The False Claims Act Guide: 2024 and the road ahead

Below are the articles in our latest guide:

Executive summary

2024 was another defining year for False Claims Act (FCA) jurisprudence.

The Supreme Court overruled the 40-year-old Chevron doctrine, holding that courts may not defer to a federal agency’s legal interpretation simply because a statute is ambiguous. The Court’s ruling in Loper Bright Enterprises v. Raimondo creates new opportunities for FCA defendants to defend themselves in cases alleging noncompliance with agency regulations interpreting ambiguous statutes. Read more…

Update on the impact of Loper Bright on FCA jurisprudence

In Loper Bright Enterprises v. Raimondo, the Supreme Court overruled the 40-year-old Chevron deference doctrine. Under Chevron U.S.A. Inc. v. National Resources Defense Council, courts were required to defer to an agency’s reasonable interpretation of an ambiguous statute administered by the agency in certain circumstances. In a 6-3 opinion, the Court overturned that longstanding doctrine, holding that the Administrative Procedure Act (APA) “incorporates the traditional understanding of the judicial function, under which courts must exercise independent judgment in determining the meaning of statutory provisions,” and that courts may not defer to an agency’s legal interpretation simply because a statute is ambiguous. The Court rejected the argument that courts should mechanically defer to an agency based solely on the agency’s subject matter expertise, reasoning that courts may consider an agency’s special expertise without being bound by the agency’s interpretation. Read more…

DOJ’s Civil Cyber-Fraud Initiative: A growing enforcement priority

2024 was an active year for the U.S. Department of Justice's (DOJ) Civil-Cyber Fraud Initiative (Initiative). Launched in October 2021, the Initiative has seen DOJ expand on its commitment to utilizing the False Claims Act (FCA) to pursue cybersecurity-related fraud by government contractors and grant recipients. With a number of settlements executed in 2024 totaling over US$15 million in recoveries, and the filing of its first complaint-in-intervention in a qui tam action under the Initiative, DOJ sent a clear message that it will pursue individuals and entities perceived to promise more cybersecurity vigilance than they deliver. What DOJ or the agencies it represents has yet to make clear, however, is how and by what standard the government will measure adequate vigilance against contractual standards that are often vague, general, and, consequently, ambiguous. Read more… 

Constitutionality of the FCA whistleblower provision comes under renewed scrutiny

In September 2024, a decision from the United States District Court for the Middle District of Florida received national attention for ruling that the False Claims Act’s (FCA) qui tam provision is unconstitutional under the Appointments Clause of Article II of the U.S. Constitution. This decision was unprecedented, but not entirely surprising to those who closely follow FCA litigation. For over three decades, defendants litigating FCA qui tam cases in which the government declined to intervene have raised various constitutional challenges to the qui tam provision. In 2000, the Supreme Court resolved one line of arguments when it held that whistleblowers have Article III standing to litigate qui tam claims. Recently, in 2023, Justices Thomas, Kavanaugh, and Barrett signaled in dissenting and concurring opinions that the argument that the FCA’s qui tam provision violates Article II warrants further review. Although the lone trial court decision is currently an outlier, an appeal in the Eleventh Circuit is pending, setting up the potential for a circuit split at a time when three sitting Supreme Court justices have expressed interest in reviewing the issue. Defendants in FCA qui tam cases and those under federal investigation should take note of these developments. Read more… 

The post-SuperValu role of objectively reasonable interpretations of the law

Over a year and half ago, the Supreme Court held in United States ex rel. Schutte v. SuperValu Inc. that a defendant’s subjective state of mind is sufficient to establish scienter under the False Claims Act (FCA). Put differently, the government or a relator can successfully prove scienter even in situations where a defendant’s actions were objectively reasonable. In the wake of SuperValu, lower courts have begun to grapple with the question of what role, if any, a defendant’s objectively reasonable but ultimately incorrect interpretation of an ambiguous statute or regulation plays in the success or failure of FCA actions. Read more… 

Manufacturer-sponsored rare disease testing under FCA scrutiny

In May 2024, then-acting U.S. Attorney Joshua Levy identified “rare disease research and treatment and genetic testing” as a new area of focus for the U.S. Attorney’s Office for the District of Massachusetts. Recent False Claims Act (FCA) settlements and disclosed enforcement actions are a further indication that the Department of Justice is focusing its health care fraud enforcement efforts on manufacturer-sponsored testing programs, which are increasingly prevalent in the age of precision medicine and advancement of rare disease treatments. Manufacturers looking to include sponsored testing programs in their patient support programs should be aware that, if improperly structured, these programs may create risk under the federal Anti-Kickback Statute (AKS) and the FCA. Read more… 

Looking ahead

2024 was another massive year for False Claims Act (FCA) enforcement with the Department of Justice (DOJ) reporting over US$2.9 billion in recoveries for the fiscal year. The 558 settlements and judgments achieved in 2024 – the second highest total after 2023 – reflect the government’s enforcement priorities, including combating health care fraud, fraud in pandemic relief programs, and knowing violations of cybersecurity requirements in government contracts and grants. Of the US$2.9 billion recovered, over US$2.4 billion arose from qui tam suits pursued by either the government or relators. And, ensuring continued activity in the months to come, whistleblowers filed 979 qui tam lawsuits in FY2024, the highest ever in a single year. Read more… 

Click here to view the full guide.

Authored by Maria Durant, Gejaa Gobena, Michael Theis, Michele Sartori, Mitchell Lazris, Jasmeet Ahuja, Eliza Andonova, Stacy Hadeka, Katie Wellington, Ronald Wisor, Allison Caplis, Emily Lyons, Hunter Davis, Jesse Suh, Taylor Hillman, Mike Dohmann, Laura Hunter, Kayla Ghantous, Xochitl Halaby, Stephanie Walsh, Steve Bruns, Alex Ervin, and Jackson Skeen.