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Judge Rules No Attorney-Client Privilege for Internal Investigation in Qui Tam Case

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Recently, a judge for the U.S. District Court of the District of Columbia ruled that documents relating to a government contractor’s internal fraud investigations were not protected by the attorney-client privilege. The judge reasoned that these investigations were a means to make sure the company was complying with its own policies and regulations, and that they did not have anything to do with the company seeking or obtaining legal advice.

What Happened in This Case?

In this case, Barko v. Halliburton Co. et al, a whistleblower alleged that private military contractor Kellogg Brown & Root Services violated the False Claims Act. They claimed that the company was actually utilizing “improper bidding and billing practices” for the subcontract work they would then bill to the government. The whistleblower, or relator, in the case wanted to obtain the documents that were a part of the company’s own investigations of these allegations.

The judge in the case, Judge James Gwin, said that these documents from Kellogg Brown & Root Services’ review did not have any protection under the attorney-client privilege, nor did they have protection under work-product privileges.

To understand why the judge made this decision, it is important to know what the attorney-client privilege is and why it would not apply. The only way it would have applied would be if the investigation and the documents were created for the express purpose of the company seeking legal advice on the matter. The judge decided that seeking legal advice was not the purpose of this documentation and investigation, thus, it would not allow for the protection of those documents.

The court said that, “Department of Defense contracting regulations require contractors to have internal control systems such as KBR’s COBC program to facilitate timely discovery and disclosure of improper conduct in connection with Government contracts.” The court ruled that the company’s policies “merely implemented these regulatory requirements,” that the “investigations resulted from KBR’s need to comply with government regulations,” and would have been conducted “regardless of whether legal advice was sought.”

The court believed that the employees questioned and interviewed did not know the information they were imparting would be used to receive legal advice, and that there was nothing about this mentioned in any of the confidentiality agreements they signed. Another reason that the court decided this way was that the person who conducted the interviews was not an attorney, so those who were interviewed really had no idea that there was any legal nature to the questions.

What does this mean?

This change could have a significant effect on how some businesses conduct internal investigations. Companies will more than likely be changing how they conduct those investigations and how they define the legal purposes of such investigations and documentation as a means to protect them. Companies will  likely retain outside legal counsel to conduct and document internal investigations so they can ensure that such investigations, and the results of them, will be considered privileged.

Qui tam lawsuits involving major government contractors are complex and raise many difficult issues that require the advice of an experienced False Claims Act attorney.  Consult with one at Seeger Weiss LLP if you have information about a contractor defrauding the government.

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