Private equity investment in health care has grown significantly over the past two decades, and the US government is starting to pay attention. Recent announcements by the US Department of Justice (DOJ) and proposals by Congress and state attorneys general show that the impact private equity firms may have over medical decisions and care is increasingly under scrutiny. The False Claims Act (FCA) appears to be the first avenue of enforcement, but private equity firms should be prepared for state investigations and congressional action as government focus gains steam.
Claims brought under the FCA by both DOJ and private parties, known as “relators,” have proliferated in recent years. Fiscal year 2023 saw a record number of FCA settlements and judgments (543) and civil investigative demands (1,504), with US$2.7 billion recovered by DOJ.1 The FCA allows for treble damages and penalties, creating massive exposure in these cases and major payments for the government and relators. Health care has consistently represented the largest focus of enforcement under the FCA and has accounted for the highest recovery.2 On the heels of this record year, DOJ announced in February that private equity involvement in the health care sector will be a priority moving forward.3
The FCA imposes liability for knowingly submitting, or causing to submit, false claims to the government. While traditionally DOJ focused on parties that “knowingly...
Share The Securities and Exchange Commission has filed charges against Nova Labs for allegedly conducting unregistered securities offerings and making false statements about business partnerships ...