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Client Alerts 66 results

Client Alert | 4 min read | 04.01.25

For Better or MORSE: Another Settlement Under DOJ’s Civil Cyber-Fraud Initiative

On March 26, 2025, the Department of Justice (DOJ) announced that defense contractor MORSECORP Inc. (MORSE) will pay $4.6 million to settle allegations that MORSE violated the False Claims Act (FCA) by failing to comply with cybersecurity requirements and subsequently submitting false or fraudulent claims for payment in its contracts with the Departments of the Army and Air Force. This is the first FCA settlement that is based on a defense contractor’s failure to reevaluate and promptly update its self-assessment score in the Supplier Performance Risk System (SPRS) after a third-party assessment resulted in a lower score.
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Client Alert | 3 min read | 11.11.24

Allegations of a Litany of Lyin’: Penn State Settles Claims of Cybersecurity Noncompliance

On October 22, 2024, the Department of Justice (DOJ) announced that Pennsylvania State University (Penn State) will pay $1.25 million to resolve allegations that it violated the False Claims Act (FCA) by failing to comply with contractually mandated cybersecurity requirements by the Department of Defense (DoD) and National Aeronautics and Space Administration (NASA).  The announcement marks the most recent settlement under DOJ’s Civil Cyber-Fraud Initiative although, unlike prior settlements, there is no allegation of a cybersecurity incident or breach that was related to or caused by the contractor’s alleged noncompliance.
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Client Alert | 3 min read | 09.04.24

California Dental Offices Settle FCA Allegations Regarding Second-Draw PPP Loans for $6.3M

On August 8, 2024, the U.S. Attorney’s Office for the Central District of California announced a $6.3 million False Claims Act settlement with West Coast Dental Administrative Services LLC (formerly West Coast Dental Services Inc.) and its founders and former owners due to seven improper second-draw Paycheck Protection Program loans received by West Coast Dental and affiliated dental offices. 
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Client Alert | 4 min read | 09.03.24

FCA Complaint Based on PPP Information Pulled from PandemicOversight.gov Website Barred

On August 5, 2024, in United States ex rel. Relator LLC v. Howard D. Kootstra and Golden Empire Mortgage, Inc., Case No. 1:22-cv-00924-TLN-CDB (E.D. Cal.), the District Court for the Eastern District of California granted a motion to dismiss allegations that a mortgage lender made false or fraudulent statements on its Paycheck Protection Program (PPP) application in violation of the False Claims Act where the relator could not overcome the FCA’s public disclosure bar.
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Client Alert | 3 min read | 06.28.24

Supreme Court Rules Gratuity Insufficient For Conviction Under Federal Bribery Law

On June 26, 2024, a 6-3 majority of the U.S. Supreme Court narrowed the scope of federal bribery law by ruling that 18 U.S.C. § 666 does not cover gratuities provided to officials for past acts. The Court held that Section 666, which outlaws bribery of state and local officials when federal funds are involved, does not extend to “gratuities” that follow an official act, in large part because regulation of such gifts is a matter of state and local law.
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Client Alert | 2 min read | 05.02.24

False Claims Act Settlement Illustrates Value of Disclosure and Cooperation

A recently-announced False Claims Act (FCA) settlement illustrates how government contractors and other FCA defendants can take advantage of a Department of Justice (DOJ) policy that rewards voluntary self-disclosure to, and subsequent cooperation with, the government.
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Client Alert | 3 min read | 03.04.24

Counterclaims Against Compliance-Officer-Turned-Relator Survive Motion to Dismiss

A recent decision in a non-intervened qui tam suit in the Northern District of Georgia provides an example of a defendant threading the needle to avoid dismissal of its counterclaims despite those counterclaims arguably implicating the conduct that the relator alleged violated the False Claims Act (FCA). It also stands as a rare instance where a company’s counterclaims against an FCA relator have survived early court scrutiny and, as such, provides FCA defendants with a potential strategy to combat opportunistic relators.
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Client Alert | 4 min read | 10.13.23

