It was my honor to co-chair the American Conference Institute’s Eleventh Annual False Claims Act and Qui Tam Enforcement conference, which took place January 22 through 23, 2024 at the New York Bar Association in Manhattan. Co-chairs Tara Shewchuk and Gus Eiyler and I were joined by Andrea Tredenick, conference coordinator, and many of the brightest lights of the FCA bar.
About the Annual False Claims Act and Qui Tam Enforcement Conference
As I stated in my opening remarks, the ACI conference may be my favorite of the year for pure intellectual stimulation. I am a huge fan of the Anti-Fraud Coalition (formerly Taxpayers Against Fraud) and its annual conference, which brings relators’ counsel from around the country to D.C. to discuss issues common to our bar.
I also support the Federal Bar Association Qui Tam section’s annual conference, which brings together both relator and defense counsel who practice in this space. Both conferences also feature FCA government attorneys as speakers and occasional attendees. But what is unique to the ACI conference is the presence of industry leaders in domains directly affected by our statute. I find the presence of industry leaders to change the dynamic of the discussion. It pulls both relator and defense counsel away from our tried and true (and to some extent, extreme) examples and urges us to confront issues closer to the margin, leading to the deepest and most useful discussions.
Conference Panel Discussions – Day One
The Subjective Scienter Standard and Future Litigation
Our first panel was titled, “A Year After the SCOTUS SuperValu Decision: Exploring the Impact of the Subjective Scienter Standard on File Strategy and Future Litigation.” The panelists for this lively discussion were Andy Mao, a Deputy Director in the Department of Justice’s Civil Fraud Section, as well as the Department’s National Elder Justice Coordinator; Eric W. Sitarchuk, a Partner at Morgan, Lewis & Bockius LLP, and chair of the firm’s white collar and corporate investigations practice; Nicole Mastropieri, Senior Director and Legal Counsel at Teva Pharmaceuticals USA, Inc., managing government investigations and litigations and former Assistant U.S. Attorney at the U.S Attorney’s Office for the District of New Jersey; and Ethan Davis, a partner at King & Spalding LLP in San Francisco who previously served as the Acting Assistant Attorney General in charge of the Justice Department’s Civil Division and Deputy Assistant Attorney General in charge of DOJ’s Consumer Protection Branch.
This panel investigated the following:
- How defense and relator’s counsel are rethinking the strength of their cases in light of the new standard
- Is early dismissal based on lack of scienter harder to prove?
- How should defense and relator’s counsel react?
- Best strategies for advancing the defense of good faith misinterpretation of the terms of a requirement that is material to the decision to pay
- How lower courts interpret the Supreme Court’s clarifications regarding reckless disregard
- How relator’s counsel and government counsel review their cases for merit in light of the subjective scienter standard
Spotlight on Compliance
Next, we were treated to “Spotlight on Compliance: Revamping Your Third Party Due Diligence Checklist to Protect Against the FCA’s Expanding Reach,” which was brought to us by Lisa Lecointe-Cephas, Senior Vice President, Chief Ethics and Compliance Officer, and AGC, Human Health Legal, Office of General Counsel at Merck; Craig Carpenito, a partner in King & Spalding’s Special Matters & Government Investigations practice and former United States Attorney for the District of New Jersey; and Daniel Spicehandler, vice president for Compliance Commercial Divisions at Stryker.
