I. Introduction
Recent developments demonstrate that sponsor-backed companies in the healthcare and life sciences sectors, and in some instances private equity firms and professionals, have entered a new era of heightened regulatory scrutiny and enforcement risk. This article addresses the U.S. Department of Justice (“DOJ”) use of the False Claims Act (“FCA”) to pursue private equity investors and their portfolio companies.[1] While DOJ has been actively investigating private equity portfolio companies, the driver behind the majority of DOJ’s investigations are whistleblower plaintiff lawyers who file qui tam suits alleging FCA violations. These lawyers have found a receptive audience in both legislative and executive branches of the federal government and are bringing pressure on DOJ to ramp up its focus on the private equity industry, a perceived deep-pocket in FCA cases.
President Biden’s recent State of the Union address on March 1, 2022 offers a prominent example of this new era. President Biden said “[A]s Wall Street firms take over more nursing homes, quality in those homes has gone down and costs have gone up.”[2] The day prior to the address, the White House released a fact sheet containing allegations that private equity-owned nursing facilities caused cost increases for government payers coupled with a deterioration in the quality of care.[3] Citing an analysis by a progressive think tank, the White House asserted that private equity investment in nursing...
University of Rochester Medical Center and a former pathologist resolved a retaliation suit alleging URMC violated the False Claims Act by firing her for calling attention to federal grant fraud. ...