Printer Friendly, PDF & Email

False Claims Act enforcement risk for private equity investors

Kirk Ogrosky (kogrosky@goodwinlaw.com) is Partner and Co-Chair of Healthcare Government Enforcement & False Claims Act Defense Group, and Matt Wetzel (mwetzel@goodwinlaw.com) is Partner, Healthcare & Life Sciences, at Goodwin Procter LLP, Washington, DC.

The U.S. Department of Justice (DOJ) is using the False Claims Act (FCA)[1] to pursue private equity investors for alleged violations committed by portfolio companies.[2] While several case resolutions have become public, multiple ongoing cases remain confidential. This article describes recent FCA case settlements involving private equity and what proactive steps investors can take to protect themselves.

Private equity investors take substantial risk to provide capital when traditional lending institutions are unwilling to extend the credit necessary for businesses to innovate and expand. Any fair review of the role private equity plays in the healthcare economy must include consideration of the growth and enhancements in the delivery of care made possible by investors. During the COVID-19 pandemic alone, for example, private equity played an outsized role in the expansion of telehealth[3] and vaccine development.[4] While investors may be rewarded, casting private equity investors in a negative light is misguided. While some criticize private equity for profit-taking,[5] investors play a vital role in the development of new technology and expansion of the economy.

With a new era of heightened regulatory scrutiny and enforcement risk, investors should be aware that whistleblower attorneys who file qui tam suits on behalf of the United States are the main driver behind DOJ’s investigations. These plaintiff attorneys have found a receptive audience in both legislative and executive branches of government,[6] and those branches are pressuring DOJ to bring more cases against private equity investors—a perceived deep pocket in FCA cases.

This document is only available to members. Please log in or become a member.
 


Would you like to read this entire article?

If you already subscribe to this publication, just log in. If not, let us send you an email with a link that will allow you to read the entire article for free. Just complete the following form.

* required field