The Boston Bar Association hosted its fifth annual White Collar Crime Conference on May 2, 2024, featuring prosecutors from the US Attorney’s Office for the District of Massachusetts (the Office) and the Office of the Massachusetts Attorney General (the AG’s Office) as well as lawyers from the defense bar.
Cooperation between white collar criminal defendants and the government, and the implications and benefits that may or may not follow, was a predominant topic, with two panels on whether and how to navigate such cooperation for both corporations and individuals. The most important takeaways for stakeholders in the life sciences and healthcare industries, however, came from the conversation with Acting US Attorney Josh Levy as well as the panel addressing the federal and state False Claims Act (FCA) enforcement priorities.
While panelists may have hinted at a perceived decrease in white collar enforcement from the Office, representatives made clear that the Office’s enforcement remains robust with several significant matters to be announced in the near future.
Insights from Acting US Attorney Levy
The conference began with a one-on-one conversation with Acting US Attorney Josh Levy, which gave attendees important insight into the state of the Office in the year following former US Attorney Rachel Rollins’s resignation. Mr. Levy addressed hard questions about his efforts to stabilize the Office, a perception of decreased white collar enforcement, and the strategic decision-making to pursue the college admissions “Varsity Blues” prosecutions. Mr. Levy urged attendees to take white collar “stats” with a grain of salt and pointed to an increase in trials over the last year and hinted at a number of significant matters in the pipeline that the Office may be addressing in the near future.
Mr. Levy also addressed the Office’s continued focus on FCA investigations and enforcement in the healthcare and life science industries, touting the Office’s deep bench of prosecutors pursuing healthcare fraud. He noted that the era of FCA cases based on “blockbuster drugs” was more or less over because those matters caused pharmaceutical companies to make meaningful changes to their practices and compliance efforts.
In light of this change, Mr. Levy expects to see an increase in FCA cases involving the rare disease space. He noted that rare diseases necessarily involve multiple interrelated stakeholders including, among others, drug manufacturers and genetic testing labs. Given the high price of these drugs and the interplay between multiple stakeholders, Mr. Levy hinted that rare disease presented opportunities for fraud and that the Office would be examining the space closely.
Enforcement Priorities
Abraham George, the Office’s Chief of the Civil Division, told the audience that the Office’s FCA enforcement priorities remain consistent from the past couple years, focusing on cases with patient harm, specifically cases related to the prescription of opioids, kickbacks, cybersecurity cases, and pandemic fraud. Mr. George brought up recent thought leadership speculating that more “complex” pandemic fraud cases were on the horizon, noting that he agreed with that perspective.
He also acknowledged the Office’s historic high in FCA litigation over the last year, which he hoped had “crested” and would return to more typical levels soon. Panelists jokingly jousted about the reason for the amount of litigation, with Mr. George making clear that he did not believe the Office’s requirement that FCA defendants admit, acknowledge, and accept responsibility for underlying facts in any settlement agreement was the driver for the increase in litigation. Like Mr. Levy, Mr. George also hinted at several settlements that the Office may be announcing in the near future.
Kevin Lownds, Deputy Chief of the Medicaid Fraud Division of the AG’s Office, provided more specific enforcement priorities. The AG’s Office is focusing on behavioral health, specifically applied behavioral analysis services for children with autism, which Mr. Lownds noted was an area rife for fraud and abuse. He also highlighted the continued focus on nursing homes and long-term care, telling the crowd that the AG’s Office was conscious of the healthcare staffing crisis and was focused instead on operators engaged in deliberate noncompliance by cutting staff to increase profits. Mr. Lownds echoed Mr. George on the state’s continued focus on the opioid crisis.
The FCA panel concluded with a discussion of the influence of private equity (PE) in healthcare, a topic that has been a high priority for the US Department of Justice. Panelists from the defense bar agreed that the government has inconsistently penalized PE companies based on their level of involvement and oversight of the companies in which they invest.
Mr. George and Mr. Lownds made clear that both offices will continue to look at PE investors through the FCA enforcement lens and will hold those companies accountable if they engage in fraud to make a return on investment. Mr. Lownds specifically noted that the AG’s Office had begun to see more PE-backed companies taking on significant debt and then telling the Office that they do not have the resources to pay damages, a tactic he indicated would not be received positively by the AG’s Office.
Cooperation, Cooperation, and More Cooperation
The predominant focus of the conference was on corporate and individual cooperation in criminal and civil investigations and cases brought by the Office. Panelists weaved cooperation into every part of the programming, even the “View from the Bench” panel during which four active Magistrate Judges for the District of Massachusetts discussed a new report reflecting changes in criminal discovery, including the Office’s agreement to identify key evidence supporting the charges filed against defendants.
Ultimately, however, the representatives from the defense bar and the Office remained entrenched in their respective positions on when—if ever—and to what extent companies should cooperate with the government. Defense attorney panelists expressed concern that the government’s understanding of “cooperation” was too close to “complete capitulation,” noting that advocacy pushing back against the government’s theory of the case could be considered uncooperative.
Representatives from the Office pushed back on that assertion, stating that defense counsel could have their clients cooperate while simultaneously advocating. The answer to the question of what amount of cooperation was sufficient to receive a more favorable resolution remained elusive, with Mr. Levy even noting that he “knows [cooperation] when he sees it.”
Key Takeaways
While this year’s conference noted a seeming decline in white collar enforcement, generally stakeholders in the healthcare and life sciences industries, especially those headquartered and/or operating in the Commonwealth of Massachusetts, should not let their guard down. Representatives from the Office and the AG’s Office will continue to focus on healthcare fraud and abuse and likely be focusing on enforcement in the rare disease space.
Stakeholders from pharmaceutical manufacturers to research institutions for clinical trials should be prepared to respond to an inquiry from the Office. Effective and strategic advocacy, including assessing if and how much cooperation with the government is required or advisable, will be crucial.
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