The fireside chat discussion offered insights into the US Department of Justice’s (DOJ’s or Department’s) False Claims Act (FCA) enforcement priorities, including its approach to dismissing meritless qui tam actions, the use of sub-regulatory guidance in government enforcement actions, incentives for voluntary self-disclosure, and data-driven whistleblower litigation.
One week later, on October 22, DOJ’s Civil Division and the US Department of Health and Human Services (HHS) announced a new six-month Healthcare FCA Self-Disclosure Pilot Program (FCA SDPP), providing a defined framework for eligible healthcare companies to resolve potential civil FCA violations through voluntary disclosure, remediation, and repayment.
Several themes emerged from the discussion of recent developments in DOJ’s approach to fraud enforcement that have practical implications for pharmaceutical manufacturers, medical device companies, healthcare providers, and other healthcare and life sciences industry stakeholders.
The newly announced FCA SDPP adds another layer of analysis and creates a formal pathway for companies to evaluate and disclose potential FCA exposure, particularly those conducting internal investigations, assessing historical compliance issues, or addressing misconduct identified through transactional due diligence.
DOJ’S COMMERCIAL LITIGATION BRANCH MAINTAINS CIVIL ENFORCEMENT ROLE AND PRIORITIZES FASTER FCA INVESTIGATIONS
Jenny addressed the creation of DOJ’s new National Fraud Enforcement Division (NFED), the Health Care Fraud Section folded into the NFED, and the Commercial Litigation Branch’s operational relationship with the NFED and its existing enforcement priorities. She emphasized that while the Commercial Litigation Branch will remain focused on civil FCA enforcement, which is a core capability, the Civil Division intends to continue its longstanding collaboration with criminal prosecutors in their commitment to fighting fraud.
Depending on the circumstances, this may result in investigations where the civil and criminal sides of the house proceed either in parallel or on separate tracks, which is consistent with past practice.
Jenny described efforts to accelerate civil fraud investigations consistent with the approach being taken by the NFED, as reported in our prior LawFlashes, DOJ Sets Priorities for New National Fraud Enforcement Division and DOJ Provides New Roadmap for Corporate Fraud Enforcement, including issuing civil investigative demands more quickly following the filing of qui tam complaints and using data analytics to improve investigative efficiency.
For Food and Drug Administration whistleblower matters involving state-administered, federally funded benefit programs, she provided insight into the DOJ’s accelerated internal review and enforcement protocol, a new process discussed in a June 24 Law360 article written by Morgan Lewis lawyers, including a requirement for supervisory approval to extend certain investigations beyond specified timeframes.
In light of these developments, companies that receive subpoenas or investigative demands should be prepared for more expedited communication, investigation, and litigation timelines with the government, and the potential for increased coordination between the DOJ’s civil fraud and criminal enforcement functions.
DOJ’S RENEWED COMMITMENT TO DISMISSING MERITLESS QUI TAM ACTIONS CREATES OPPORTUNITIES FOR EARLY DEFENSE ADVOCACY
A central focus of the fireside chat discussion was DOJ’s authority under 31 U.S.C. § 3730(c)(2)(A) to dismiss qui tam actions over a relator’s objection. Recent revisions to the Justice Manual reinforce the administration’s policy, long advocated by Jenny, that DOJ should consider dismissal of meritless qui tam actions even where, as the current revisions clarify, the deficiencies are not apparent on the face of the complaint. The revisions also instruct DOJ lawyers to reassess dismissal as cases proceed through litigation.
Jenny characterized the changes as largely memorializing DOJ’s existing practices rather than representing a fundamental shift. She explained that meritless cases account for the vast majority of DOJ-initiated dismissals, although the Department’s statutory authority is not limited to those circumstances. When asked about the frequency with which DOJ is exercising its dismissal authority, Jenny cautioned against measuring the volume of DOJ-initiated dismissals solely by the number of formal dismissal motions.
She clarified that when DOJ concludes that an action lacks merit, prosecutors may communicate that assessment to relators’ counsel when notifying counsel of DOJs declination decisions, sometimes prompting voluntary dismissal without the need for government intervention.
Jenny also offered practical guidance for defense counsel seeking dismissal. She encouraged counsel to present compelling legal and factual grounds for dismissal, approaching the issue as one would approach a summary judgment analysis. Evidence that a company disclosed the conduct at issue, acted consistently with an agency’s interpretation of applicable requirements, or otherwise has a strong legal defense may be particularly persuasive.
Jenny emphasized that DOJ’s dismissal analysis is not static, and an initial decision not to seek dismissal at the time of making a declination decision does not necessarily foreclose reconsideration later in the litigation. Although DOJ expects its initial investigation to develop the relevant facts, Jenny acknowledged that ongoing discovery efforts or other developments may reveal material new information warranting reassessment.
DOJ lawyers are now expected to, and defense counsel also should, consider whether subsequent developments provide a basis for dismissal. Since timing, transparency, and credibility are central to effective dismissal advocacy, Jenny encouraged defense counsel to bring material evidence to DOJ’s attention as early as possible and renew a request for dismissal, rather than wait until summary judgment briefing.
Jenny also addressed situations in which defense counsel believe dismissal is warranted but cannot obtain traction with the local US Attorney’s Office. She recognized that prosecutors out of the DOJ central office in Washington DC (colloquially referred to as “Main Justice”) work closely with local offices on FCA matters and occasionally receive requests to reconsider positions taken at the local level.
However, she advised that defense counsel first meaningfully engage with the local office and reach a true impasse before elevating the matter to the Civil Division. Jenny recommended that defense counsel be transparent with the local office about their intention to seek review by Main Justice and equally forthcoming with Main Justice about the substance and history of the discussions leading to the impasse.
