Document type: Guide Practice area: Litigation — Government Enforcement Jurisdiction: United States (federal) Last reviewed: 5 September 2026

Who this is for

Counsel to a company that has just received a civil investigative demand and does not yet know why, and counsel to an employee considering whether to become a relator.

Our example is Kestrelmoor Diagnostics, a clinical laboratory with 900 employees and roughly 70% federal payor revenue. Its general counsel is Ottoline Marchetti-Nkemdirim.

The organizing fact for a defendant: you are probably already a defendant. Qui tam complaints are filed in camera and under seal under 31 U.S.C. § 3730(b)(2), are not served until a court orders it, and seals are routinely extended for years. By the time you learn of the case, the government has been investigating for a long time with the relator's help.

Step 1 — Recognize the signals

A civil investigative demand under 31 U.S.C. § 3733 is the clearest signal. The Attorney General may issue one before commencing a civil proceeding, requiring documents, interrogatory answers, or oral testimony. A CID almost always means a sealed qui tam exists.

Other signals: a grand jury subpoena; an unusual or unannounced agency audit; an Office of Inspector General or agent interview of a current employee; a former employee's counsel requesting a personnel file; a departing employee who downloaded documents; an unexplained request for historical billing or certification records.

What to read from the CID's scope. Claims data alone suggests a clerical or coding theory. Communications about policy — emails, compliance memoranda, meeting minutes — suggests the theory is knowledge, which after United States ex rel. Schutte v. SuperValu Inc., 598 U.S. 739 (2023) is about what the company subjectively believed. The date range tells you the limitations theory: six years under § 3731(b)(1), or longer under the discovery provision.

Do not treat a CID as a routine document request. It is the visible portion of a case that has been running for a year or more.

Step 2 — The first thirty days

Engage experienced FCA counsel immediately. This is a specialist practice and the early decisions are the consequential ones.

Issue a litigation hold that reaches where the evidence actually is: email, chat and messaging platforms, shared drives, the billing system, the clinical or operational documentation system, voicemail, and personal devices used for work. Identify custodians by role, not by seniority. Suspend routine deletion, including auto-purge rules nobody remembers configuring.

Preserve, and then verify. A hold that was issued but not implemented is worse than none, because it documents that the company knew. Confirm with IT, in writing, that each system's deletion is actually suspended.

Negotiate the CID's scope. CIDs are frequently negotiable and always burdensome. Reduce the custodian list, stage the production, agree on search terms, and get the schedule in writing. A cooperative, organized response buys credibility that matters later at the intervention decision.

Open a privileged internal investigation on a parallel track. The company must understand its own facts before it answers questions about them. Scope it, staff it with counsel rather than the business, and give Upjohn warnings in every interview, documented.

Do not retaliate, and be careful about anything that could look like it — a performance action, a reassignment, a denied transfer. Section 3730(h) exposure is separate, easier to prove, and litigated in public while the qui tam remains sealed.

And say nothing publicly. The seal binds the relator and the government; it does not require the company to speak, and anything it says will be read against the complaint later.

Step 3 — Find your own facts

The internal investigation has one job: determine whether a false claim was submitted and, if so, what the company actually knew.

Map the claim generation process end to end. What triggers a claim, what data feeds it, who reviews it, what is certified, and by whom. Someone should be able to describe it in a page.

Then look for the two records that decide most cases.

The interpretation file. If the alleged violation turns on an ambiguous requirement — and it usually does — find out whether anyone identified the ambiguity at the time. Search for the compliance analyst's memorandum, the outside counsel opinion, the policy committee minutes, the training materials. After Schutte, scienter is subjective: a contemporaneous record showing that the question was identified, analyzed, advised on, decided, and applied consistently is the strongest possible defense. Its absence is a serious problem.

The internal complaint record. Did anyone raise this internally? What happened? A complaint investigated and reasonably resolved is a defense; the same complaint ignored is the relator's opening exhibit — and, frequently, the relator is the person who raised it.

