UPDATE2: McEachin gives up on Civil Investigative Demands Here
As suggested in the Spring of 2010, Sen. Don McEachin (D - Richmond) has proposed a bill to eliminate the power of the Attorney General of the Commonwealth of Virginia to issue civil investigative demands [CID] in cases of suspected o fraud on the taxpayers.
SB1314 takes away all court enforceable investigative authority from the AG until after a lawsuit is filed. It does not water the subpoena process down or impose limitations. Instead, the bill completely eliminates the process and the nine statutes underlying the process. Pretrial investigative authority will be limited to that which the AG can gain voluntary compliance.
At this point, many people know about the AG's attempt to obtain documents through this civil investigative demand from the University of Virginia. Unfortunately Sen. McEachin's heavy handed attempt to put a check on the current AG's power will have the unintended consequence of leaving Virginia less able to properly exercise its rights under the Virginia Fraud Against Taxpayers Act [FATA].
CIDs are used before a case is pending to determine the nature, scope, and existence of frauds perpetrated against the Commonwealth of Virginia before a lawsuit is pending. This allows Virginia to decide if it wants to file a lawsuit in the first place. Additionally private plaintiffs are allowed to sue under the FATA. In those cases, under Va. Code § 8.01-216.5 Virginia may choose to allow the private plaintiff to prosecute the case, or Virginia may intervene and take over. Having an advanced investigation at the time of commencement of the lawsuit allows for the gathering of evidence quietly and earlier avoiding potential destruction of evidence due to a deliberate cover-up or negligent loss from the passage of time and loss of records.
The FATA is based moderately on the federal False Claims Act. The Attorney General of the United States has very similar CID powers for federal false claims under 31 U.S.C. § 3733. This power is wielded at the federal level by mere political appointees, unlike in the Commonwealth of Virginia where the power to issue CID's belongs to the duly elected AG, an officer beholden directly to the people.
SB1314 could have simply restricted the timing, or scope of CID's. It could even have placed the power in the hands of an Inspector General like the one suggested in HB2076 proposed by Del. Steven Landes (R - Weyers Cave), or some other statutorily created independent counsel's office. Sen. McEachin may need someone else to use the CID process someday, or may want to use it himself. Perhaps he thinks the CID power can be placed back into the code once AG Cuccinelli leaves office . . .
Prediction: With a Democratic senate, this bill might make it out of the Senate only to die in the House Courts of Justice Committee after crossover.
UPDATE: Sen. Chap Petersen (D - Fairfax) has also introduced legislation to limit the scope of civil investigative demands. SB831 prohibits CIDs in the limited instance in which a CID is issued against an academic institution and the subject matter is “a matter of academic inquiry or research.” Sen. Petersen is to be commended for at least trying to narrow the scope of the prohibition targeted at one specific attorney general, but his bill raises two major issues.
First, why are institutions of higher education in a specialized position vis-a-vis the rest of the economy that receives government dollars? Public and private institutions that are policy oriented but not academic (contractors hired to perform studies for the Commonwealth), and hospitals that do research are not equally protected.
More importantly, the CID process is intended to allow the AG to obtain information about fraud without the investigated party knowing the scope and nature of the fraud itself. This, in part, prevents cover-ups through hidden and destroyed documents. To enforce the provision as written, the purpose of the CID must be made public for all CID’s issued to an academic institution. This eliminates a major benefit of the CID, namely the ability to investigate effectively by investigating quietly.
Prediction: SB831 makes it out of committee but is tabled by the full senate.
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