DOJ Announces Safe Harbor for Acquirers Who Disclose Pre-Acquisition Misconduct

On October 4, 2023, Deputy Attorney General (DAG) Lisa O. Monaco announced the Department of Justice’s (DOJ) new safe harbor policy for voluntary self-disclosures made in connection with mergers and acquisitions (Safe Harbor Policy).  Following other announcements from DOJ over the past two years aimed at encouraging voluntary self-disclosures, the Safe Harbor Policy was adopted because DOJ does not want to “discourage companies with effective compliance programs from lawfully acquiring companies with ineffective compliance programs.”  Through this new policy, DOJ is aiming to incentivize acquirers to timely disclose misconduct discovered during the M&A process (including pre-closing diligence and post-closing integration).
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Client Alert | 4 min read | 09.12.23

Civil Cyber-Fraud Settlement Highlights Potential for Cooperation Credit

A False Claims Act (FCA) settlement recently announced by the U.S. Department of Justice stands at the intersection of two evolving trends:  DOJ’s increasing focus on cybersecurity lapses by government contractors as part of its Civil Cyber-Fraud Initiative, and DOJ policies incentivizing corporations to voluntarily self-disclose violations of federal law.
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Client Alert | 3 min read | 08.02.23

He’s a Material Guy in a Material World: Senator Grassley Proposes FCA Amendments to Weaken Materiality Defense Where Government Pays Despite Knowledge of Non-Compliance

The continual push and pull between the courts and Congress over the contours of the False Claims Act (“FCA”) has once again spawned proposed legislation unfavorable to FCA defendants, this time poised to curtail defense arguments that continued government payment of claims in the face of alleged noncompliance with contractual or other legal requirements demonstrates a lack of materiality.

Client Alert | 1 min read | 06.28.23

SBA OIG Believes at Least 20% of EIDL and PPP Loans Disbursed Are Potentially Fraudulent

On June 27, 2023, the Small Business Administration (SBA) Office of Inspector General (OIG) reported its estimate that SBA disbursed over $200 billion of potentially fraudulent COVID relief, including Economic Injury Disaster Loans (EIDL) and Paycheck Protection Program (PPP) loans.  These possibly fraudulent loans represent at least 17% of all EIDL and PPP funds—or 21% of all loans and grants--disbursed.  The SBA OIG estimates that the SBA disbursed $64 billion in potentially fraudulent PPP loans.
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Client Alert | 6 min read | 04.12.23

Fair Warning Protection or a “Free Pass to Fleece the Public Fisc”?: SCOTUS Takes Up the Safeco Objective Reasonableness Standard and Subjective Intent Under the FCA

Next Tuesday, April 18, 2023, the highest court in the land will hear arguments in what is poised to be the most influential False Claims Act (FCA) case since the landmark decision in Universal Health Servs. v. United States ex rel. Escobar, 136 S. Ct. 1989 (2016).  On January 13, 2023, the U.S. Supreme Court granted certiorari to hear two consolidated appeals from the U.S. Court of Appeals for the Seventh Circuit in United States ex rel. Schutte v. SuperValu Inc., 9 F.4th 455 (7th Cir. 2021) and United States ex rel. Proctor v. Safeway, Inc., 30 F.4th 649 (7th Cir. 2022).  The Court’s decision will likely have far-reaching ramifications for FCA cases involving ambiguous contractual or regulatory requirements and may also provide benchmarks for assessing the key element of scienter across all FCA cases.  
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Client Alert | 2 min read | 12.21.22

FCA Settlement Offers Reminder of the Importance of TAA and PRC Compliance

The Department of Justice has announced a $14 million False Claims Act (FCA) settlement with Coloplast, a medical product manufacturer, after Coloplast self-disclosed violations of the Trade Agreements Act (TAA) and Price Reduction Clause (PRC) while under contract with the Department of Veterans Affairs (VA).  The TAA requires contractors to furnish end products that are U.S.-made or “substantially transformed” in designated countries.  Coloplast disclosed that it misapplied the substantial-transformation standard, causing Coloplast to report incorrect countries of origin for products and to improperly retain certain products on contract after manufacturing moved to non-designated countries.  Coloplast also disclosed that it overbilled the Government by failing to provide the VA with discounts pursuant to the terms of the PRC, which normally requires tracking discounts offered to designated commercial customers and offering corresponding downward price adjustments to VA customers. 
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Client Alert | 3 min read | 09.16.22

DOJ Announces First-Ever False Claims Act Settlement with PPP Lender and Creation of COVID-19 Fraud Strike Force Teams