Confront the adverse documents. An email saying "I know this is aggressive but the numbers are good" will be found. Know about it before the government does, and build the response.

Quantify. How many claims, over what period, at what value. The exposure calculation drives every subsequent decision, and it is treble damages plus a per-claim penalty under § 3729(a)(1).

Step 4 — Build the materiality record

This is the highest-value defense work in most implied certification cases, and it is largely a documents exercise directed at the government's conduct rather than the company's.

Under Universal Health Services, Inc. v. United States ex rel. Escobar, 579 U.S. 176 (2016), materiality is demanding. It is not established merely because the government could have declined payment, or because the requirement was labeled a condition of payment. And the Court identified the evidence that matters: payment in full with actual knowledge of noncompliance is strong evidence that the requirement is not material.

So collect:

  • Audit and review history. Was the practice visible in sampled records? Was any adjustment made? Did payment continue?
  • Agency guidance and its evolution. What did the agency say the requirement meant, and when?
  • Prior enforcement practice. Has the agency pursued this issue against anyone, or treated it as immaterial?
  • Payment history for the claims at issue, and any denials.
  • Communications with the agency or its contractor about the practice.
  • Industry practice, where the agency was on notice of it.

Kestrelmoor's most valuable document was a contractor audit report from two years earlier in which the billing practice appeared in the sampled records, no adjustment was made, and payment continued. The company had never read it.

Make the record requests early. Freedom of Information Act requests, contractor records, and agency correspondence take time, and this evidence is what you will present at Step 6.

Step 5 — Research the bars

Two provisions dispose of cases before any merits inquiry, and both should be researched during the seal so they can be pleaded the day the complaint is served.

First-to-file. Section 3730(b)(5) bars any person other than the Government from bringing a related action based on the facts underlying a pending action. Search for earlier-filed cases against the company — which is difficult precisely because they are sealed, but public dockets, unsealed cases, and settlement announcements often reveal enough. The litigated question is what counts as the same essential facts.

Public disclosure. Section 3730(e)(4) requires dismissal where substantially the same allegations or transactions were publicly disclosed in a federal criminal, civil, or administrative hearing in which the Government or its agent is a party; in a congressional, Government Accountability Office, or other federal report, hearing, audit, or investigation; or in the news media — unless the relator is an original source.

Build the disclosure inventory: prior audits and reports, agency findings, congressional materials, industry press, trade publications, prior litigation, and public settlements. Then assess the original-source question: did the relator voluntarily disclose to the Government before the public disclosure, or does the relator have knowledge that is independent of and materially adds to what was disclosed?

Two decisions frame this. Graham County Soil & Water Conservation District v. United States ex rel. Wilson, 559 U.S. 280 (2010) construed the pre-amendment "administrative report" language to include state and local reports — a holding Congress narrowed prospectively, so which version of the bar applies depends on when the conduct occurred. And Rockwell International Corp. v. United States, 549 U.S. 457 (2007) directs the original-source inquiry to the allegations ultimately proved, not those originally pleaded, and requires direct and independent knowledge of the information underlying them.

Also check the limitations reach. Section 3731(b) provides six years from the violation, or three years from when the responsible United States official knew or should have known, capped at ten years. Cochise Consultancy, Inc. v. United States ex rel. Hunt, 587 U.S. 262 (2019) held the three-year discovery provision available in a declined case, and that the relator is not the official whose knowledge starts the clock — so assume a ten-year reach until you know otherwise.

Step 6 — Present to the government during the seal

This is the highest-leverage moment in the entire case, and many defendants never use it.

Why it matters. The government's intervention decision under § 3730(b)(4) determines the shape of everything after. An intervened case brings the resources and credibility of the United States; a declined case leaves the relator's firm funding litigation against a motivated defendant. And under United States ex rel. Polansky v. Executive Health Resources, Inc., 599 U.S. 419 (2023), a government persuaded that a case lacks merit can intervene and dismiss it — with courts granting such motions in all but the most exceptional cases.

So the government, not the relator, is the audience for your best work.

