San Diego False Claims Act Lawyers & White Collar Crime Attorneys – Defense

Former federal prosecutors defending healthcare providers and government contractors under investigation in San Diego

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You are probably holding one of four documents.

A civil investigative demand from the Department of Justice. A subpoena from HHS-OIG, DCIS, or a federal grand jury. A target letter from the U.S. Attorney’s Office for the Southern District of California. Or nothing at all on paper — just the fact that federal agents showed up at your practice, your program office, your billing company, or your home, and asked to “talk for a few minutes.”

Whichever one it is, you are asking the same three questions right now:

What Is the False Claims Act?

The federal False Claims Act, 31 U.S.C. §§ 3729–3733, makes it illegal to knowingly submit — or cause someone else to submit — a false or fraudulent claim for payment to the federal government. It reaches government contractors billing the Department of Defense, hospitals and physicians billing Medicare or Medicaid, businesses that received PPP or SBA funds, and anyone paid, directly or indirectly, with federal dollars. “Knowingly” includes actual knowledge, deliberate ignorance, and reckless disregard for the truth — a company doesn’t need intent to defraud to face liability if it should have known a claim was false.

Most FCA cases in San Diego start one of two ways: a qui tam whistleblower lawsuit filed under seal in the U.S. District Court for the Southern District of California, or a direct government investigation opened by DOJ, HHS-OIG, DCIS, or another federal agency after an audit or data anomaly draws scrutiny.

How serious is this? What am I not supposed to do? And who do I call today?

Here is the honest answer to the first one. If DOJ has issued a civil investigative demand, a sealed whistleblower complaint against you almost certainly already exists, and the government has been working it for months. It has your claims data or your invoices. It has probably already interviewed at least one former employee. The False Claims Act exposure attached to that data is three times the government’s claimed loss plus a penalty on every single claim — and “each claim” means each CPT code on each encounter, or each invoice on each task order. Not each patient. Not each contract.

The second answer is shorter and more urgent: do not delete anything, do not correct any billing or invoicing, and do not let anyone at your organization speak to an agent without counsel present. The section below explains exactly why each of those matters.

The third answer is why this page exists.

What happens when you call Watson & Associates LLC

• You speak with a federal defense attorney the same day. There is no screening call.
• We read the CID, subpoena, or target letter with you on that call and tell you what it actually reveals — the theory, the time period, the likely relator, and whether a criminal track is running alongside it.
• You get a written first-week action plan: litigation hold scope, custodian list, employee-contact protocol, the government-communication decision, and your exclusion, revocation, or suspension and debarment risk.
• You get a straight assessment of exposure and cost. Not a pitch, and not a prediction of how your case ends — no ethical lawyer can give you that.

We represent federal defendants only. We do not represent whistleblowers, in any case, ever. There is no relator on the other side of our office, and no conflict sitting in your file.

📞 Call 1 (866) 601-5518 · Request a Confidential Case Review · Download the Free CID & Subpoena Response Checklist

What Kind of Federal Investigation Are You Actually In?

Most clients arrive believing they are in “an audit.” They are usually in something else. The document in your hand tells you which one, and each demands a different first move.

A civil investigative demand (CID) under 31 U.S.C. § 3733

This is DOJ’s False Claims Act investigative subpoena. It can demand documents, written answers under oath, and sworn oral testimony. It is used almost exclusively when a qui tam complaint has been filed under seal and the Civil Division is deciding whether to intervene.

What it means: the case has been underway for months or years. What matters: the return date is negotiable — but only through counsel, and only before it passes.

An inspector general subpoena — HHS-OIG, DoD-IG, GSA-OIG, SBA-OIG

Broad administrative authority, frequently the first visible step, often issued before DOJ Civil has committed to a theory. An OIG subpoena is not automatically criminal — but OIG agents work side by side with Assistant U.S. Attorneys on both tracks, and what you produce here follows you into whatever comes next.

Agents at the door — DCIS, NCIS, FBI, HHS-OIG

In San Diego, defense contractors most often meet the Defense Criminal Investigative Service and the Naval Criminal Investigative Service, frequently together with the FBI and IRS-CI. Healthcare providers meet HHS-OIG and the FBI. In every case the visit has the same purpose: a statement, before you have counsel.

