxtable is the law clerk for Robert S. Griscti in Dean Mead’s Gainesville office assisting in the areas of criminal and civil white collar litigation and compliance. He is a third year law student at the University of Florida, graduating May 2016. He may be reached at jhuxtable@deanmead.com.

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