What to present. Documents, not narrative. The interpretation file that answers scienter. The audit history and payment record that answer materiality. The claim-process map showing what actually happened. And an honest treatment of the weak facts — a presentation that ignores the bad email is a presentation the government discounts entirely.

How to present it. In person, with counsel who has done this, in a meeting requested through the line attorney. Short. Organized around the elements the government must prove. With a written submission that can circulate internally after you leave.

The risks are real and should be weighed. You are educating the government about your own case. You may reveal defenses you would rather hold. You may prompt questions you have not answered. And in a matter with criminal exposure, everything said is available to the criminal component.

When to do it anyway. When you have an objectively strong record — particularly the materiality record — and when the alternative is years of litigation against an intervened United States. Kestrelmoor's presentation in month eleven consisted of two exhibits: the 2021 interpretation memorandum and the contractor audit report. The government declined three months later.

Step 7 — When the complaint is served

The seal lifts and the clock starts. Read the complaint against everything you already know, and note where the relator's theory differs from what you expected — it usually does.

File the motion to dismiss, and lead with the strongest ground.

Rule 9(b) is frequently the most efficient. Courts apply the particularity requirement to FCA claims, and the circuits divide on whether a relator must plead representative false claims or may plead a scheme plus reliable indicia that claims were submitted. Know your circuit's rule; it is the single most important variable in the motion.

Materiality under Escobar, where the complaint fails to plead facts showing the requirement was material — and where the government's payment practice can be judicially noticed or is apparent from the complaint.

Falsity, where the allegation is regulatory noncompliance rather than a false claim, or where the dispute is about clinical judgment, contract interpretation, or a reasonable estimate.

Scienter, where the complaint alleges no facts about what the defendant actually believed.

The bars, pleaded from the Step 5 research.

Then the answer and the counterclaim question. Counterclaims against a relator are permitted in narrow circumstances and are hazardous: a counterclaim that would effectively penalize the relator for bringing the action is generally impermissible, and it hands the relator a retaliation narrative. Counterclaims for independent wrongs — document theft, breach of a confidentiality obligation — are sometimes viable and always a judgment call.

Step 8 — Discovery, which runs in both directions

What the relator will seek: the claim data, the compliance file, internal complaints and their handling, communications about the practice, audit responses, training materials, and the documents behind any certification.

What you should seek from the relator: what the relator knew and when, what documents were taken and how, communications with counsel about compensation, prior employment issues, and the disclosure statement served on the government under § 3730(b)(2) — which is frequently the most useful document in the case and is sometimes obtainable.

What you should seek from the government, even in a declined case: the agency's knowledge and payment practice, which is the materiality evidence. This is contested and worth fighting for.

Manage the parallel proceeding problem. A retaliation claim under § 3730(h) proceeds publicly and generates discovery that will be used in the qui tam. So does any criminal investigation. Coordinate, and consider whether to seek a stay.

And keep the privilege discipline. The internal investigation is the company's most valuable work product and the thing the relator most wants. Decisions about waiver — particularly in the context of cooperation — should be made deliberately, at a senior level, and never by a witness in a deposition.

Step 9 — Resolution

Most cases that survive dismissal settle. Negotiate in this order.

The damages base first. The government argues gross damages; you argue a benefit-of-the-bargain measure crediting value actually delivered. Every dollar removed from the base is removed three times, so this argument precedes the multiplier argument.

Then the multiplier. Settlements are typically expressed as a multiple of single damages, reflecting the conduct, cooperation, ability to pay, and litigation risk. Getting from treble-plus-penalties exposure to a low multiple of single damages is where the value is.

Then the relator's share and fees, which are separate line items. Section 3730(d) fixes the share, and a prevailing relator recovers reasonable expenses, attorney fees, and costs from the defendant. In a small declined case the fee component can exceed the damages component.

Then the collateral terms, which often matter more. Suspension and debarment for contractors, sometimes resolved through an administrative agreement. Program exclusion and a corporate integrity agreement for healthcare defendants — multi-year, with an independent review organization, reporting, and executive certifications. These are negotiated with different government components than the payment.