A federal grand jury subpoena

This is criminal. It comes from the U.S. Attorney’s Office and signals that the Criminal Division — not just the Civil Division — is engaged. Documents subpoenaed to a grand jury are generally not protected by the Fifth Amendment act-of-production privilege when an entity produces them, a distinction that has ended careers.

A target letter, or an unannounced interview

A target letter states the government believes you committed a federal offense. An agent knocking at 7 p.m. is doing something different: seeking a statement while you are surprised and cooperative. Every person at your organization has the right to decline that interview and the right to have a lawyer present. Statements made in those conversations are charged under 18 U.S.C. § 1001 with regularity — even where the underlying billing or invoicing conduct is never charged at all.

Nothing on paper — but the money stopped

For providers, a payment suspension under 42 C.F.R. § 405.371, a prepayment review, or a UPIC records request is frequently the first sign of a fraud investigation rather than a routine audit. For contractors, the equivalent signals are a DCAA referral of suspected irregular conduct, a withheld progress payment, a sudden request for the incurred cost submission, or a show-cause notice. If your cash flow changed before any document arrived, treat that as the notice it usually is.

The First 72 Hours: What to Do, and What Will Make This Worse

In our experience, most of the serious damage in a federal fraud case is done in the first week — by capable, well-meaning people, before anyone calls a lawyer.

Do this now

1. Issue a written litigation hold today. Suspend auto-delete on email, text, EHR audit logs, billing systems, timekeeping and job-cost records, program files, and voicemail. Stop wiping laptops of departing staff. Document that you did it, and when.
2. Calendar the return date and route it to counsel. Section 3733 requires only a “reasonable period” to comply — commonly three to four weeks in practice. Extensions and scope narrowing are routinely negotiated, before the date, not after.
3. Designate one point of contact for all government communication. One person. In writing. Everyone else refers and reports. For contractors, that instruction includes your contracting officer and your COR — once an OIG or DOJ file is open, the CO cannot make it go away, and conversations with the CO become evidence.
4. Tell your staff their rights, without telling them what to say. Employees may speak to agents or decline, and may have counsel present. Instructing them how to answer is obstruction; informing them of their rights is not. The line matters, and counsel should draw it.
5. Separate individual exposure from entity exposure early. If you are an owner, officer, medical director, or program manager, your interests and the organization’s can diverge quickly. Better to identify that in week one than in a deposition.
6. Preserve the good-faith record. Coding guidance and LCD/NCD policies, payer correspondence, prior audit results, compliance minutes — or, on the contract side, the solicitation, the clauses, the modifications, the DCAA workpapers, the CO correspondence file, and the technical evaluations. This is the raw material of your defense, and it is exactly what routine retention policies destroy.

Do not do this

• Do not “clean up,” rebill, or reprice anything. Corrective billing or a revised invoice during an open investigation reads as consciousness of guilt, and it creates a new set of claims.
• Do not conduct an unstructured internal investigation. A review run without counsel-defined scope and privilege structure often becomes the government’s best evidence. Findings written in an unprivileged email are discoverable.
• Do not touch the suspected whistleblower. Adverse action toward a suspected relator creates independent retaliation liability under 31 U.S.C. § 3730(h) and hands the government a narrative it will use at every stage. Bring it to counsel and do nothing else.
• Do not assume “civil” means not criminal. DOJ’s Civil and Criminal Divisions coordinate on these matters by design.
• Do not disclose before you know what you have. For contractors, FAR 3.1003(a)(2) makes knowing failure to timely disclose credible evidence a cause for debarment — but “credible evidence” is a real standard, not a hair trigger, and it presumes you have done enough factual work to know what you are disclosing. Investigate under privilege first, then decide.
• Do not let your carrier, your prime, or your health system pick your lawyer by default. Read the choice-of-counsel clause. Panel counsel is selected on rate; your exposure may include exclusion, debarment, and personal criminal risk.

The reversibility rule. Everything on the “do not” list is survivable if it has not happened yet, and permanent if it has. That is why our line is answered at 2 a.m. — 1 (866) 601-5518.

Why San Diego Is a Federal Fraud Enforcement Center

This matters because it explains who is investigating you and why the Southern District of California takes these cases as seriously as it does.

San Diego runs on two streams of federal money, and both are False Claims Act territory.

