Hogan Lovells explores enforcement and regulatory implications of False Claims Act in 2024

Hogan Lovells today released the “FCA Guide 2024: Looking Ahead,” on important legal developments in FCA enforcement that are expected to build in 2024. The lower courts are expected to be battlegrounds for resolving the uncertainty in the proof required to establish a violation of the FCA, at least for the foreseeable future.

“Absent further clarity from the Supreme Court, we anticipate that the lower courts will continue to struggle with the evidence needed to prove FCA cases,” partner Greg Noonan said.

Key legal topics covered by the FCA Guide include:

• Proof of scienter under the FCA — The Supervalu decision concerning scienter shows that the Supreme Court is keeping an eye on the statute, its interpretation, and the government’s methods of enforcement;

• Causation in cases based on violations of the AKS – a growing circuit split is likely to broaden as additional courts consider what quantum of evidence is required to prove that a violation of the FCA “results from” a violation of the Anti-Kickback Statute; and

• DOJ’s use of the FCA to further regulatory enforcement aims — DOJ may ramp up FCA enforcement if the ability of agencies to enforce their own regulations and guidance is weakened by the Supreme Court, or if whistleblowers continue to use the qui tam provisions of the Act to press cases based on violations of agency regulations.

The FCA guide examines particular areas where DOJ is expected to focus its enforcement resources, including its continued focus on managed care plans and private equity investors in healthcare companies; manufacturer-sponsored laboratory testing; cyber-security provisions in government contracts under the Cyber-Fraud Initiative; and in using the expanded FCA statute of limitations to pursue recoveries in COVID-19 relief loans.

“As is amply illustrated by FCA enforcement activity over the years, DOJ is more than willing to use the FCA as a vehicle for changing behavior in industries, particularly life sciences and technology,” said partner Ginny Gibson.

If, as many predict, the Supreme Court overturns or significantly narrows Chevron deference — the rule requiring judicial deference to administrative agencies’ interpretations of ambiguities in the laws they implement — it could have far-reaching implications for FCA enforcement.

“Agency interpretation of federal statutes, through regulations and guidance, is the mainstay of the ‘implied false certification’ theory of FCA liability. If the Supreme Court alters the weight to be given to the agency’s views, it could add greater uncertainty to the determination of which statements or claims constitute false or misleading representations of compliance with those regulations. This could provide fertile ground for litigation over the proper scope of FCA liability,” added partner Mike Theis.

View the FCA Guide here.