Now that you understand what prompts an agency subpoena or CID, the next step is to have a strategy, which involves answering the question, “what should I do?” Taking the right approach from the outset is critical to protecting your company’s interests.
What Should I Do?
Once a subpoena or CID is received, a company must actively take measures to ensure that all potentially responsive documents and data are preserved. Thus, the most immediate priority for a company served with a subpoena or CID is to institute a litigation hold. A litigation hold is an instruction to company employees to preserve documents. Preservation efforts should include, among other things, stopping any automatic deletion protocols of emails and other electronic data. Additionally, employees who may have responsive information promptly should be identified and provided with specific instructions (in writing) to preserve all potentially responsive documents and data. After issuing the litigation hold and confirming full compliance, you should periodically follow up with these employees to ensure they are continuing to abide by the litigation hold.
If a litigation hold is not implemented and responsive documents are destroyed, the company may face serious penalties, including the possibility of spoliation sanctions should the subpoena or CID be a precursor to a False Claims Act (FCA) lawsuit. In addition, any destruction of documents could undermine the company’s credibility with the Government and make it more difficult to convince it that further investigation is not warranted.
Retaining experienced outside counsel to assist the company in responding to a subpoena or CID is always a best practice. Counsel can assist the company with data preservation and can negotiate the scope of the subpoena with the Government. Agency subpoenas and CIDs often are overly broad. Experienced counsel can help negotiate a more targeted scope that reduces the company’s burden, while still providing the Government with the requested data and information. Negotiating with the Government also may provide the company with insight into the direction of the investigation, including whether a relator is lurking.
It also is important to “get ahead” of the Government’s investigation. If the subpoena or CID was issued in response to a FCA lawsuit or some other compliance issue, the company should identify and understand the source of these potential issues. This is another area where outside counsel can assist by conducting an internal investigation. Any investigation resulting from a subpoena or CID should be done at the direction of counsel so that it is privileged. Otherwise, information relating to the investigation may be discoverable. In the event an issue is identified during an investigation, counsel also can assist the company in choosing the most effective approach for any mandatory or voluntary disclosures to the Government.
If your company receives an agency subpoena or CID, hopefully it is just a routine audit and a FCA complaint is not on the horizon. Either way, if you follow the steps above, your company will be well-positioned to deal with any possibility.