In this session, in-house and defense counsel walked us through the questions to ask when:
- Applying recent DOJ and OIG compliance program guidance to the evolving FCA landscape
- Developing new strategies to satisfy third-party compliance
- Reviewing best practices for compliance during M&A (due diligence as well as integration)
- Fine-tuning speaker programs in healthcare and strategies to ensure the procedures and policies are being followed by agents and other third parties
- Practically scoping internal investigations and how to manage third parties during the process
- Considering how to best manage the implications of the Monaco memo, recidivism, and inter-agency collaboration
Latest Cross-Industry Trends in Civil Cyber Fraud
I had the pleasure and honor of moderating the third panel of the day, “The DOJ’s Civil Cyber Fraud Initiative in Action: The Latest Cross-Industry Trends and How Companies Can Become Compliant.” I was joined by Tirzah Lollar, a partner at Arnold & Porter in Washington, DC, and co-chair of the firm’s False Claims Act Investigations & Defense practice; Jaclyn Unis Whittaker, a partner with Morgan, Lewis & Bockius LLP; Adam Yoffie, Executive Director, Head of Compliance & Ethics Investigations and Integrity Line at Bristol Myers Squibb and former Trial Attorney in the DOJ Fraud Section’s Health Care Strike Force; Andrew O’Connor, co-leader of Ropes & Gray’s Band 1-ranked False Claims Act practice and the firm’s Health Care and Life Sciences Industry Group; and Brian Craig, Vice President and Assistant General Counsel at SAIC.
Topics of discussion in this panel included:
- Examining cybersecurity scenarios that could potentially lead to FCA recoveries
- Learning how the cyber security standards were developed and unpacking the complexity of the regulations
- Unpacking the lessons learned from FCA settlements under the initiative
- Considering overlapping cybersecurity requirements, such as HIPAA regulations in healthcare
- Balancing the cost of becoming IT compliant against the cost of being found non-compliant, and potentially facing an FCA claim
- Knowing the self-reporting considerations
The Rise of Data Realtors and Data Analytics
Things got a little spicy in the next discussion, as Relator’s counsel and Defense counsel faced off the merits of “data-driven” cases—cases in which the relator is not an insider but someone who has put together data in a significant way. The panel was titled “Crunching the Numbers: The Rise of Data Relators and DOJ Data Analytics to Identify Fraud,” led by Lee M. Cortes, Jr., the Executive AUSA for the District of New Jersey; Jonathan Kroner, relator’s counsel at Jonathan Kroner Law Office; and Scott Grubman, partner at Chilivis Grubman here in Atlanta and former Trial Attorney for the Department of Justice and AUSA in the Southern District of Georgia.
Some valuable insights covered in the discussion included:
- How does the government assess the quality and accuracy of the data they receive?
- From where does the government receive data?
- Learning how whistleblowers, relators, and their counsel use data to allege FCA violations
- Knowing the factors considered by the government before deciding to issue a CID based on data analytics
- Governmental sensitivity to the costs, financial and otherwise, associated with “big data” requests
- Navigating a strategic response to CID’s for a data-based claim
- Balancing the cost of a comprehensive response against the benefit of an investigation ending
- Exploring what an FCA defendant can argue to prevent a relator from getting past the pleading stage when the claim is based on data analytics
Navigating Procurement Fraud and Mitigating Risk
Our next panel was called “Government Contracts Under the Microscope: Navigating Procurement Fraud and Mitigating Risk.” It was another incredible lineup, as we were joined by Jaime Raich, Chief Counsel for Global Investigations for GE Aerospace and former AUSA in the Southern District of Florida; Justin Chiarodo, partner and Chair of the Government Contracts Practice at Blank Rome LLP; Nkechi A. Kanu, counsel in Crowell and Moring’s Government Contracts practice group; and Michael Gill, who recently joined Huntington Ingalls Industries (HII) as an Assistant General Counsel and Director of Investigations. Before joining HII, Mike served 22 years as an AUSA in EDVA and NDTX and as DEA’s Chief of Staff. Most recently, he served as EDVA’s Criminal Chief from 2018 through 2023 and Chair of the Criminal Chiefs’ Working Group.
Discussion topics included:
- Revisiting strategies for calculating statutory penalties and actual damages following the Ninth Circuit’s clarifications in U.S. ex rel. Hendrix v. J-M Manufacturing Co.