Defense. Military spending accounts for 22.2% of San Diego County’s gross regional product — $61.3 billion, supporting nearly 357,000 jobs, according to the 2025 San Diego Military Advisory Council report prepared with UC San Diego’s Rady School of Management. Of that, $19.8 billion flowed to more than 2,000 companies in defense contracts. NAVWAR and Naval Information Warfare Center Pacific, Naval Base San Diego, the Navy’s ship repair and shipbuilding industrial base, and the region’s aerospace and unmanned systems sector all sit inside that number.

Healthcare. San Diego’s hospital systems, physician groups, laboratories, behavioral health and substance use treatment providers, and telehealth companies bill Medicare, Medi-Cal, and TRICARE — the last of which, in a Navy town, is a substantial and closely watched program.

The enforcement follows the money. The U.S. Attorney’s Office for the Southern District of California maintains an active Major Frauds practice and has prosecuted some of the most significant procurement fraud matters in the country. Recent and representative examples from that office:

• Seven defendants pleaded guilty to manipulating the Defense Logistics Agency’s EMALL system through three San Diego-area contractors, substituting unauthorized, overpriced goods across more than 12,000 transactions worth approximately $45 million — investigated jointly by DCIS, NCIS, the FBI, IRS-CI, and GSA-OIG.
• The president of a defense contractor pleaded guilty in March 2025 to a bribery scheme involving a Naval Information Warfare Center employee and roughly $16 million in SBA 8(a) small business contracts across about 26 contracts and task orders.
• Multiple Navy civilian employees and contractors have been charged in this district in bribery and kickback schemes tied to government contracts.

For healthcare, the same office participated in the June 23, 2026 National Health Care Fraud Takedown — 455 defendants nationally, more than $6.5 billion in alleged fraud, 90 licensed medical professionals charged — including a Southern District of California case involving a nurse practitioner alleged to have billed roughly $9.5 million in Medicare wound care claims.

None of this means your matter is a fraud case. It means the office evaluating it does this work constantly, has dedicated investigators embedded with it, and will not be persuaded by a general explanation.

Federal False Claims Act Cases We Defend: Healthcare Providers in San Diego, CA

The False Claims Act, 31 U.S.C. §§ 3729–3733, reaches anyone who knowingly presents a false claim for payment to the federal government or makes a false record material to one. In healthcare, that abstract language becomes a small number of recurring fact patterns.

Medical necessity and utilization. The theory is that services were rendered but were not reasonable and necessary — cardiology and vascular interventions, spinal procedures, hospice eligibility, inpatient versus observation status, home health certification, behavioral health length of stay. These cases are fought over clinical judgment and contemporaneous documentation, not over whether the patient existed.

Coding, upcoding, and unbundling. E/M level distribution, modifier 25 and 59 usage, incident-to billing, split/shared visits. A pattern in your data is not proof of intent, and the difference between the two is where the case is won.

Medicare Advantage risk adjustment. Diagnosis code validity, chart review and HRA programs, one-way code deletion. Now the single largest driver of healthcare FCA recoveries — the Kaiser Permanente affiliates’ $556 million resolution and Aetna’s $117.7 million resolution both landed in the first half of 2026 on risk-adjustment theories.

Anti-Kickback Statute and Stark Law predicates. Under 42 U.S.C. § 1320a-7b(g), a claim tainted by a kickback is a false claim per se. Medical director agreements, space and equipment leases, compensation formulas tied to referral volume or value, marketing arrangements, speaker programs, free or discounted services. Stark, 42 U.S.C. § 1395nn, is strict liability — intent is no defense to the underlying violation, which makes the FCA overlay especially dangerous.

Laboratory, toxicology, and genetic testing. Reflex and standing-order panels, medically unnecessary UDT confirmations, cancer genomic testing marketed to beneficiaries, and the referral arrangements behind them.

Telehealth and DME. Certification without an adequate encounter, marketing companies supplying pre-populated orders, and the arrangements among prescriber, platform, and supplier.

Substance use disorder and behavioral health. Patient brokering, urine drug testing volume, residential treatment billing — a California enforcement priority.

Hospital and health system exposure. Two-midnight compliance, physician compensation above fair market value, 340B duplicate discounts, DSH and wage index reporting, provider-based status.

Pharmacy and manufacturer arrangements. Copay foundation support, patient assistance programs, best price and Medicaid Drug Rebate reporting under 42 U.S.C. § 1396r-8, specialty pharmacy hub services.

