False Claims Act (FCA) litigation is on the rise. The Department of Justice (DOJ) opened 250 new investigations in 2020, the most since 1994.1 Federal qui tam cases have also steadily increased since 2017, with 672 matters filed in 2020.2 Additionally, the federal government has recently signaled willingness to use the FCA to combat fraud in the context of cybersecurity.3 As such, companies and insurers that seek or offer coverage for FCA actions should be proactive about monitoring whether policies are up to date and provide the agreed-upon coverage for FCA liability.
The False Claims Act
The FCA prohibits fraud on the government and is particularly important for businesses and insurers to consider in light of how large individual recoveries under the FCA can be – such recoveries have exceeded $1 billion.4 For example, to resolve FCA allegations, GlaxoSmithKline paid $2 billion in a 2012 settlement,5 Johnson & Johnson paid $1.39 billion in 2013,6 and Bank of America and Countrywide paid $1 billion in 2014.7 In addition, businesses can be found liable not just for fraudulent statements to the government, but also for failing to comply with material requirements tied to receiving government funding.8
Both the Biden Administration and the DOJ have recently indicated that parties can expect FCA litigation to emerge in the cybersecurity context in the near future. President Biden signed an Executive Order on May 12, 2021 aiming to reduce data breaches and malicious cyber...
A front-page article with the byline of veteran New York Times opinion writer Nicholas Kristof is the latest poisonous example of what I call the NGO “halo effect.” Headlined “The Silence That Mee...