- Analyzing the nexus between costs charged to a government contract and the objective of the contract to avoid allegations of overcharging or misallocation of resources
- Applying theories of damages relating to subpar goods or services, and defenses against them
- Assessing theories to hold the prime contractor liable for a failure to oversee a subcontractor, and ensuring compliance and avoiding false certification throughout the supply chain and/or procurement processes
- Understanding admissions of factual liability and explicit rejections of legal liability in the Settlement Agreement
The Public-Private Partnership Between Relator’s Counsel and Government
Our last panel for Day One was “The Public-Private Partnership Between Relator’s Counsel and Government: Everything You Never Knew You Never Knew.” (Catchy, right?) It was moderated by Renee Brooker, whistleblower lawyer at Tycko & Zavareei LLP in D.C. and former Assistant Director for Civil Frauds at the U.S. Department of Justice. She was joined by Charlene Keller Fullmer, Deputy Chief for Affirmative Litigation in the Civil Division of the United States Attorney’s Office in the Eastern District of Pennsylvania; Erica Blachman Hitchings, a partner at the Whistleblower Law Collaborative LLC and former Trial Attorney in the Civil Fraud section in Washington, D.C. and AUSA in the Northern District of California; and Colette G. Mattzie, partner at Phillips & Cohen and former lawyer for the Civil Appellate section, the Tobacco Litigation Team, and staff attorney with Public Citizen Litigation Group.
This panel investigated the following:
- Exploring the relationship both when government declines to intervene, and when they intervene
- Benchmarking which factors lead to significant changes in the cadence of this relationship?
- Considering practical actions that relator’s counsel may take when the government declines to intervene
- Investigating how relator’s counsel can best reconcile the perception that their case is weak because the government declined to intervene
Conference Panel Discussions – Day Two
Enforcing and Defending Claims under the Anti-Kickback Statute and Medicare Advantage Plans
The second day started strong, looking at “Newest Trends of Enforcing and Defending Claims under the Anti-Kickback Statute and Medicare Advantage Plans.” The discussion was moderated by Jay Dewald, partner and Head of Healthcare Investigations for the United States at Norton Rose Fulbright and former NDTX Criminal Health Care Fraud Coordinator. He was joined by Miriam Glaswer Dauermann, Acting Assistant Chief of the Northeast Strike Force of the U.S. Department of Justice’s Health Care Fraud Unit; Krysten Rosen Moller, partner at Covington & Burling, LLP in Washington, D.C.; Kevin Lamb, partner at WilmerHale in Washington, DC, and a member of in the firm’s Government & Regulatory Litigation and Appellate & Supreme Court Litigation Practice Groups; and John Kokkinen, Senior Associate General Counsel for Enterprise Government Investigations at Optum and former Criminal Health Care Fraud Coordinator in D. Minnesota.
This panel analyzed notable issues regarding the Anti-Kickback Statute and causation, including:
- Implications of the 8th Circuit decision in United States ex rel. Cairns v. D.S. Medical LLC (July 26, 2022); United States v. Teva Pharmaceuticals 1.20-cv-11548 (D. Mass)(July 14, 2023); United States v. Regeneron Pharmaceuticals (D. Mass)(September 27 2023); and other recent decisions and petitions for certiorari regarding causation in FCA/AKS cases
- Examining the causation defenses from recent cases
- Considering venue selection and pleadings, considering the circuit splits on causation
- Appreciating the impact of HHS OIG’s revisions to the regulations implementing the AKS
And discussed several key issues regarding Medicare Advantage plans:
- Offering kickbacks to healthcare professionals and the waiver of co-payments
- Risk adjustment and diagnostic coding fraud
- Inappropriate restriction of beneficiary access to medically necessary care
- Submitting inaccurate information about the health status of MA plan beneficiaries
Post-Pandemic Telehealth Fraud
From there, we did a deep dive into telehealth fraud in the wake of the pandemic, in “Countering Compliance Uncertainty in the Telehealth Rules and Managing Post-Pandemic Telehealth Fraud Risks.” That panel was moderated by Jolie Apicella, partner in Wiggin and Dana’s Litigation Department and Health Care Practice Group and former AUSA in the EDNY, including time as Chief of Healthcare Fraud. She was joined by Jacob Foster, Principal Assistant Chief, National Rapid Response Strike Force, Fraud Section, Criminal Division with U.S. Department of Justice; Eric Triana, Chief Compliance Officer and Corporate Counsel at Talkiatry, a telepsychiatry practice operating in over 40 States who previously spent twelve years at the DEA, most recently as Deputy Assistant Administrator over foreign and domestic Diversion Control Operations; and Jonathan Phillips, a partner in the Washington, D.C. office of Gibson, Dunn & Crutcher, where he is Co-Chair of the FDA and Health Care Practice Group and False Claims Act/Qui Tam Defense Practice Group and former DOJ Trial Attorney.
