What DOJ Intervention in FCA Suit Means for Private Equity Firms

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The U.S. Department of Justice's unusual decision to intervene in a False Claims Act lawsuit against a private equity firm as the majority owner of a pharmacy allegedly involved in a fraudulent scheme should grab the attention of general counsel at such firms, a legal expert said.

But it is too early to tell whether the case represents a new health care fraud enforcement trend for the federal government, or is just a one-off based on the circumstances of the alleged conduct, the expert said.

The government announced in December its intent to intervene in a civil qui tam lawsuit filed in the U.S. District Court for the Southern District of Florida in Fort Lauderdale. The named defendants include Diabetic Care Rx, which does business as Patient Care America, a compounding pharmacy in Coral Springs, Florida; Patient Care's president and CEO Patrick Smith; and its chief operating officer, Matthew Smith, as well as Riordan, Lewis & Haden, a Southern California-based private equity firm and majority owner of Patient Care America.