Largest Settlement to Date Announced With a PE Investor to Resolve Claims that a Portfolio Company Healthcare Provider Violated the FCA

This week, in a case we previously reported on here, a PE fund and two executives agreed to pay $25M to resolve claims that they caused the submission by a portfolio company mental health center of false claims for services that were not rendered in compliance with various state law and contractual requirements. The settlement announcement follows Judge Saris’s decision in May denying the defendants’ motions for summary judgment, allowing claims against the fund and two principals to move forward on the basis of facts that suggested they were aware of the allegedly unlawful activities through pre-investment diligence and post-close board positions and oversight of the health center’s operations yet failed to take action to bring the center’s operations into compliance.

This settlement will no doubt encourage relators’ counsel to bring and DOJ to pursue cases against other PE investors in the healthcare industry, and we will continue to report on developments in this space here.

This post is as of the posting date stated above. Sidley Austin LLP assumes no duty to update this post or post about any subsequent developments having a bearing on this post.