Grant, research, and COVID-era funding. Provider Relief Fund attestations, PPP eligibility certifications, NIH grant effort reporting.

Federal False Claims Act Cases We Defend: Government Contractors and Subcontractors

Procurement fraud cases are decided on procurement documents. That is the single most important thing to understand about defending one.

A federal False Claims Act theory against a contractor almost always rests on a proposition about the contract — that a certification was false, that a cost was unallowable, that a delivered item did not conform, that a small business was not eligible. Answering it requires someone who can read the solicitation, the clauses, the modifications, the DCAA workpapers, the technical evaluation, and the correspondence file, and explain to a prosecutor why the government’s reading of them is wrong.

Cost mischarging and labor mischarging. Hours charged to the wrong contract or the wrong CLIN, direct costs booked as indirect, unallowable costs in the indirect pool, uncompensated overtime treatment, and labor category substitution — billing a senior engineer’s rate for junior work.

Cross-charging. Moving costs from a fixed-price contract onto a cost-reimbursement contract. A recurring theory in mixed-portfolio defense work.

Defective pricing. Failure to submit or disclose accurate, complete, and current cost or pricing data under the Truthful Cost or Pricing Data statute (TINA).

Product substitution and nonconforming goods. Including Buy American Act and Trade Agreements Act country-of-origin issues, counterfeit and gray-market parts, and unapproved substitutions in the supply chain.

Quality assurance and testing fraud. Certifying tests that were not performed as specified, or first-article and acceptance representations that the underlying data does not support. A recurring theory in ship repair and shipbuilding supply chains.

Small business and set-aside eligibility fraud. 8(a), SDVOSB, WOSB, EDWOSB, and HUBZone status, ownership and control, affiliation, the ostensible subcontractor rule, the nonmanufacturer rule, joint venture and mentor-protégé compliance, and pass-through allegations. These cases are investigated by SBA-OIG, usually alongside an agency OIG and DOJ.

Cybersecurity representations. DFARS 252.204-7012, NIST SP 800-171, and CMMC compliance certifications — an explicit DOJ enforcement priority, and one where no actual breach is required for liability.

Bribery, gratuities, and conflicts. Payments, meals, tickets, or employment offered to government personnel, and the procurement integrity provisions that reach them. A live and repeatedly charged theory in this district.

Customs, tariff, and origin evasion. Misdeclared country of origin or valuation, now the subject of a DOJ cross-agency trade fraud enforcement effort.

Grant and federally funded research. Allowable cost, effort reporting, and 2 C.F.R. Part 200 compliance for universities, nonprofits, and research organizations.

The trap in the small business cases

If your matter involves set-aside eligibility, understand what the government will argue about damages. Under 13 C.F.R. § 121.108, when a concern willfully misrepresents its size status to obtain a small business award, there is a presumption of loss to the United States equal to the total amount expended on the contract — not the profit, not the overcharge, the entire contract value. That figure is then subject to treble damages and per-claim penalties. The same regulation makes offering on a set-aside or self-certifying in SAM a deemed certification, and identifies the consequences: debarment under FAR subpart 9.4, FCA liability, the Program Fraud Civil Remedies Act, and criminal liability under 15 U.S.C. § 645(d), 18 U.S.C. § 1001, and 18 U.S.C. § 287.

If your matter is not described anywhere above, that is not a reason to wait. It is a reason to call and describe it.

Why the Numbers Are Worse Than the Underlying Conduct

Three features of the statute drive every decision in your case.

The math is punitive, not compensatory. Liability is treble the government’s damages plus a per-claim civil penalty of $14,308 to $28,619. Those figures took effect July 3, 2025, and they remain the operative numbers today: DOJ announced on July 15, 2026 that it was not making an inflation adjustment for 2026, because an appropriations lapse prevented the Bureau of Labor Statistics from producing the required CPI-U data and OMB directed agencies to hold at 2025 levels.

Do the arithmetic against your own billing cycle. A contractor invoicing monthly on a five-year contract has submitted roughly 60 claims — approximately $858,000 in minimum penalties before a dollar of damages is calculated, with treble damages then added on top. A physician practice submitting thousands of encounters a year is working with a far larger multiplier. Penalty stacking — how the government defines “a claim” — is frequently worth more than the damages fight, and it is where the constitutional excessiveness argument lives.

