D.C. Circuit Restores Privilege Protections to Internal Investigations

On Friday, June 27, 2014, the United States Court of Appeals for the District of Columbia Circuit issued a writ of mandamus in Kellogg Brown & Root, Inc., et al., No. 14-5055,--- F.3d ----, 2014 WL 2895939, (D.C. Cir. June 27, 2014) (KBR) with significant implications for companies that conduct internal investigations pursuant to compliance programs. The KBR writ reverses a district court decision from March of this year (the Barko decision) that had created substantial uncertainty related to the application of the attorney-client privilege in the context of compliance investigations. Indeed, as explained below, Barko seemed to put all companies -- particularly government contractors that are subject to the FAR's mandatory disclosure requirements -- in an untenable dilemma by suggesting that conducting internal investigations to minimize the risk of government enforcement action would render those same investigations vulnerable to discovery in False Claims Act (FCA) and other cases. The lower court decision also created significant uncertainty as to the application of the attorney-client privilege to investigations conducted by life sciences companies pursuant to reportable event requirements under Corporate Integrity Agreements, which require those companies to investigate and then report “probable violations” of federal healthcare program laws. In reversing, the Court of Appeals helps to restore the privilege protections for such investigations established by Upjohn Co. v. United States, 449 U.S. 383 (1981) more than 30 years ago, while also serving as a reminder of the importance of taking steps to preserve privileges and confidentiality during internal investigations.

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