D.C. Circuit Rejects "Collective Knowledge" But Shines Spotlight on Processes

A good internal investigation gives equal scrutiny to people and processes. It may be easier to replace or reprimand the "bad apple" employee than to overhaul a system with which employees are familiar and has become ingrained in the operational culture. Nevertheless, it is increasingly vital that companies take a hard look at systems, structures, and processes. A recent opinion from the D.C. Circuit indicates that these organizational elements will be the next battleground in False Claims Act ("FCA") litigation.

In United States v. Science Applications International Corporation, SAIC entered into a contract with the Nuclear Regulatory Commission ("NRC") to provide technical assistance and expert analysis. The contract included strict provisions on conflicts of interest, including a requirement that SAIC seek NRC's prior written approval if it had reason to believe that a proposed arrangement may raise a conflict of interest. SAIC subsequently entered into two