Attorney General Holder’s Retirement and the Fate of the FCA

There were a lot of interesting changes in the upper levels of the U.S. Department of Justice this week, including the announcement of Attorney General Eric Holder’s retirement.

While we all know that on some level this is of earth-shaking importance it will not – at least for the moment — change much in the day-to-day administration of the DOJ, at least not with respect to those of us handling matters under the Federal False Claims Act.

Of course, the leadership of the DOJ matters to us. However, I don’t think anybody expects a dramatic shift in the direction with which the department approaches these cases. The major issues for the DOJ remain the same: what is the law and what resources does the department have to pursue a case? Those are far more likely to affect the outcome of any individual case brought before the U.S. Department of Justice than other matters. Mr. Holder’s decision to stay on until a successor is confirmed is also likely aimed at maintaining some level of continuity at the DOJ.  Indeed, his picture is still prominently displayed in Justice Department offices throughout the country.

Having said that, we note with gratitude Mr. Holder’s recent speech at New York University.  The school has a digital recording of it here.

The attorney general discusses many important topics in this speech as well as other public announcements. In my view his statements regarding whistleblowers were at least as important as anything else he could have said. The False Claims Act, and the whistleblowers who are the key to its phenomenal success are always under attack. There have been numerous high-profile attempts to spin the law and weaken it in the name of making the world safer for commerce. Those attacks come from people and companies with the resources to threaten the administration of justice.  So it matters when the attorney general says:

… (S)ince no financial fraud case is prosecutable unless we have sufficient evidence of intent – we should seek to better equip investigators to obtain this often-elusive evidence.  This means, among other things, thinking creatively about ways to incentivize witness cooperation and encourage whistleblowers at financial firms to come forward.

Under an important law known as the False Claims Act, or FCA, the Justice Department has recovered more than $22 billion – since 2009 – from people who have defrauded the government.  Many of these recoveries resulted from a strong whistleblower amendment – authored more than 25 years ago by Senator Charles Grassley – which allows citizens who provide evidence of fraud to receive, in some cases, up to about a third of the funds recovered by the government.  Thanks to this robust provision, the FCA has also sometimes led to criminal charges against company executives.

If you click here to read his speech, you will see that Mr. Holder did not stop there.  The Still Attorney General Holder went on to advocate financial incentives for whistleblowers to extend to additional laws!

Whatever other issues we have with the DOJ, this is an important statement from the top of the department in support of whistleblowers made at a key time.  Indeed, it would seem whoever the next nominee for attorney general is likely to be will be asked if they support the FCA and similar policies. Senator Grassley may ask that very question. Again, Holder’s very public and very strong stance in putting the DOJ on the record as a supporter and advocate for whistleblowers – which includes the support of additional rewards — is something for which those of us who work in this field will be forever grateful.