This panel dove into:
- Enforcement trends of the DOJ’s nationwide coordinated law enforcement action to combat telemedicine, laboratory and durable equipment (DME) fraud
- Untangling HHS-OIG’s special fraud alert regarding telehealth arrangements
- Clarifying what CMS’s proposed changes to Medicare telehealth policies mean for your company and how to streamline the changes in your practice
Conducting Effective Internal Investigations When the Whistleblower is an Employee
Next up, Jason Crawford from Crowell & Moring LLP moderated the panel on “Conducting Effective Internal Investigations When the Whistleblower is an Employee: Best and Newest Practices.” He was joined by Paul Kauffman, Deputy General Counsel and Vice President in the Office of Legal Affairs at Northwell Health. Paul served for over ten years as the Chief of Civil Health Care Fraud for the U.S. Attorney’s Office for the Eastern District of New York (EDNY).
Topics of discussion in this session included:
- Reviewing the first and essential steps that should be taken when a whistleblower report of an FCA violation is reported internally
- Strategizing when the right time is to engage outside counsel to assist with an internal investigation
- Finding the balance between protecting the company without crossing into conduct that could lead to a retaliation claim from the whistleblower
- Reviewing the Department of Justice’s corporate and criminal voluntary self-disclosure programs and analyzing the advantages and disadvantages of this strategy
Navigating the Intricacies of Parallel Proceedings and Strategically Negotiating Global Settlements
Next up, Lisa Kutlin, Senior Compliance Counsel in Pfizer’s Compliance Investigations Division, moderated the panel called “A Deep Dive into Navigating the Intricacies of Parallel Proceedings and Strategically Negotiating Global Settlements.” She was joined by John Vagelatos, AUSA in EDNY and a member of the Health Care Strike Force in the Business & Securities Fraud Section; Kevin Gingras, Vice President and Corporate Head of Litigation at Lockheed Martin who previously served in multiple roles as a prosecutor with DOJ, at the FBI as Special Counsel to Director Robert Mueller, and as Deputy Chief of Staff; and Dan Suleiman, Co-Chair of the Aerospace, Defense, and National Security group at Covington & Burling LLP in Washington, D.C. who previously served in senior positions in the U.S. Department of Justice’s Criminal Division, including as Deputy Chief Staff & Counselor to the Assistant Attorney General.
Topics of discussion included:
- Identifying what factors in the CID or investigative interview suggest a criminal investigation is coming, and how to mitigate this risk without violating ethical or evidentiary rules
- Tackling the risks of adverse inferences when individuals plead the 5th and incorporating this possibility into settlement negotiations
- Knowing when to hire separate counsel for the individual and the corporation and considering the benefits and pitfalls of entering into a joint defense agreement, including how Upjohn warnings work when there is a joint defense agreement
- Developing unique strategies for settlements where DOJ insists on admissions and appreciating the potential impact of admissions
Trial Advocacy Advice from Trial and Appellate Counsel
This panel was followed by a trial-focused, star-studded panel titled “From Prep to Verdict: Trial Advocacy Advice from Trial and Appellate Counsel.” Jennifer Verkamp of Morgan Verkamp LLC and lead trial counsel from the Relator’s side were joined by Maurice Bellan, Managing Partner of Baker McKenzie, LLP in Washington, DC. And former Trial Lawyer at the US Department of Justice and Douglas Hallward-Driemeirer, Head of Appellate and Supreme Court Practice with Ropes & Gray LLP. Doug also previously worked for the DOJ, handling civil appeals and Supreme Court litigation, and was an Assistant to the Solicitor General.
