What We Know About DOJ’s New FCA Enforcement Priorities

Federal prosecutors are gearing up for a significant expansion in False Claims Act enforcement, signaling new priorities that could reshape corporate compliance landscapes across multiple sectors. Recent announcements from Department of Justice officials reveal an intensified focus on several key areas that legal experts say warrant immediate attention from companies dealing with federal funds.

In statements made last week, Michael Granston, Deputy Assistant Attorney General of the DOJ’s Civil Division, highlighted areas where enforcement actions are expected to increase. Pandemic-related fraud remains a top priority, as the government continues scrutinizing the approximately $5 trillion in relief funds distributed during the COVID-19 crisis.

“We’re seeing only the tip of the iceberg when it comes to pandemic relief fraud,” said Granston during an industry conference. “Companies that received CARES Act funding, Paycheck Protection Program loans, or other pandemic assistance should prepare for heightened scrutiny well into 2024 and beyond.”

The healthcare industry faces particularly intense examination, with the DOJ targeting Medicare Advantage plans and their risk adjustment practices. Officials have expressed concern about potential manipulation of patient diagnostic data to increase reimbursements from the government, a practice that costs taxpayers billions annually.

Pharmaceutical manufacturers also remain in the crosshairs, with particular attention to patient assistance programs. These initiatives, which help patients afford expensive medications, have come under increased scrutiny for potentially functioning as kickbacks that drive prescriptions toward specific drugs, especially when manufacturers fund the assistance.

Cybersecurity compliance represents a newer frontier for FCA enforcement. Companies that fail to maintain adequate security measures while certifying compliance with government standards could face substantial liability, particularly defense contractors and healthcare organizations handling sensitive patient data.

“The cybersecurity enforcement initiative demonstrates how the FCA is evolving to address modern concerns,” explained Jessica Williams, a partner at Morrison & Foerster specializing in government contracts. “Companies can no longer treat cybersecurity certifications as mere checkboxes when submitting government bids or claims.”

Small business program fraud has emerged as another enforcement priority. The DOJ has increased investigations into companies misrepresenting their status to qualify for set-aside contracts intended for small, disadvantaged, or veteran-owned businesses. These investigations often result from whistleblower complaints from competitors or former employees.

Environmental violations also feature prominently in the DOJ’s expanded focus. Companies misrepresenting compliance with environmental regulations while receiving federal funds or contracts may face False Claims Act liability alongside traditional environmental penalties.

Legal experts note this expanded enforcement agenda arrives as the DOJ continues strengthening its collaborative approach across divisions. The Civil, Criminal, and Antitrust Divisions increasingly coordinate investigations, creating more comprehensive enforcement actions against alleged wrongdoers.

“We’re witnessing an unprecedented level of coordination between DOJ divisions,” noted Robert Chen, former federal prosecutor now at Covington & Burling. “Companies facing False Claims Act investigations today are more likely to encounter parallel criminal investigations than in previous years.”

The financial implications of these enforcement priorities are substantial. FCA cases resulted in over $2.2 billion in settlements and judgments in fiscal year 2022, with whistleblower actions continuing to drive many investigations. Whistleblowers filed 652 qui tam lawsuits last year, receiving approximately $488 million in awards.

For corporations, the expanded enforcement landscape necessitates proactive compliance measures. Legal experts recommend comprehensive risk assessments focusing on the DOJ’s priority areas, stronger internal controls, and thorough documentation of compliance efforts.

“Self-disclosure remains one of the most effective ways to mitigate potential penalties,” advised Sarah Johnson, compliance officer at a major healthcare system. “Companies that identify potential violations and voluntarily disclose them typically face more favorable outcomes than those waiting for government investigators to discover problems.”

As the DOJ continues refining its enforcement approach, companies across sectors must adapt their compliance programs to address these evolving priorities or risk facing increasingly aggressive investigations and potentially devastating financial penalties under the False Claims Act.