Then scope of release: what conduct, what period, what entities, what claims — and what is reserved, which typically includes criminal, tax, and administrative claims.

Then the recitals, because the press release is what the market reads.

And individual exposure, addressed expressly or expressly not, with the conflicts understood.

One timing lever to know about early. Section 3729(a)(2) reduces the multiplier to not less than double damages where the defendant furnished all known information within 30 days of obtaining it, fully cooperated, and did so before any investigation began. That window closes long before most investigations finish, which is why the disclosure decision must be pre-considered rather than improvised.

Step 10 — If there is criminal exposure

The signals: a grand jury subpoena rather than a CID; unannounced agent interviews, especially at homes; requests not to disclose; the involvement of a criminal Assistant United States Attorney.

What changes. Individual employees need their own counsel. Upjohn warnings become critical and must be documented. Cooperation credit generally requires providing information about individuals, which reallocates risk from the entity to its people — a board-level decision with real conflicts. Statements to agents carry separate criminal exposure. And civil discovery responses, deposition testimony, and settlement statements can be used in the criminal matter.

Coordinate counsel, consider a stay of the civil case, and advise the client that resolving one does not resolve the other — a civil FCA settlement typically reserves criminal claims expressly.

Step 11 — The relator's path

Assess the case first. Is there an actual claim for federal payment, not merely regulatory noncompliance? Is there evidence of knowledge as § 3729(b)(1) defines it — which after Schutte means the defendant's subjective belief? Is the violation material under Escobar — and has the agency continued paying with knowledge?

Run the bars before drafting, per Step 5.

Advise the client honestly about what this involves: years under seal with no ability to discuss it; a high probability of declination; a funding decision if declined; discovery into the client's own conduct and motives; and likely loss of the job and difficulty in the industry, whatever § 3730(h) provides.

Do not counsel document removal. A client who takes documents creates exposure under confidentiality obligations, computer access statutes, and sometimes trade secret law — and hands the defense a motive narrative. Advise on what may lawfully be retained, before anything is taken.

Write the disclosure statement seriously. Section 3730(b)(2) requires service on the Government of a written disclosure of substantially all material evidence and information the person possesses. This document, more than the complaint, drives the intervention decision. Organize it, document it, and be honest about weaknesses.

Plead to Rule 9(b) in your circuit's formulation, and file in a proper venue under § 3732, which is notably broad.

And prepare for the seal to be extended repeatedly. The statutory 60 days bears little relation to practice.

Step 5A — Reading the CID for what it does not say

A civil investigative demand is a disclosure document if you read it carefully, and the reading takes an hour.

The date range tells you the limitations theory. Six years back suggests reliance on § 3731(b)(1); a longer range signals the discovery provision, which after Cochise Consultancy can reach ten years even in a declined case.

The document categories tell you the theory of the case. Claims data alone points to coding or billing mechanics. Compliance files, policy communications, and training materials point to knowledge — the government is building the subjective scienter case that Schutte made central.

The custodian list tells you who the relator is, or nearly. The individuals named are the ones the relator identified as decision-makers, and the list frequently includes the relator's own former supervisor and peers.

A document requested by name tells you the relator has it. If the demand asks for "the [date] memorandum regarding [subject]," someone gave the government its title.

What is absent is informative too. A demand that omits an obvious business line suggests the theory is narrower than feared. A demand that omits the compliance department suggests the government has not yet identified the interpretation file — which is a reason to find it first.

Then map the demand against your own exposure. Which claims, over what period, at what value. That number — claim count times the per-claim penalty, plus three times the damages measure under § 3729(a)(1) — is what the board needs at the first briefing, and it is available in week one.

And record the reading. A short privileged memorandum diagnosing the theory from the demand's scope orients everyone who joins the matter later, and it is a useful check on whether the theory the government eventually articulates is the one you prepared for.

Step 6A — Working with agency counsel, not just DOJ

An FCA matter involves at least two government components, and defendants who address only one lose leverage.

