U.S. Department of Justice updates corporate fraud and False Claims Act enforcement

The U.S. Department of Justice (DOJ) has issued new directives and manual revisions aimed at refining corporate fraud enforcement and False Claims Act (FCA) litigation.

Assistant Attorney General Colin McDonald issued Directive 26-12 to the National Fraud Enforcement Division, outlining priorities for healthcare, government, tax, and trade fraud. The memorandum establishes ten factors for prosecutors to weigh when deciding whether to charge a company and creates a central Corporate Enforcement Section. The policy aims to balance an aggressive approach to pervasive misconduct with restraint to avoid disrupting legitimate business operations, specifically rewarding companies that demonstrate voluntary disclosure, cooperation, and remediation.

Additionally, the DOJ has revised sections of its Justice Manual regarding FCA enforcement. These changes reinstate a policy limiting the ability of sub-regulatory guidance documents to impose legal obligations on parties outside the Executive Branch. The revisions also mandate that attorneys assess whether to seek the dismissal of qui tam actions when the government declines to intervene, encouraging the curbing of meritless litigation.