Private parties start most of these cases. Whistleblowers filed more than 780 new qui tam suits in the first half of fiscal year 2026 alone, a pace that puts the year on track to exceed FY 2025’s record of 1,297. Those complaints are filed under seal under 31 U.S.C. § 3730(b)(2) and stay sealed while DOJ investigates. Your CID is usually your first notice that any of it exists. The relator is almost always an employee, a former employee, a competitor, or a teaming partner.

The proof standard is low, and the lookback is long. Section 3731(d) sets the burden at a preponderance of the evidence — not beyond a reasonable doubt. And the word doing the most work in the statute is knowingly: under § 3729(b)(1), that means actual knowledge, deliberate ignorance, or reckless disregard, and the statute expressly requires no proof of specific intent to defraud. A rate structure nobody reviewed for three years, a certification signed by someone who never checked, a subcontractor’s origin representation taken at face value — these produce FCA liability without anyone intending to defraud anyone.

Under § 3731(b), the government has six years from the violation, or three years from when the responsible official knew or should have known, capped at ten. Closed-out contracts and conduct your staff barely remembers are squarely in scope.

The off-ramp most defendants never hear about. Under 31 U.S.C. § 3729(a)(2), the multiplier drops from treble to double damages where a defendant discloses all known information within 30 days of learning of the violation, fully cooperates, and does so before any action has commenced and without actual knowledge of an investigation. That window is narrow, it closes permanently once an investigation is under way, and the disclosure decision carries serious risk in both directions. It should be evaluated deliberately with counsel — not missed by default because no one raised it.

Civil or Criminal? Usually Both Are on the Table

This is the question clients ask first and the one most general practitioners answer too casually. There is no wall between the two tracks.

For healthcare providers, the same billing conduct that supports civil FCA liability supports charges under 18 U.S.C. § 1347 (healthcare fraud), § 1035 (false statements in healthcare matters), § 287, § 1001, and the wire and mail fraud statutes. Kickback conduct carries separate criminal exposure under 42 U.S.C. § 1320a-7b(b), and the Eliminating Kickbacks in Recovery Act, 18 U.S.C. § 220, reaches lab and treatment-center arrangements that never touch Medicare.

For government contractors, the recurring criminal statutes are:

Statute	Conduct	Maximum imprisonment
18 U.S.C. § 287	False, fictitious, or fraudulent claims to a federal agency	5 years
18 U.S.C. § 1001	Materially false statements or concealment in a federal matter	5 years (8 in specified cases)
18 U.S.C. § 371	Conspiracy to defraud the United States	5 years
18 U.S.C. § 1031	Major fraud against the United States — contracts of $1,000,000 or more	10 years
18 U.S.C. §§ 1341, 1343	Mail fraud and wire fraud	20 years

Section 1031 deserves particular attention from executives at mid-size and large contractors: it applies to any scheme involving a contract or subcontract of $1,000,000 or more, carries fines up to $5,000,000 where gross loss or gain reaches $500,000, and has a seven-year limitations period rather than the usual five.

Two consequences follow, and both are strategic:

A criminal conviction resolves the civil case against you. Under 31 U.S.C. § 3731(e), a conviction estops you from contesting those elements in the FCA action. You cannot win the civil case after losing the criminal one.

Anything you say in the civil track can be used in the criminal one. CID testimony, interrogatory answers, and documents produced to DOJ Civil are available to prosecutors. A defense built for one track that ignores the other is not a defense — it is two problems being managed by people who are not talking to each other.

We handle both tracks inside one firm, under one strategy, with former prosecutors who worked both sides of that house.

The Six Stages of a False Claims Act Case — and Where Your Leverage Actually Is

Stage 1 — The sealed complaint. A relator files under 31 U.S.C. § 3730(b). It is served on the government, not on you. You know nothing.

Stage 2 — The government investigation. DOJ works the case with HHS-OIG and the FBI, or with DCIS, NCIS, DCAA, SBA-OIG and GSA-OIG. CIDs issue. Third-party records are pulled from your clearinghouse, your billing company, your payers — or your prime, your subs, and your bank. Former employees are interviewed at home. This is where the case is decided.

Stage 3 — The intervention decision. DOJ elects to intervene or decline. Declination is the more common outcome and a materially better position — but it is earned by the record built during Stage 2, not granted automatically. And declination is not the end: relators may proceed alone, and declined cases have produced record recoveries in recent years.