The Department of Justice makes the intervention recommendation, through a line attorney in a United States Attorney's Office or the Civil Division, or both.

The client agency and its inspector general supply the substance. The agency knows what its requirements mean, what its contractors were told, what its audits found, and — critically — what it did after learning of the practice. Its views on materiality carry weight precisely because Escobar makes agency payment behavior the evidence.

So make the agency an audience too. Where the defense rests on the agency's own guidance, audit practice, or continued payment, the presentation should include material the agency can verify from its own records — and ideally should be attended by agency counsel.

Understand the incentives. An agency that concluded the practice was acceptable has an institutional interest in saying so. An agency embarrassed by having paid does not. Read which situation you are in before deciding how hard to press.

Use the ordinary administrative channels in parallel. A request for an advisory opinion, a coverage determination, or a clarification of guidance — where such a mechanism exists — can produce a document that is worth more than any brief. Timing matters: a favorable determination obtained before the government decides on intervention is far more useful than one obtained afterward.

And be careful. Approaching an agency about the substance of conduct under investigation can be read as an attempt to influence the investigation, and in a matter with criminal exposure it is hazardous. Coordinate every agency contact with DOJ counsel, and put the purpose in writing.

Step 7A — Responding to a civil investigative demand, in detail

The CID response sets the tone for the intervention decision, and it is the first thing the government learns about how the company operates.

Read what the CID actually asks for. Section 3733 authorizes demands for documents, written interrogatory answers, and oral testimony. A demand for testimony is a materially different event from a document demand and should be recognized as such — the witness is examined under oath, by the government, without the protections of a deposition in litigation.

Diagnose the theory from the scope. The date range tells you the limitations theory. The document categories tell you whether the theory is billing mechanics or knowledge. The custodian list tells you whom the relator has identified. And a request for a specific policy or memorandum by name tells you the relator has it.

Negotiate, in writing, early. Custodian count, date range, search terms, form of production, and schedule. Government attorneys expect this and generally accommodate reasonable proposals. What they do not accommodate is silence followed by a request for an extension on the due date.

Produce in an organized way. Load files, a cover letter describing what is produced and what is withheld, a privilege log that is actually usable, and a named point of contact. A production that requires the government to reconstruct what it received creates the impression of obstruction whether or not any exists.

Assert privilege carefully and consistently. Over-designation is the most common error and it is discovered. Under-designation waives.

Watch the objection deadlines. A CID may be challenged by petition to modify or set aside, on a schedule set by the statute — a route rarely used and occasionally correct where the demand is genuinely overbroad or seeks privileged material wholesale.

Prepare any testimony witness thoroughly. They are testifying under oath to the United States, about a matter they may not fully understand, in a proceeding where a misstatement carries independent criminal exposure. Prepare with documents, prepare for the "I don't know" answer, and prepare the witness to correct the record.

And use the interaction. A CID response is also the company's first chance to make an impression on the attorney who will recommend intervention. Cooperative, organized, and credible is worth more than any argument made later.

Step 8A — Budget, timeline, and what to tell the board

FCA matters run longer and cost more than boards expect, and the surprise is corrosive. Set the expectation at the first briefing.

Timeline. From civil investigative demand to resolution, three to five years is ordinary. The seal period alone commonly runs two to four years, during which the company is spending money on a case it cannot describe publicly and cannot resolve.

Phase costs. CID response and document production, driven by custodian count and data volume, is frequently the largest single line in year one. The internal investigation is the second. Then the materiality record project — Freedom of Information Act requests, contractor records, agency correspondence. Then the government presentation. Then, if the case proceeds, motion practice, discovery, experts, and either trial or settlement.

The exposure model, presented honestly. Treble damages plus a per-claim civil penalty under § 3729(a)(1), over a period that can reach ten years after Cochise Consultancy. Show the board the arithmetic — claim count times penalty, plus three times the damages measure — and then show the realistic settlement range as a multiple of single damages. The gap between the two is the reason to spend on defense.

