What DOJ’s New Enforcement Plan Means for Health Care Companies

Chief among the ten new priority areas listed in the Plan is investigating and prosecuting “waste, fraud, and abuse, including healthcare fraud.” The Plan also calls out “fraud that threatens the health and safety of consumers” and “violations of the Controlled Substances Act (“CSA”) and the Federal Food, Drug, and Cosmetic Act (“FDCA”), including the unlawful manufacture and distribution of chemicals and equipment used to create counterfeit pills laced with fentanyl and unlawful distribution of opioids by medical professionals and companies.” Collectively, these health care-focused issues account for approximately one third of the delineated priority areas.

For companies in the health care and life sciences industries, these priorities likely signal a sharpened focus on interactions involving federal health care programs, patient support programs, interactions with health care professionals, and drug and device distribution and manufacture. Separate from fraud and abuse laws, the Plan uses intentionally broad language to also capture “fraud that threatens the health and safety of consumers,” which likely targets counterfeiting, misbranding, and adulteration theories in connection with the manufacture and sale of both pharmaceuticals and medical devices, as well as potentially direct-to-consumer advertising.

Enforcement of these criminal violations is yet another tool in DOJ’s arsenal to combat health care fraud. DOJ is sending a strong message of deterrence to companies: it will pursue criminal liability just as fervently as it does civil False Claims Act (“FCA”) liability. Aggressive enforcement of the FCA will continue under this DOJ, as confirmed during remarks by DOJ leadership at a Federal Bar Association’s conference in March. Last year alone, DOJ was able to recover approximately $2.9 billion (up from $2.7 billion in 2023), approximately $1.67 billion of which came from FCA recoveries in the health care space. [1] FCA investigations frequently spawn criminal enforcement actions, and matters are often investigated in parallel. Ongoing probes of Medicare Advantage, upcoding practices, and pharmacy benefit manager practices indicate that DOJ intends to make sure that 2025 and beyond will be lucrative years for FCA recoveries.

The Plan also identifies “trade and customs fraud, including tariff evasion” as a priority area, which is a high-risk area for multinational life sciences companies. Related violations could include misclassification and undervaluing of goods and other intentional efforts to circumvent tariffs and other duties related to the sale of drugs, biologics, and medical devices. In conjunction with criminal theories of liability, we foresee continued pursuit of FCA-based theories to combat any person or company that “knowingly conceals or knowingly and improperly avoids or decreases an obligation to pay or transmit money or property to the Government” or knowingly makes a false record or statement material to such an obligation under 31 U.S.C. § 3729(a)(1)(G). Discussed further in our February 3 Alert.

In addition to the listed priority areas, the Plan directs prosecutors to ensure “fairness” in corporate criminal investigations by reiterating DOJ’s historical commitment to ensuring individual accountability, with a specific focus on senior management. We anticipate a continued series of large civil and criminal recoveries for corporate liability coinciding with criminal charges for implicated individuals.

The Plan also instructs prosecutors to abide by a third tenet – efficiency – by “mov[ing] expeditiously to investigate cases and make charging decisions” to ensure that investigations “do not linger and are swiftly concluded.” While this may, at first blush, be welcome news, companies should also consider that this added time pressure may result in more aggressive investigative tactics on shorter timeframes. For instance, prosecutors may be inclined to issue subpoenas, request interviews, or expect proffers earlier in the investigative process and under accelerated timing to comply with the Criminal Division’s new directive. This, coupled with an already aggressive stance on corporate health care enforcement, may result in charging decisions based on less information and truncated engagement with companies and counsel. Companies should be ready to accelerate their responses in these investigations.

Finally, the Plan previews changes to three DOJ corporate criminal enforcement policies, as follows:

1) Expanding the DOJ Whistleblower Program to Incentivize Health Care Fraud Reporting

The Plan also introduces revisions to the DOJ’s relatively new Whistleblower Program guidance to broaden the types of qualifying reports that may be eligible for rewards, including additional health care violations. Whistleblower reports have for several years been one of DOJ’s most effective tools for ferreting out health care fraud.

When the DOJ Whistleblower Program was first launched in August 2024, it provided whistleblowers an additional avenue to report potential health care (and other) violations that were not otherwise covered under the FCA or other available whistleblower programs. In the 2024 version, the DOJ Whistleblower Program contemplated awards for reports related to health care fraud involving private insurers not subject to the FCA. These types of reports remain eligible for an award under the revised 2025 DOJ Whistleblower Program guidance; however, in addition, the revised policy extends qualifying reports to include tips related to health care fraud involving public health care programs. The revised policy also announces that reports related to “fraud against patients, investors, and other non-governmental entities in the health care industry” may qualify for recovery, provided certain procedural requirements are met.

It is also worth noting that the pilot program is a three-year-initiative. With just two years remaining, the DOJ will likely swiftly investigate tips received through the Program in an effort to promote its success and support a longer-term initiative in this area.

2) Additional Carrots for Voluntary Self-Disclosure in Criminal Matters

As described by Mr. Galeotti, DOJ also issued a revised Voluntary Self-Disclosure Policy “to simplify the policy and clarify the outcomes that companies can expect.” As summarized in our May 15 Alert, the revised policy now states that companies that meet the defined self-disclosure, [2] remediation, and cooperation requirements will be entitled to a declination – not just the presumption of a declination, as noted in the prior iteration of the policy.

The focus on incentivizing companies to proactively disclose potential criminal violations is consistent with Biden-era policies. The critical decision of whether to self-disclose misconduct continues to present important risks that need to be carefully considered. Namely, voluntary self-disclosure under the Criminal Division’s policy does not guarantee a declination by other DOJ Divisions, federal agencies, or state regulators. Similarly, disclosures to non-DOJ offices or other federal agencies, which in many cases may refer information to the Criminal Division, may not necessarily qualify as a timely disclosure to DOJ. For example, healthcare providers participating in clinical research have independent legal obligations to report certain clinical and financial data to the FDA. Such disclosures, particularly if incomplete or false, could serve the basis for criminal investigation and prosecution of clinical trial fraud. [3] Companies considering self-disclosure will also need to be prepared to meet DOJ’s expectations regarding the extent of cooperation in order to obtain the promised declination.

Ultimately, companies operating in highly regulated industries, like health care and life sciences, must carefully weigh these additional “carrots” against the risk of enforcement exposure from other agencies, including DOJ civil components that are typically more active in the health care space than criminal counterparts.

3) Reduced Reliance on Corporate Compliance Monitors in Criminal Matters

Finally, Mr. Galeotti also announced a revised Memorandum on Selection of Monitors in Criminal Division Matters (“Monitor Selection Memo”), noting that “the value monitors add is often outweighed by the costs they impose, so you can expect to see fewer of them going forward.” The Monitor Selection Memo puts forth a series of factors that prosecutors must weigh in evaluating whether to impose a monitor, which build upon prior published criteria. Ultimately, while this change decreases the likelihood that a company will have a monitor imposed in connection with a criminal resolution, it has no impact on compliance monitoring and reporting requirements that may be imposed by any other regulators, such as HHS-OIG, the US Securities Exchange Commission, or state attorneys general.