Stage 4 — Unsealing and service. The complaint becomes public. For a physician group, a hospital, or a contractor with a recompete, a financing event, or a transaction pending, the business consequences begin here — independent of the merits.

Stage 5 — Motions, discovery, resolution. Rule 9(b) particularity, the public disclosure bar, first-to-file, and materiality motions. Then discovery, which in an FCA case is expensive and asymmetric.

Stage 6 — Collateral proceedings. Exclusion, revocation, licensure, suspension and debarment, corporate integrity agreement negotiation, and state analog actions — frequently running concurrently and sometimes outlasting the federal case.

Stage 2 is the entire ballgame. Counsel engaged during the investigation can correct the government’s factual assumptions, present exculpatory clinical, cost, or contract evidence, narrow the CID, and make the declination argument while it is still available. Counsel engaged after unsealing is arguing to a government that has already committed publicly.

If you are reading this holding a CID, you are in Stage 2. That is good news, and it is perishable.

The Federal Prosecutors and Procurement Officials on Your Side of the Table

Your San Diego Federal Defense Attorney Team Leads — Led by a Former Federal Prosecutor

Carolyn L. Oliver, Of Counsel and our San Diego lead, brings more than 40 years of legal experience to Watson & Associates’ federal white collar defense practice. Before private practice, she served as an Assistant United States Attorney in the Major Frauds Section of the U.S. Attorney’s Office for the Central District of California — prosecuting the same False Claims Act, healthcare fraud, and government contract fraud cases she now defends. She has sat on the government’s side of the table, seen how a case file gets built, and knows which arguments actually move a prosecutor and which ones don’t.

Read Carolyn’s full background →

She works alongside a small group of attorneys chosen for the same reason: Theodore Watson, national practice leader and a former federal agency executive admitted to practice before the Supreme Court of the United States; Chris Mancini, 45+ years as an Assistant U.S. Attorney in the Southern District of Florida, including Deputy Chief of both the Criminal and Civil Divisions; Robert “Bob” Ayers, more than 20 years defending corporate executives and public officials in fraud, bribery, and regulatory matters; and Wise D. Allen, a former Judge Advocate focused on procurement fraud and False Claims Act defense for government contractors.

This team has handled these cases from both sides of the courtroom — which is the advantage clients are actually paying for.

What this combination gives you that a general criminal defense firm cannot. These cases are won or lost on two things at once: the underlying clinical or contractual record, and the prosecutor’s assessment of whether this is a fraud case or a documentation dispute. Arguing the first to someone who has never made the second decision is how good facts get wasted. A federal criminal defense firm without a government contracts practice cannot read your incurred cost submission. A government contracts firm without criminal capability cannot defend the indictment.

Our team has done both — prosecutors who made the charging decisions, and procurement officials who built the contracts the decisions are made about.

Nationwide federal practice. Serving San Diego and all of Southern California, with offices in Denver, Colorado and Washington, DC. Our False Claims Act and federal fraud practice is federal, which means we appear in federal courts nationwide.

📞 Speak with a defense attorney now: 1 (866) 601-5518

How We Defend These Cases

There is no template. But there are six lines of attack experienced False Claims Act defense counsel evaluates in nearly every matter, and the order in which you build them shapes everything.

1. Defeat scienter — the “knowingly” element

The FCA punishes knowing falsity, not error and not disagreement. Under United States ex rel. Schutte v. SuperValu (2023), the question is what your organization subjectively believed at the time — not what a reasonable coder or auditor might have concluded later. The Fourth Circuit reinforced this in 2026 in Sheldon v. Allergan, holding the subjective standard governs disputes over regulatory interpretation.

Contemporaneous evidence is therefore decisive: the coding guidance you followed or the FAR clause you read, the MAC or contracting officer advice you requested, the compliance opinions you obtained, the ambiguity in the LCD or the solicitation itself, and the reasoning of the people who made the call. All of which is why the litigation hold in week one matters so much — the documents that prove good faith are precisely the ones a retention policy deletes.

2. Attack materiality under Escobar

Not every regulatory violation is material to payment. Universal Health Services v. Escobar (2016) made materiality a “demanding” standard and identified the strongest defense fact pattern in the statute: if the government knew about the noncompliance and kept paying, that is powerful evidence it was not material. Building it means going into CMS’s and the MAC’s records, or into the agency’s own contract file — payment history, prior audit findings, DCAA reports, CO correspondence, program guidance, and disclosures. Document-intensive work, and it wins cases.