Reserves and disclosure. A public company must assess whether the matter is probable and estimable for accrual and whether disclosure is required, and it must do so while the case is under seal and while the company may not describe it. Involve the auditors and disclosure counsel early; this is a recurring source of avoidable secondary problems.

Insurance. Notify carriers promptly under any policy that might respond — directors and officers, professional liability, and any specific regulatory or government investigations coverage. Late notice is a common and entirely avoidable coverage forfeiture. Understand that most policies exclude the return of amounts improperly received, so the damages component is frequently uninsured while defense costs may not be.

And what to tell the board. That the case is probably older than the company's knowledge of it; that the government, not the relator, is the audience; that the outcome will turn substantially on documents created years ago; and that a declination is a very good outcome but not the end. Say all of it at the first briefing, in writing.

Step 9A — Handling the retaliation claim that comes with it

A qui tam frequently arrives with a companion, and the companion is public.

Section 3730(h) protects an employee, contractor, or agent from being discharged, demoted, suspended, threatened, harassed, or otherwise discriminated against because of lawful acts done in furtherance of an FCA action or other efforts to stop a violation. Relief includes reinstatement with seniority, two times back pay, interest, and special damages including litigation costs and reasonable attorney fees.

Two features make it dangerous.

It is easier to prove than the qui tam. The elements are protected activity, employer knowledge of it, and adverse action because of it. No false claim need be established — the "efforts to stop a violation" language protects an employee who was wrong about the underlying legality, provided the belief was reasonable.

It proceeds in public while the qui tam remains sealed. The discovery taken in the retaliation case — about the company's practices, its treatment of internal complaints, and who knew what — will be used in the sealed case, and the company frequently cannot explain to its own workforce what is happening.

What to do.

Suspend adverse action against anyone who has raised a compliance concern, and require legal review of any personnel decision touching such a person. This constrains managers and it is worth the friction.

Reconstruct the history immediately. Performance reviews, disciplinary records, compensation decisions, and reorganization plans predating the protected activity are the defense. Documentation created afterward is discounted.

Look hard at the timing. Adverse action shortly after a complaint is the fact pattern that produces liability, and a legitimate reason that happens to coincide will not look legitimate.

Consider early resolution. A retaliation claim settled quietly, on terms that do not concede the underlying conduct, removes a public proceeding, a sympathetic narrative, and a discovery vehicle — often for a fraction of what defending it costs.

And be careful with the release. A settlement that purports to bar the individual from participating in the qui tam or from communicating with the government is unenforceable and, worse, becomes evidence of obstruction. Draft it with that limitation understood.

Step 10A — Managing the internal investigation

The investigation is the most valuable work product in the matter and the thing the relator most wants. Run it deliberately.

Scope it in writing. What conduct, what period, what systems, what people — and who authorized it. An investigation that expands without a documented decision becomes a project nobody controls and a privilege log nobody can defend.

Staff it with counsel, not the business. Findings developed by a compliance department in the ordinary course are not privileged, and a business-led investigation produces documents the relator will read. Where forensic accountants or consultants are used, retain them through counsel and document the purpose.

Give Upjohn warnings in every interview, and document them. The employee must understand that counsel represents the company, not the individual; that the conversation is privileged and the privilege belongs to the company; and that the company may waive it. Have the interviewer record that the warning was given and understood.

Watch for the moment an employee needs separate counsel. When an individual's exposure diverges from the company's — because they made the decision, signed the certification, or may be a target — the company should say so and, usually, offer to fund separate counsel. Continuing to interview that person under a company banner damages both.

Take memoranda carefully. Attorney memoranda reflecting mental impressions are core work product. Verbatim transcripts and recordings are far less protected and are a discovery target. Choose the format knowingly.

Do not create a "findings" document until you know what it will say. A draft report circulated widely, containing conclusions later revised, is a gift to the other side.

Plan the waiver question before it arises. Cooperation credit frequently comes at the price of disclosing investigation results, which can waive privilege as to the subject matter. That is a board-level decision with long consequences, and it should never be made incrementally by a witness answering a deposition question.

