DOJ’s intervention against PE firm defendant may signal increased exposure for PE firms under the False Claims Act.

Earlier this year, the US Department of Justice (DOJ) sued a private equity (PE) firm in a False Claims Act (FCA) lawsuit involving a military healthcare contract held by one of the firm’s portfolio companies. That case, United States ex rel. Medrano v. Diabetic Care Rx, LLC, may suggest increased FCA enforcement efforts against PE firms. In a press release touting its intervention decision, DOJ explained: “We will hold pharmacies, and those companies that manage them, responsible for using kickbacks to line their pockets at the expense of taxpayers and federal health care beneficiaries.”