By: Matt Fischer
The Department of Justice (DOJ) has recently aimed its investigatory efforts under the False Claims Act (FCA) to the durable medical equipment (DME) industry. One area of DME regulation focus has been on diabetic shoe and insert manufacturers. In its arsenal of investigative tools, the DOJ has the ability to issue Civil Investigative Demands (CIDs). However, there are limits to the DOJ’s investigatory powers. If a CID is received, DME suppliers need to be aware of the limitations placed on the government and what initial steps need to be taken.
If new to this issue, here are the basics. The DOJ is authorized under the FCA to file a lawsuit or intervene in a whistleblower’s FCA qui tam lawsuit under the provisions set forth in the FCA. Prior to filing its own lawsuit or intervening in a qui tam suit, DOJ has the authority to conduct an investigation using CIDs to compel a supplier to produce documents, answer interrogatories, and/or provide testimony. The FCA, however, states that CIDs must be issued prior to DOJ commencing its own suit or electing whether or not to intervene in a whistleblower action. This is an important distinction that many are not aware of, even some attorneys. If it is discovered that a CID is not issued prior to a DOJ suit or is issued after DOJ has declined to intervene in a qui tam action, a motion to set aside the CID can be filed with the applicable federal district court.
CIDs place an added burden on suppliers as time and money are devoted to compliance with DOJ’s demands. Although it is not always apparent that a CID is unauthorized, there are several steps a supplier or its legal counsel can take once a CID is received: First, check whether the DOJ has commenced its own lawsuit under the FCA (unlikely). If a current case is found, then move to set aside the CID. Second, inquiry whether the CID was issued in connection with a whistleblower lawsuit. If an action is ongoing, confirm whether an intervention decision has been made. If the DOJ declined, move to set aside the CID.
The use of CIDs has become increasingly common especially after the expansion of which government officials can issue them. The government has limits on its authority and DME regulation so suppliers need to be aware of their ability to push back.