A Civil Investigative Demand (CID) is just what it sounds like – a demand for information in a non-criminal investigation. It’s a powerful discovery tool used by federal and state government agencies to gather information in a civil investigation. Several agencies have this tool at their disposal.
If you receive a CID, you will likely have some questions:
Why does the government issue CIDs?
CIDs allow the government to gather any information that it considers relevant to its pre-litigation investigation. CIDs demand documents, interrogatory responses (sworn narrative responses to a list of questions) or deposition testimony from witnesses. They are issued before any formal complaint or lawsuit has been filed. They are also issued when the government is deciding whether to intervene in a qui tam (whistleblower) lawsuit filed under the False Claims Act. The government will use the information obtained from the CIDs to make its decision whether to litigate or decline enforcement.
Does this mean I’m under investigation?
Maybe. The government likely will not give you the full story at first. But what the government must disclose is the subject matter of its investigation in the CID itself. This is a short summary of the law they are trying to enforce and the general nature of the conduct they are investigating that might violate that law.
What does the government investigate with CIDs?
Many different subject areas. The most common subject area is fraud, including health care fraud, procurement fraud, COVID-19 fraud, and failure to implement cyber-security measures. The Department of Justice or local United States Attorney’s Offices issue CIDs in fraud investigations.[1] Other agencies have CID authority as well, including the DOJ Antitrust Division,[2] Federal Trade Commission,[3] and the Consumer Financial Protection Bureau.[4] State agencies like State Medicaid Fraud Control Units (MFCU), have authority to issue CIDs to investigate Medicaid fraud.[5]
Are there any limits to what the government can demand?
Yes. Generally speaking, the government cannot demand more than what it could request through discovery requests under the Federal Rules of Civil Procedure. 31 U.S.C. § 3733(b) (limiting False Claims Act CIDs). If you think the government is demanding too much, you can object and typically negotiate reasonable parameters. That said, the government does have the right to seek Court intervention to compel your compliance with the CID.
What happens after I turn over the information to the government?
Generally, one of three things:
First, you may never hear from the government again. This could mean that you were not the target of the investigation, or you were the target, but the government didn’t identify enough evidence to bring a case against you. You will likely never know.
Second, the government may follow up and inform you that it is considering enforcement action against you. The government will typically explain in greater detail why they think you violated the law and why they think the evidence against you is strong. In almost every instance, the government is open to hearing your side of the story and any potential defenses or mitigating factors. If you are not able to resolve the matter informally, the government will file a civil lawsuit against you or initiate proceedings before an administrative law judge.
Third, the government may ask you to remain available as a potential witness against the target of their investigation. This means that you must preserve all relevant documents – including the ones that were not produced to the government but might be related to the subject-matter of the investigation.
What if I find evidence of wrongdoing during my information collection?
Don’t panic. It is not uncommon to discover evidence of wrongdoing when you search for documents and information. It is important to remember however that this wrongdoing may or may not be related to what the CID is demanding. If it is not responsive to the CID but still related to the subject matter of the investigation, you will have to decide whether to self-disclose the wrongdoing to the government agency who issued the CID. When it comes time for the government to make an enforcement decision after its investigation, it may give you cooperation credit for self-disclosing. But various factors must be considered, and each option has costs and benefits. This puts you in a delicate position – you must comply with the CID but you should proceed carefully to preserve all your rights and defenses.
What should I do when I get a CID?
First, retain legal counsel to assist you in preparing your response to the CID and navigating any potential enforcement action that may follow.
Second, identify what the CID is demanding. Some CIDs are narrow – for example, they may request a specific list of business records or pose narrow questions about the identity of your contractors, for example. Other CIDs are broad – they may request all internal email communications on a specific topic or ask you to identify every employee to whom you paid a bonus in the past five years.
Third, issue a litigation hold. You need to take reasonable steps to preserve the documents and information demanded. This requires identifying the individuals within your organization likely to have responsive information and giving some general guidelines about what to preserve and how to do that. It will almost always require a discussion with your IT professionals to make sure auto-delete settings are disabled for individuals who are likely to have responsive information.
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With all of these considerations in mind, and with the potential consequences of facing a government investigation, you need to know what you’re up against and what the government expects when it issues a CID.
KGR attorney Justin Olson is a former Assistant United States Attorney who issued dozens of CIDs on behalf of the Department of Justice. He now represents individuals and entities who receive CIDs and can work with the government to put together a response and resolve any subsequent enforcement action. You can contact Justin with questions or to schedule an appointment at 317.777.7450 or jolson@kgrlaw.com
[1] 31 U.S.C. § 3733.
[2] 15 U.S.C. § 1312.
[3] 15 U.S.C. § 57b-1; see also https://www.ftc.gov/business-guidance/blog/2018/01/so-you-received-cid-faqs-small-businesses.
[4] 12 U.S.C. § 5562.
[5] E.g., Ind. Code § 5-11-5.5-10.
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