Investigations Newsletter: Senior DOJ Official Michael Granston Discusses COVID Relief Enforcement, Granston Memo, and other FCA Issues

Arent Fox

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Senior DOJ Official Michael Granston Discusses COVID Relief Enforcement, Granston Memo, and other FCA Issues

Michael Granston, the Deputy Assistant Attorney General of the DOJ Civil Division, sat down this week with Jody Hunt, the former Assistant Attorney General of the DOJ Civil Division, at the American Conference Institute's 8th Annual Advanced Forum on False Claims and Qui Tam Enforcement. In a “fireside chat,” Granston highlighted the extent of the DOJ’s FCA enforcement activity. In 2020, for the 12th straight year, DOJ’s FCA recoveries exceeded $2 billion. Last year also saw more than 900 new FCA matters, 672 of which were qui tam actions.

A major topic of discussion at the conference is the DOJ’s emphasis on investigating misconduct related to COVID-19 relief funding. Granston stated that when evaluating possible pandemic relief funding cases, DOJ will look at the various requirements imposed on funding recipients, what representations recipients made when seeking funding, and how the funding was used.

Granston and Hunt also discussed private equity firm liability under the FCA. Hunt noted that in the past two years, DOJ has resolved two cases with private equity firms, suggesting that DOJ may have a new target for FCA enforcement actions. Granston explained that there is currently no specific focus on private equity firms, but to the extent that a private equity firm, or any other party, plays a substantial or foreseeable role in causing any entity to submit a false claim, it could be subject to enforcement actions.

With respect to the cooperation credit guidance issued by Hunt in 2019, Granston explained that under the policy, cooperation credit in FCA cases may be earned by voluntarily disclosing misconduct unknown to the government, cooperating in an ongoing investigation, or undertaking remedial measures in response to a violation. Granston stated that the goal of the policy is to encourage corporate policing and that since implementation of the policy, DOJ has seen increased cooperation. Granston also noted that DOJ is making an effort to highlight in press releases where a defendant has received cooperation credit in order to incentivize others to voluntarily disclose misconduct and cooperate with FCA investigations.

Granston also spoke about the DOJ’s FCA dismissal policy, outlined in a memo that Granston issued in 2018 and commonly referred to as the “Granston Memo.” Granston explained that the dismissal guidance was intended to ensure consistency and transparency across the department in its use of the FCA’s dismissal provision. He also emphasized that historically, dismissal was used sparingly, and the Granston Memo in no way changed that practice. Indeed, since the Granston Memo was issued in 2018, the government has filed a motion to dismiss in approximately 50 cases, and in 2020, DOJ moved to dismiss only six cases. According to Granston, DOJ will continue to use its FCA dismissal authority sparingly.

IRC Settles FCA Allegations for $6.9 Million

The International Rescue Committee (IRC) has agreed to pay $6.9 million to settle a False Claims Act matter involving allegations of procurement fraud. IRC, a global humanitarian aid, relief, and development nongovernmental organization, received USAID funding for humanitarian assistance programming to provide emergency assistance to internally displaced persons located in Syria. USAID’s OIG investigated allegations that IRC staff in Turkey engaged in collusive behavior and a kickback scheme with a Turkish supply ring. Specifically, IRC staff allegedly received kickbacks, steered bid procurement tenders, and permitted conflicts of interest between staff and vendors. As a result, between October 2012 and December 2015, USAID allegedly paid unreasonably high prices for goods.

The DOJ press release is here.

Multistate Investigation Results in Appx. $190 Million Settlement by Medical Device Manufacturer

The New York Attorney General announced that Boston Scientific Corporation will pay $188.6 million to resolve claims that it falsely represented the safety of its surgical mesh products by failing to sufficiently disclose risks associated with their use. The complaint alleged that Boston Scientific failed to disclose the full range of serious and irreversible complications caused by transvaginal surgical mesh, a synthetic woven fabric that is implanted in the pelvic floor to treat common health conditions in women. Millions of women were implanted with the device, and thousands allegedly suffered severe complications, including chronic pain, voiding dysfunction, and new onset of incontinence.

The agreement, which resolves claims that Boston Scientific violated the consumer protection laws of 47 states and the District of Columbia, requires Boston Scientific to implement marketing reforms, including disclosing the complications in understandable terms. The company must also disclose (a) the risk of significant complications when training health care providers on insertion and implantation procedures, and (b) any potential conflicts of interest in clinical studies or published data regarding mesh.

The NY AG press release is here.

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Arent Fox

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