This panel dove into the following:
- Contrasting how evidence is weighed differently at trial versus during the government’s investigation
- Unpacking retrospective insights from appellate counsel: the unanticipated ways that investigative efforts and first-instance pleadings harm or help the case on appeal
- Preparing the right jury instructions for complicated topics like scienter and recoveries
- Considering the use of experts
Ethical E-Discovery and Privilege in FCA Internal and External Investigations
Our final conference panel was “Demystifying Ethical E-Discovery and Privilege in FCA Internal and External Investigations.” Panelists were Lisa Podewils Korologos, an AUSA and Senior Trial Counsel in SDNY. She also serves as the SDNY Privilege Review Coordinator and as a chair of the DOJ Filter Review Working Group. She was joined by Patrick McCarthy, currently Senior Vice President and the Managing General Counsel for Fluor Mission Solutions and a former Navy JAG Corps attorney whose thirty years included multiple tours of duty in combat zones, where he held positions as Staff Judge Advocate (General Counsel) at various commands and senior staffs within the United States military, including Deputy Legal Advisor to the Chairman of the Joint Chiefs of Staff. Matthew J. Cannon is a partner at Greenberg Traurig who formerly served as a federal prosecutor. Lastly, the lovely and talented Mary Inman represented the Relator’s perspective, currently Constantine Cannon’s head of international whistleblower practice.
This panel investigated the following:
- The pros and cons of making conservative privilege decisions during investigations and extrapolating the potential impact on litigation or settlement
- E-discovery and privilege when a relator is involved in the investigation
- How to build credibility with DOJ through e-discovery production while avoiding ethical privilege violations
- Learning the tools and strategies for comprehensive e-discovery
Keynotes and special messages
Following lunch on the first day of the conference, we heard from an incredible lineup of government investigators about their current enforcement priorities in the panel called “Government Enforcement and Investigative Priorities: Exclusive Roundtable,” which was led by Kelly P. Mayo, the Director of the Department of Defense’s Defense Criminal Investigative Service; Brian Martens, Director of Strategic Projects and Initiatives with U.S. Department of Health and Human Services, Office of Inspector General; Ken Dieffenbach, Deputy Assistant Inspector General for Investigations at the U.S. Department of Energy; and Sean Leddy, Assistant Special Agent in Charge at the U.S. Food and Drug Administration’s Office of Criminal Investigations.
On the second day of the conference, we had a special interview by Kevin Andrew Chambers, Global Chair of Latham’s White-Collar Defense & Investigations Practice and the Department’s first Director of COVID-19 Fraud Enforcement of Michael Galdo, DOJ’s current Director of COVID-19 Fraud Enforcement and a Texas AUSA in charge of Cybercrime; as well as Brian Miller, the Special Inspector General for Pandemic Recovery.
After lunch on the second day, we were treated to a keynote by Jamie Ann Yavelberg, the Director of the Fraud Section in the Commercial Litigation Branch. Jamie talked about the enforcement priorities for Civil Frauds—this was a conference highlight.
“Strange bird but a beautiful statute”
As you can see, it would be hard to pull together more diverse stakeholders from the FCA world. As Charlene Fullmer, Civil Chief in EDPA said, the FCA is a “strange bird” but a “beautiful statute.” By extension, maybe we all have a bit of the strange bird in us—but it was a wonderful way to learn a lot and grow in understanding other perspectives on our “beautiful statute.”