JUSTICE MANUAL REVISIONS REINFORCE LIMITS ON SUB-REGULATORY GUIDANCE IN FCA ENFORCEMENT
Jenny also discussed recent Justice Manual revisions addressing the use of sub-regulatory guidance in enforcement proceedings. The changes reinforce the principle that agency guidance documents cannot independently impose binding legal obligations beyond those established by applicable statutes and regulations. Notably, the recent revisions clarify that DOJ cannot treat a regulated party’s awareness of an agency’s legal interpretation as an admission that the interpretation is correct.
Guidance documents may remain relevant as evidence of knowledge or other issues, subject to applicable limitations. Importantly, Jenny encouraged regulated entities that believe agency guidance improperly imposes new legal obligations to consider raising those concerns directly with the issuing agency.
For healthcare and life sciences companies operating under extensive agency guidance, these revisions underscore the importance of distinguishing binding legal requirements from nonbinding agency interpretations when evaluating compliance obligations and potential FCA exposure.
DOJ WELCOMES DATA-MINING RELATORS BUT EXPECTS MEANINGFUL FRAUD INDICATORS
Jenny discussed DOJ’s Fraud Oversight through Careful Use of Statistics (FOCUS) initiative, announced in April to facilitate engagement with whistleblowers who use data analytics to identify potential fraud. While recognizing the value of sophisticated data analysis in identifying previously undetected misconduct, Jenny emphasized that DOJ expects data-mining relators to demonstrate strong, reliable correlations between identified patterns and actual fraud as statistical anomalies alone do not necessarily establish an FCA violation.
Jenny indicated that DOJ has already identified promising matters through data-mining submissions and is prioritizing investigations supported by compelling fraud indicators. The initiative reflects both DOJ’s interest in leveraging external analytical capabilities and its intention to direct investigative resources toward higher-quality allegations.
DOJ ENCOURAGES MORE VOLUNTARY CIVIL FRAUD SELF-DISCLOSURES, INCLUDING FOLLOWING M&A DUE DILIGENCE
Finally, Jenny addressed the recently issued first-ever Department-wide Corporate Enforcement and Voluntary Self-Disclosure Policy, as reported in our LawFlash, DOJ Issues Unified Corporate Enforcement Policy, which establishes incentives for voluntary disclosure, cooperation, and remediation in criminal matters. Jenny distinguished that criminal framework from the Civil Division’s approach to potential FCA violations.
Regarding situations in which suspected misconduct may give rise to civil FCA liability but does not rise to the level of criminal conduct, Jenny strongly suggested that companies consider disclosure through the Civil Division’s established framework.
Jenny expressed the Civil Division’s continuing interest in encouraging voluntary disclosures arising from transactional due diligence, as reported in our LawFlash, A Closer Look at DOJ’s New Safe Harbor Policy for Voluntary Self-Disclosure in M&A.
She observed that buyers sometimes identify potentially problematic legacy practices at a target company but defer addressing them until long after closing, and recognized that during post-closing integration activities, remediation of those identified practices can often be inadvertently pushed to the bottom of the to-do list. Jenny explained that if DOJ later investigates, the buyer may face questions as to why it failed to discontinue the identified practice or timely remediate the conduct.
Jenny acknowledged that companies need meaningful, predictable incentives to self-disclose, including potential reductions in FCA settlement damages multipliers. Although the availability and extent of the benefits for voluntary disclosure and cooperation remain dependent on the circumstances, her comments reinforced the Civil Division’s interest in encouraging proactive disclosure and remediation.
DOJ AND HHS ANNOUNCE NEW HEALTHCARE FCA SELF-DISCLOSURE PILOT PROGRAM
On October 22, DOJ’s Civil Division and HHS announced the new FCA SDPP, perhaps creating a long-awaited formal process for self-disclosing potential civil fraud. The pilot program is available to a broad range of healthcare industry participants, including providers, suppliers, manufacturers, payors, and other entities involved with items or services reimbursed or otherwise funded by federal healthcare programs.
To qualify, companies must voluntarily disclose potential FCA violations that were previously unknown to the federal government and have taken appropriate remedial measures to address the disclosed non-compliance. Conduct already known to the government is not eligible for resolution under the pilot program, although companies may still receive credit for voluntary disclosure and cooperation under DOJ’s existing policies.
For disclosing companies, the program establishes a repayment range of 1.25 to 1.6 times the Base Self-Disclosure Repayment, with the applicable multiplier determined by factors including the timeliness of disclosure, scope and duration of the misconduct, involvement of senior leadership, financial benefit to the company, and remediation of misconduct involving successor liability.
Participating companies are eligible to receive coordinated civil relief, including a federal FCA release without the imposition of a Corporate Integrity Agreement or civil monetary penalties.
Notably, the pilot program also contemplates relief from certain CMS administrative remedies, including CMS’s commitment not to seek Medicare enrollment revocation as part of a qualifying resolution. The program illustrates how CMS’s existing enrollment revocation authority and newly delegated permissive exclusion authority, as discussed in our October 19 blog post, HHS Secretary Delegates Permissive Exclusion Authority to CMS: What Does This Mean?, may factor into coordinated FCA resolutions, although questions remain regarding how CMS will exercise or waive its permissive exclusion authority in future settlements.
For healthcare and life sciences companies, the new pilot program adds an important consideration to evaluating potential FCA exposure, particularly where misconduct is identified before government scrutiny begins. By offering a defined repayment framework, the initiative may alter the calculus surrounding voluntary disclosure, although companies will need to assess the strength of potential FCA allegations, the scope of available releases, and the consequences of participation before determining whether disclosure is warranted.