And close the investigation properly. A documented conclusion, remediation where warranted, and a decision about disclosure — recorded, dated, and approved by someone with authority.

Step 11A — How Kestrelmoor's matter ran

Month 0. A civil investigative demand arrived seeking six years of billing records for a panel of tests, together with clinical documentation, staffing records, and communications about billing policy. Marchetti-Nkemdirim read the third category correctly: the theory was knowledge, not coding error.

Days 1–5. FCA counsel engaged. Litigation hold issued covering email, the messaging platform, two shared drives, the laboratory information system, the billing system, and the personal devices of six named individuals. IT confirmed in writing that auto-deletion was suspended in each — which took four days and revealed a chat platform retention rule nobody knew existed and that had been purging at ninety days.

Days 5–30. CID scope negotiated: custodians reduced from twenty-eight to eleven, production staged over four months, search terms agreed. Privileged internal investigation opened, with documented Upjohn warnings in every interview.

Months 2–5. The investigation found the two records that decided the case. In 2022 a compliance manager had questioned whether a coverage requirement permitted the panel to be billed as it was. A memorandum had been prepared, outside counsel consulted, an interpretation adopted, and it had been applied identically across every site since. It was exactly the contemporaneous file that Schutte makes decisive.

It also found the bad email, from a regional director: "I know this is a stretch but nobody has ever questioned it." Kestrelmoor built the response rather than hoping it would not surface — the author had no role in the interpretation decision, had been corrected in writing by the compliance manager, and the practice he described was not the practice adopted.

Months 3–8. The materiality record. A Freedom of Information Act request and contractor correspondence produced two prior review letters in which the billing practice appeared in the sampled records. No adjustment had been made; payment had continued. Under Escobar, payment in full with actual knowledge is strong evidence that the requirement is not material.

Month 11. The presentation. Ninety minutes with the line attorney and the agency's counsel. Two exhibits and a four-page written submission. The weak facts addressed in the second paragraph rather than omitted.

Month 14. The government declined to intervene.

Months 15–21. The relator — a former billing supervisor — proceeded. Kestrelmoor moved to dismiss on Rule 9(b) grounds, on materiality, and on the public disclosure bar. The relator dismissed voluntarily after full briefing and before the hearing.

In parallel, months 2–13, the same individual's § 3730(h) retaliation claim proceeded publicly, generating discovery used in the sealed case and considerable internal anxiety. It settled.

Total cost: about $3.4 million, over twenty-one months, with no payment to the government.

What Marchetti-Nkemdirim tells other general counsel: "We were saved by a memorandum a compliance manager wrote in 2022 and two audit letters we had filed without reading. Neither cost anything at the time. Everything we spent afterward was spent proving what those documents already said."

Step 12 — What compliance should have done

Map every process that ends in a request for federal money. Billing, invoicing, reimbursement, grant drawdowns, certifications — including as a subcontractor or supplier, because § 3729(b)(2) reaches claims presented to a contractor or grantee where the money is spent on the Government's behalf.

Inventory your certifications. Which ones does the organization make, who signs, what diligence supports the signature, and is that diligence real?

Document ambiguity resolutions contemporaneously. After Schutte this is the single highest-value compliance practice. Write down the question, the analysis, the advice obtained, the decision, and the date. Apply it consistently across the organization.

Take internal reports seriously, and document the response. A complaint investigated and reasonably resolved is a defense; ignored, it is the relator's first exhibit and often produces the relator.

Read your own audit reports. Kestrelmoor's best document was a contractor audit nobody had opened.

Handle departures thoughtfully, with exit interviews that surface concerns and documented responses, and with nothing that could be characterized as retaliation.

And decide the disclosure question in advance. Given the 30-day window in § 3729(a)(2) and the mandatory disclosure obligations that apply to many federal contractors, a company that discovers a real problem has days, not months. Know who decides, on what standard, before it happens.

Related documents

This guide is general information, not legal advice, and does not create an attorney-client relationship.