Becker Private Equity & Business Podcast: Episode Summary Title: False Claims Cases with David Pivnick of McGuireWoods LLP
Host: Scott Becker
Guest: David Pivnick, Leader, Lawyer, and Business Strategist at McGuireWoods LLP
Release Date: May 29, 2025

Introduction

In this insightful episode of the Becker Private Equity & Business Podcast, host Scott Becker welcomes David Pivnick, a distinguished leader and top litigator specializing in white-collar claims, particularly those involving private equity funds. The discussion delves deep into the intricacies of the False Claims Act (FCA), recent constitutional challenges, and their implications for various industries, especially healthcare.

Understanding the False Claims Act

David Pivnick begins by outlining his focus on defending False Claims Act cases, representing a diverse clientele that includes health systems, managed care insurers, and private equity funds. He emphasizes the significance of the FCA in today's legal landscape:

“I spend a lot of my time and energy defending False Claims Act cases representing a wide range of providers...and private equity funds.”
[01:52]

The False Claims Act, originally enacted during the Civil War, is designed to combat fraud against government programs. However, Pivnick points out that its scope has expanded beyond its original intent, leading to complexities and challenges in its application.

The Zafarov Case and Constitutional Challenges

A significant portion of the discussion centers around the Zafarov case, currently under appeal in the 11th Circuit. This case questions the constitutionality of the FCA's True Claims Act's key provisions (TCM), which empower whistleblowers to file lawsuits on behalf of the government.

“...whether the False Claims act and specifically its key TAM provisions allowing whistleblowers to bring lawsuits on behalf of the government is constitutional.”
[01:30]

Pivnick explains that Justice Thomas's dissenting opinion in a Supreme Court case has spurred extensive litigation challenging the FCA's constitutionality. The Zafarov case, initially decided in the Middle District of Florida with a ruling against the FCA's provisions, has been appealed with numerous amicus briefs submitted by both supporters and opponents.

Implications of a Potential Constitutional Ruling

When Scott Becker inquires about the historical resilience of the FCA and the possibility of it being struck down entirely, Pivnick provides a nuanced perspective:

“Under the Constitution...there are certain authorities that are limited to the executive...the QTM provision sort of circumvents that.”
[04:47]

Pivnick contends that the FCA's broad application, especially in healthcare, introduces policy and practical issues. For instance, minor regulatory non-compliance can lead to hefty penalties, which may be disproportionate to the alleged wrongdoing. He raises concerns about the FCA being used to target non-fraudulent conduct, thereby stretching its original purpose.

“There's a big difference between fraud and regulatory non compliance getting lumped in with fraud.”
[06:12]

If the courts rule the FCA unconstitutional, particularly its TCM provisions, whistleblowers may no longer be able to prosecute claims effectively. This outcome would predominantly impact cases where the government opts not to intervene, potentially leading to a significant reduction in FCA-related litigation.

Government Intervention in False Claims Cases

The conversation shifts to the role of the government in FCA cases. Currently, the Department of Justice (DOJ) intervenes in approximately 20-25% of such cases, a critical factor in the success rates of these lawsuits.

“In any given year, it's in that 20 to 25% ballpark that the government intervenes.”
[08:45]

Pivnick explains that government intervention is pivotal because cases where the DOJ steps in tend to have higher recovery rates, often exceeding 80-90%. Without this intervention, many FCA cases may not reach such favorable outcomes, leading to more dismissals and fewer large-scale recoveries.

Impact on the Healthcare Sector

Healthcare remains the primary focus of FCA litigation, accounting for 50-70% of filings and recovered dollars. Pivnick provides a financial overview:

“Total government fraud recoveries...typically in the 3 to 5 billion dollars range.”
[11:00]

These recoveries are predominantly sourced from the DOJ's intervention in a minority of high-stakes cases. The rest of the claims, often less severe, result in lower settlements or dismissals, reflecting the selective enforcement strategy of the government.

Concluding Insights

As the episode wraps up, Scott Becker highlights the significance of the discussed issues, noting the potential transformative impact of ongoing constitutional challenges to the FCA. The dialogue underscores the delicate balance between preventing fraud and ensuring that statutory tools like the FCA are applied judiciously without overreaching into areas of regulatory compliance.

“It's fascinating to see the ultimate impact on this, because of the 75% of the cases that the government doesn't intervene in...they're less likely to lead to successful outcomes for the plaintiff.”
[10:22]

David Pivnick's expertise offers valuable perspectives on the future of FCA litigation, especially in balancing effective fraud prevention with constitutional safeguards.

Key Takeaways

• False Claims Act's Evolution: Originally intended to address blatant fraud against the government, the FCA's scope has broadened, leading to complex legal challenges.

• Zafarov Case Significance: This pivotal case questioning the constitutional basis of the FCA's whistleblower provisions may set a precedent impacting future litigation.

• Government's Role: DOJ's selective intervention plays a crucial role in the high success rates of FCA cases, especially within the healthcare sector.

• Healthcare Sector Dominance: Majority of FCA litigation and recoveries pertain to healthcare, highlighting the sector's vulnerability to government fraud claims.

• Potential Constitutional Shift: A ruling against the FCA's TCM provisions could significantly reduce the number of FCA cases, altering the landscape of whistleblower litigation.

Conclusion

This episode provides a comprehensive examination of the current state and future prospects of False Claims Act litigation, particularly in the context of recent constitutional challenges. David Pivnick's in-depth analysis offers listeners a clear understanding of the legal dynamics at play and their broader implications for businesses and industries reliant on government contracts and funding.

For More Information:
Visit Becker Private Equity & Business Podcast or reach out to David Pivnick at McGuireWoods LLP for specialized legal insights on False Claims Act cases.