On September 12, 2022, the Department of Justice (DOJ) announced the first-ever settlement with a Paycheck Protection Program (PPP) lender.  The lender, Prosperity Bank, agreed to pay $18,673.50 to resolve allegations it improperly processed a PPP loan on behalf of an ineligible applicant.  The announcement coincides with DOJ’s creation of three COVID-19 fraud “Strike Force” teams designed to enhanced DOJ’s efforts to combat and prevent COVID-19 related fraud.
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Client Alert | 2 min read | 06.27.22

Procurement Collusion Strike Force Nabs Another Military Contractor in Bid Rigging Scheme

On June 23, 2022, a federal grand jury returned an indictment against Army contractor Envistacom LLC and two of its executives alleging participation in a fraudulent scheme that deprived the federal government of competition and making false representations to the government in furtherance of the conspiracy. The indictment also charged the executive as a co-conspirator, and asserts the conspirators coordinated in the preparation of so-called “competitive quotes” submitted in connection with 8(a) set aside contracts. The quotes were allegedly fraudulently inflated in order to all but guarantee the government customer would sole source the award to the conspirators’ pre-determined bidder. This indictment represents the fruits of yet another investigation by the Department of Justice’s Procurement Collusion Strike Force (“PCSF”).

Client Alert | 7 min read | 06.03.22

DOJ’s Revised Prosecutorial Guidelines: The “Ethical” Hacker Exemption

For the first time in nearly a decade, the U.S. Department of Justice (DOJ) has revised its prosecutorial guidelines for bringing criminal charges under the Computer Fraud and Abuse Act (CFAA), 18 U.S.C. § 1030. Under the revised guidelines, federal prosecutors should not pursue CFAA violations if available evidence shows an individual’s conduct consisted of, and the defendant intended, “good faith security research.” See Justice Manual (J.M.) § 9-48.000 (Revised CFAA Guidelines). These policy changes, effective immediately, provide some welcome clarity for so-called “white-hat” or “ethical” hackers, such as cyber researchers and penetration testers.
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Client Alert | 2 min read | 03.14.22

Department of Justice Settles First False Claims Act Case Under its Civil Cyber-Fraud Initiative

On March 8, 2022, the Department of Justice (“DOJ”) announced that Comprehensive Health Services LLC (“CHS”) agreed to pay $930,000 to resolve allegations that it violated the False Claims Act (“FCA”). DOJ alleges that CHS falsely represented to the State Department and Air Force that it complied with contract requirements relating to the secure storage of medical records under its contracts to provide medical services at government facilities overseas. CHS did not admit to liability in the settlement agreement.
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Client Alert | 2 min read | 10.25.21

Us Deputy Attorney General Requests Assistance From Companies in the Fight Against Cybercrime

This week, US Deputy Attorney General Lisa O. Monaco called upon private industry to assist law enforcement in fighting cybercrime. During her opening remarks at the Criminal Division of the Department of Justice’s (“DOJ”) cybersecurity roundtable, Monaco stressed that the United States is at an “inflection point” in the types of cyber threats it faces, namely that bad actors were historically nation-states but are expanding to include more private actors and criminal enterprises.
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Client Alert | 1 min read | 10.08.21

Just in Time for Halloween: DOJ Launches Cyber Enforcement Initiative Using False Claims Act

On October 7, 2021, the Department of Justice (DOJ) announced its new Civil Cyber-Fraud Initiative, focused on civil enforcement against government contractors that fail to follow cybersecurity contract requirements.  The Initiative, led by the Civil Division’s Commercial Litigation Branch and Fraud Section, will utilize the False Claims Act to combat cyber threats to sensitive information and critical systems by enforcing the government’s contractual cybersecurity standards.  The Initiative will hold accountable contractors that knowingly: 1) provide deficient cybersecurity products or services; 2) misrepresent cybersecurity compliance; or 3) fail to monitor and report cybersecurity incidents in accordance with contract requirements. 
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Client Alert | 4 min read | 07.27.21

Senator Grassley Introduces Long-Promised Proposed Amendments to the False Claims Act

On Monday, July 26, 2021, a bipartisan group of senators, led by Sen. Chuck Grassley (R-Iowa), introduced a bill titled “False Claims Amendments Act of 2021” aimed at “beef[ing[ up the government’s most potent tool to fight fraud.”
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