July 16, 2015 Articles

Increasing Coordination among Federal Prosecutors, Regulators, and Civil Enforcers

By Adam J. Spicer

On May 19, 2015, the head of the Department of Justice’s Criminal Division, Assistant Attorney General Leslie R. Caldwell, stated in a prepared speech that “[i]t is Department of Justice policy that criminal prosecutors and civil attorneys coordinatewith one another and with agency attorneys, to the extent permissible, to protect and advance the government’s overall interests.” Press Release, Dep’t of Justice, Assistant Attorney General Leslie R. Caldwell Delivers Remarks at the Compliance Week Conference (May 19, 2015). Ms. Caldwell has also recently expressed her view that “[t]here is a critical need for criminal prosecutions, even if conduct could be pursued civilly or through regulatory action. . . . And often it is the threat of criminal prosecution that deters potential wrongdoers.” Press Release, Dep’t of Justice, Assistant Attorney General Leslie R. Caldwell Delivers Remarks at the New York University Center on the Administration of Criminal Law’s Seventh Annual Conference on Regulatory Offenses and Criminal Law (Apr. 14, 2015).

Coordination among criminal and civil federal authorities and regulatory agencies is not altogether new. But efforts to formalize and, in fact, mandate coordination began in earnest in the late 1970s and early 1980s. Consider a 1979 report by the U.S. General Accounting Office (GAO), which found that “[t]he Department of Justice is not making full use of civil remedies to combat fraud [and] . . . must take a more active posture if its coordination of civil and criminal remedies is to be more effective.” U.S. Gen. Accounting Office, GGD-80-7, Department of Justice Should Coordinate Criminal and Civil Remedies to Effectively Pursue Fraud in Federal Programs, at v (1979).

The 1979 GAO report made several recommendations as to how the Department of Justice (DOJ) could achieve greater results through coordination. Notably, while the DOJ generally agreed that coordination of civil and criminal sanctions is beneficial, the DOJ expressed serious concerns about the legality and potential consequences of such coordination. For example, the DOJ noted:

The [GAO] report makes light of the legal limitations and strictures to proceeding criminally and suggests that the Department establish appropriate procedures to permit access to grand jury material for other than criminal investigation and prosecution purposes. Review of the Supreme Court opinion in United States v. Procter and Gamble, 356 U.S. 677 (1958) and the Fourth Circuit decision in United States v. Litton Systems, Inc., d/b/a Ingalls Nuclear Shipbuilding Division. 573 F. 2d 195 (4th Cir. 1978), clearly reveals that although joint pursual of civil and criminal remedies is possible, the legal requirements especially relating to legitimate due process concerns are considerable.

Id. at 48 (app. II, Letter from Kevin D. Rooney, Assistant Attorney General for Administration, Dep’t of Justice, to Allen R. Voss, Director, General Government Division, GAO (Sept. 4, 1979)).

The DOJ also responded to the GAO’s expressed concerns that the criminal justice process was viewed by the DOJ as “preeminent” to the civil process. In particular, the DOJ noted that “such preeminence exists for sound policy reasons. It would be highly inappropriate to barter criminal prosecutions with recovery of monies.” Id. at 49. In addition, “serious due process concerns are raised every time the Federal Government proceeds against a private party on several bases. Each time, serious consideration and care has to be given to the legitimacy, independence, and good faith of each element.” Id. At that time (in 1979), the DOJ’s ultimate view was that “although the civil and criminal remedies should be considered in many cases, simultaneous implementation of both processes may properly be the exception.” Id.

In recent years, however, “simultaneous implementation” of both the civil and criminal processes appears to be the rule rather than the exception. Recent pronouncements by DOJ officials at the highest levels—and the outcomes they obtain—reveal that parallel criminal, civil, and regulatory/administrative proceedings will continue to trend upward. Pharmaceutical, medical device, and biotech companies, and the lawyers who handle lawsuits involving them, may be affected more than any other industry. In 2009, the federal government established the Health Care Fraud Prevention and Enforcement Action Team (HEAT) “to increase coordination and optimize criminal and civil enforcement.” Press Release, Dep’t of Justice, Justice Dep’t Recovers Nearly $6 Billion from False Claims Act Cases in Fiscal Year 2014 (Nov. 20, 2014). Between January 2009 and September 2014, the government received $22.75 billion in cases brought under the False Claims Act. Id. In fiscal year 2014, alone (for the period ending September 30, 2014), the DOJ obtained a record $5.69 billion in settlements and judgments from civil cases involving fraud and false claims. Claims against health care programs accounted for $2.3 billion of this record amount, and “a substantial part” included claims against pharmaceutical companies. Id.

Increased coordination is not limited to corporations. Indeed, the individuals employed by these corporations will continue to be affected as well. Earlier this year, Deputy Assistant U.S. Attorney General Sung-Hee Suh stated:

The prosecution of individuals—including corporate executives—for criminal wrongdoing continues to be a high priority for [the DOJ]. That is not to say that we will be looking to charge individuals to the exclusion of corporations. However, corporations do not act criminally, but for the actions of individuals. And, the Criminal Division intends to prosecute those individuals, whether they are sitting on a sales desk or in a corporate suite. . . . We are also building and relying upon on our relationships with our foreign counterparts to gather evidence, locate individuals overseas, conduct parallel investigations of similar conduct, and, when appropriate, coordinate the timing and scope of resolutions.

Press Release, Dep’t of Justice, Deputy Assistant Attorney General Sung-Hee Suh Speaks at the PLI’s 14th Annual Institute on Securities Regulation in Europe: Implications for U.S. Law on EU Practice (Jan. 20, 2015).

Increased coordination among federal authorities continues to result in record settlements and criminal sanctions. For attorneys involved in pharmaceutical, medical device, and biotechnology cases, the lines between civil litigation and white-collar criminal law have increasingly become blurred. The civil lawyer who does not, at a minimum, consider potential criminal implications of a seemingly routine civil lawsuit may do so to the client’s—and the lawyer’s—detriment.

Keywords: mass torts litigation, criminal prosecution, civil lawsuit, civil and criminal remedies


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