In a Law360 article, litigation & enforcement partner Andrew O’Connor, who co-leads the firm’s healthcare and life sciences industry group and False Claims Act practice, commented on a Nebraska federal court’s dismissal of FCA claims against Pharos Capital Group. The Nebraska court held that Pharos was a distinct entity from the portfolio company, and thus out of reach of the whistleblower suit.
“The decision underscores that relators can’t use the FCA as an end-run around bedrock principles of corporate law,” said Andrew, emphasizing that investors “are not liable for a company’s actions” without a substantial showing that effectively erases the distinction between investor and company. Andrew also noted that the "decision reinforces that the traditional rule continues to apply to private equity firms," despite heightened scrutiny from the government and relators.
A New York attorney has been cautioned that, in most cases, it is unethical to act as a relator in a qui tam False Claims Act suit against his former client,... Want to continue reading? Unlock the...