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The V&E Report
Insights in Government Enforcement and Investigations

  • 12
  • June
  • 2019

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Opioid Manufacturer Files for Bankruptcy after Settling with DOJ

On June 5, the Department of Justice announced that opioid manufacturer Insys Therapeutics (Insys) agreed to settle the government’s criminal and civil investigations into an illegal marketing scheme for Subsys, an opioid spray used by adult cancer patients. The investigations are part of the DOJ’s escalating efforts to confront the opioid crisis and signal its continued commitment to address the country’s opioid issues.

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Heritage Pharmaceuticals Under Fire, Settles Criminal and Civil Charges with DOJ

On May 30, 2019, the DOJ’s Antitrust Division charged Heritage Pharmaceuticals Inc., a generic pharmaceutical company, for conspiring with its competitors to fix prices, rig bids, and allocate customers. The one-count felony information, filed on May 30 in the Eastern District of Pennsylvania, alleges that from April 2014 to December 2015 Heritage conspired with other individuals and companies to fix and maintain prices of glyburide, a medicine used to treat diabetes.1

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Supreme Court Extends the Statute of Limitations for Claims by Relators

The Supreme Court’s recent decision in Cochise Consultancy Inc. v. United States, ex rel. Hunt,1 has altered the landscape for False Claims Act (FCA) claims by expanding the period for private-party relators to bring FCA lawsuits. Under the Court’s unanimous decision in Cochise, relators can now file a complaint either six years after an FCA violation or three years after the facts of the false claim are known or reasonably should have been known by the government, up to a maximum of ten years after the date of the violation.

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New Guidelines Reward Voluntary Self-Disclosure of FCA Violations and Cooperation with DOJ

The U.S. Department of Justice (“DOJ”) announced this month its latest initiative to incentivize companies to voluntarily self-disclose potential False Claims Act (“FCA”) violations and to cooperate with DOJ during FCA investigations.1 These new guidelines, which have been incorporated into the U.S. Attorney Manual (recently renamed the Justice Manual), formalize DOJ’s established practice of decreasing FCA penalties sought when a company voluntarily discloses and actively cooperates with DOJ’s investigation into its conduct.

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  • 23
  • May
  • 2019

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Minority Report: San Francisco Bans Facial Recognition Tech Over Potential Bias, Privacy Concerns

Privacy advocates in the Bay Area have cause for celebration after San Francisco became the first municipality in the United States to pass an ordinance barring the city’s use of facial recognition technology because of the “propensity [of] facial recognition technology [to] endanger civil rights and civil liberties” and “exacerbate racial injustice.”

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FINRA Gives Broker-Dealers New Tips for Spotting Fraud and Money Laundering

On May 6, 2019, the Financial Industry Regulatory Authority (FINRA) issued Regulatory Notice 19-18 to help broker-dealers recognize and report potential fraud and money laundering. The notice does not alter the current reporting requirements for broker-dealers, but rather provides practical advice by citing 97 red flags that could signal suspicious trading activity.

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  • 15
  • May
  • 2019

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Federal Cybersecurity Regulations Pose New FCA Risk to Defense Contractors

Defense contractors who falsely claim that they are compliant with federal cybersecurity acquisition regulations may face liability under the False Claims Act (“FCA”) in light of a recent decision from the Eastern District of California. The case, United States ex rel. Markus v. Aerojet Rocketdyne Holdings, Inc.,1 demonstrates the substantial liability risk that defense contractors face as they struggle to meet the government’s cybersecurity standards.

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Clarity for Crypto: Commissioner Peirce wants the SEC to Refine Fintech Regulation

On May 9, 2019, SEC Commissioner Hester M. Peirce delivered a speech via video conference to the Securities Enforcement Forum lamenting the Commission’s failure to develop meaningful regulation in the realm of cryptocurrency and emphasizing the need for clear regulation that would be meaningful and not overly burdensome. Commissioner Peirce’s address highlighted several grey areas in the current regulatory landscape regarding cryptocurrency.

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Brace Yourself: DOJ Demonstrates it Can Adapt to Technological Advances in Healthcare Industry

Although it is sometimes difficult for regulators to keep pace with innovation, telemedicine — the use of telecommunication and information technology to provide medical care remotely — is both rapidly evolving and under intense scrutiny. Just last month, DOJ announced charges against 24 individuals in what it touts is the largest telemedicine-related fraud case to-date, demonstrating DOJ’s ability to pursue complex and rapidly changing industries such as this one.

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Investigation Outsourcing: When Do Companies Become Arms of the State?

A recent decision by a district judge in the Southern District of New York demonstrates that when a company’s outside counsel conducts an investigation in connection with a government investigation of the company, the Government’s involvement in shaping, directing and relying upon that investigation will be closely scrutinized.1 If the Government cannot demonstrate that it has not simply “outsourced” its investigative function, the company and its outside counsel may be seen as tools of the Government and arms of the State.

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Updated DOJ Guidance Provides Useful Roadmap for Implementing and Enhancing Corporate Compliance Programs

On Tuesday, the U.S. Department of Justice released perhaps the most comprehensive guidance to date on how prosecutors evaluate the design, implementation, and effectiveness of corporate compliance programs in making charging decisions, framing sentencing recommendations, and determining whether on-going corporate compliance obligations, such as the imposition of a monitor, may be necessary as part of any enforcement resolution. In announcing the release of the Criminal Division’s Evaluation of Corporate Compliance Programs guidance document (“Guidance”), DOJ Criminal Division, Assistant Attorney General Brian A. Benczkowski explained that the updated guidance is intended to align the Fraud Section’s 2017 guidance with other Department instructions and legal standards, and to provide greater transparency into prosecutors’ assessments.

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DOJ Announces First Criminal Charges Against a Distributor in the Fight Against Opioids

Last week, the U.S. Department of Justice took an important step in the fight against opioid abuse, announcing the first criminal charges against a pharmaceutical distribution company for its part in perpetuating the opioid crisis by ignoring red flags of abuse. Charges were brought against Rochester Drug Co-Operative (“RDC”), one of the ten largest pharmaceutical distributors, and two of its executives.

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  • 24
  • April
  • 2019

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Government’s Filing of Complaint Against Private Equity Company Signals New Focus on Private Equity and Other Investors

In a new development in False Claims Act (“FCA”) litigation, the United States Department of Justice (“DOJ”) has filed a complaint-in-intervention naming, among other defendants, California-based private equity firm, Riordan, Lewis & Haden, Inc. (“RLH”). The lawsuit, United States ex rel. Medrano and Lopez v. Diabetic Care Rx, LLC dba Patient Care America, et. al., No. 15-CV-62617 (S.D. Fla.), was originally brought by two former employees of Diabetic Care Rx, LLC d/b/a Patient Care America (“PCA”) acting as relators, but as permitted under the FCA, the United States has intervened in the matter.

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