DOJ Targets Private Equity Firm for Portfolio Company’s Alleged Improper Kickbacks

In an unusual and potentially significant move, the U.S. Department of Justice has named as one of the defendants in a False Claims Act lawsuit a private equity firm whose portfolio company the DOJ alleges engaged in an illegal health care-related kickback scheme. As the Jones Day law firm noted in a February 27, 2018 client memo about the DOJ’s action, the inclusion of a PE firm as a defendant in this lawsuit “may indicate a sea change in terms of who the DOJ is willing to pursue in False Claims Act changes” and “could signal the DOJ’s willingness to seek to pierce the corporate veil and hold private equity sponsors accountable for the noncompliance of their portfolio companies in the health care industry.” The DOJ’s February 23, 2018 press release about the lawsuit can be found here. The DOJ’s complaint in intervention in the lawsuit can be found here.   Background Diabetic Care Rx LLC d/b/a Patient Care America (PCA) is a…

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