Hot Topics & Emerging Trends in False Claims Investigations

Key Takeaways | 2024 Enforcement Outlook: Hot Topics and Emerging Trends in False Claims Investigations and Litigation


The False Claims Act (FCA) represents one of the most powerful tools against fraud that the federal government has in civil enforcement. In 2023, the government reported $2.68 billion in FCA settlements and judgments, with almost 70% coming from the healthcare industry.

The US Department of Justice (DOJ) recently announced its enforcement priorities for FCA pursuits, which include cybersecurity, pandemic fraud, healthcare fraud and third-party accountability. Meanwhile, the government continues to emphasize the significance of voluntary disclosure and cooperation, which presents challenges for companies, contractors and providers that may be caught in the crosshairs of potential FCA investigations as they navigate compliance concerns, regulators, inspector general authorities, whistleblowers and prosecutors.

During this webinar in our Enforcement Outlook series, Laura McLane, Dana McSherry and Ashley Hoff unpacked the emerging trends and relevant topics for navigating the government’s FCA enforcement activities.

Top takeaways included:

  1. The DOJ has multiple FCA enforcement priorities in 2024. These include:
    • Cybersecurity: The DOJ is doubling down on its Civil Cyber-Fraud Initiative with the intention to use the FCA to hold government contractors accountable for knowingly placing government data and security systems at risk. This will likely lead to increased enforcement in this area this year and beyond.
    • Pandemic fraud: The COVID-19 Fraud Enforcement Task Force remains robust in both criminal and civil enforcement. Civil enforcement will focus on Paycheck Protection Program fraud using the FCA. The DOJ continues to pursue unauthorized and unnecessary lab testing claims for nursing home patients submitted during the pandemic.
    • Healthcare fraud: It is still the leading source of all FCA judgments and settlements, and the DOJ will continue to aggressively pursue Anti-Kickback Statute (AKS) and Stark Law violations. There is a strong focus on claims arising from nursing home facilities, including unauthorized therapies, chemical restraints, labs and substandard care. Stakeholders should also expect vigorous enforcement of Medicare Part C and Medicare Advantage fraud relating to risk adjustment.
    • Third-party accountability: The government is expanding investigations outside of direct signers and transmitters. There is also increased scrutiny of billing experts, coding consultants and electronic health record software companies, with the DOJ closely examining influence on patient care. Expect the government to continue to target private equity for potential FCA liability.
  2. The DOJ encourages voluntary disclosure and cooperation, but the benefits are less clear in the civil context than in criminal enforcement matters. There is a challenge to determine whether to disclose, when to disclose and what entity to approach for the best outcome. Negotiations are case-specific, which makes it difficult to predict for evaluation. The DOJ’s 2023 Safe Harbor Policy, however, sheds some light on disclosures made in connection with mergers and acquisitions.
  3. There is a disputed causation standard in AKS-based FCA cases. The US courts of appeals are split over “resulting from” causation language in AKS-based FCA cases. The Sixth and Eighth Circuits endorse the more limited “but for” standard favored by defendants. The Third Circuit, however, endorses a “proximate cause” standard, which is closer to the government’s general taint theory and only requires a link to the claimed items or services. Ultimately, this issue appears to be headed to the Supreme Court.
  4. One year later, the Supreme Court’s SuperValu ruling continues to reverberate through the legal system. In June 2023, the Supreme Court held that if a defendant acts on an interpretation of a complex regulation that is wrong (e., falsity) and the defendant knows it is wrong (i.e., scienter), then liability attaches for FCA, regardless of whether an objectively reasonable interpretation would have supported the action taken. The SuperValu holding is limited to instances where the defendant believes claims are false in the face of rule ambiguity; it does not address falsity without scienter or scienter without falsity. The Supreme Court articulated new descriptions of “deliberate ignorance” and “reckless disregard” for the knowledge and scienter element, but lower courts are left to determine how to apply these boosted definitions. The subjective standard may fall to obvious illegality in some circumstances. Companies should consider formalizing their interpretations of ambiguous regulations and documenting those in a nonprivileged memorialization with a potential for disclosure to the government during performance or at the time of claims submission.

Check out past recordings and materials from our Enforcement Outlook webinar series.

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