3. Attack damages and stop penalty stacking

Government damages theories are routinely overstated. Where care was rendered and documented, or where the government received and used conforming goods and services, the correct measure is not the full billed or invoiced amount. And how the government defines “a claim” — per encounter, per line item, per invoice, per voucher — can swing exposure by an order of magnitude. When penalties dwarf actual loss, Eighth Amendment Excessive Fines arguments become live.

4. Attack the pleading and the relator

FCA complaints must satisfy Rule 9(b) particularity: the who, what, when, where, and how of actual claims submitted. Relators who describe a “scheme” without identifying specific false claims are vulnerable at the motion-to-dismiss stage — and the relator is often a biller, nurse, or program employee without access to the submission data. The public disclosure bar and first-to-file rule under § 3730(e)(4) and (b)(5) dispose of more cases than defendants expect, particularly where the relator’s information came from an OIG report, a GAO report, a prior suit, an audit, or the press.

5. Preserve the constitutional challenge

In September 2024, Judge Kathryn Kimball Mizelle held in United States ex rel. Zafirov v. Florida Medical Associates that the FCA’s qui tam provisions violate the Appointments Clause. The Eleventh Circuit heard oral argument on December 12, 2025 and, as of August 2026, has not ruled. The Third Circuit heard the same question in March 2026. No appellate court has yet adopted the holding.

We will not tell you this will save your case — it may never be adopted at all. But it costs little to preserve, it is waived if not raised, and the landscape could shift with a single opinion. Any defense lawyer handling a relator-driven case right now should be raising it and tracking both appeals.

6. Control the collateral consequences from day one

For most of our clients, this is the real exposure. A settlement is survivable. Losing your eligibility is not.

For healthcare providers, that means managing mandatory and permissive exclusion under 42 U.S.C. § 1320a-7, Medicare enrollment revocation under 42 C.F.R. § 424.535, Corporate Integrity Agreement negotiation, and state licensure and Medi-Cal participation.

For government contractors, it means suspension and debarment — and the timing is unforgiving. Suspension can be imposed on adequate evidence, before any charge or finding, and it stops new awards immediately; under FAR 9.407-4 it runs up to 12 months, extendable by 6 if legal proceedings begin. Debarment under FAR 9.406-4 generally runs up to three years, which is terminal for most contractors, and the SAM exclusion record follows the company and its principals into every teaming conversation for years afterward. FAR 9.406-2(a) makes fraud in connection with obtaining or performing a public contract a cause for debarment; FAR 9.406-2(b)(1)(vi) makes a principal’s knowing failure to timely disclose credible evidence an independent cause.

Suspension and debarment officials operate on their own timeline, in a separate forum, with a different standard of proof. Waiting for the criminal case to resolve before engaging the SDO is a mistake. Present-responsibility advocacy — governance changes, compliance remediation, personnel action, an administrative agreement — usually has to run in parallel with the civil and criminal defense, and each track constrains what you can say in the others. Counsel who treat eligibility as a post-settlement problem have already given away the leverage.

Questions Executives, Physicians, and Contractors Ask Us

Does a civil investigative demand mean we are going to be sued? No. A CID is an investigative tool under § 3733, and DOJ declines a substantial share of the qui tam cases it investigates. But it does mean a sealed complaint likely exists and the government is actively working it. What you do during the response period materially affects the intervention decision.

Can I be held personally liable, or is this just the company? Individuals are named regularly. Owners, medical directors, CFOs, program managers, and compliance officers are routinely defendants alongside the entity. Where your interests and the organization’s may diverge — and in closely held companies and physician-owned entities they often do — separate counsel may be required. We raise that in week one rather than month six.

Does the government have to prove we intended to defraud anyone? Not for civil FCA liability. Section 3729(b)(1) defines “knowingly” to include deliberate ignorance and reckless disregard, and expressly states no proof of specific intent to defraud is required. Criminal charges require a higher mental state — which is exactly why the line between the two tracks is worth fighting over early.

The errors were real, but nobody meant to defraud the government. Is that a defense? It can be a strong one. The FCA does not reach negligence, mistake, or a good-faith reading of ambiguous guidance. The work is proving your state of mind contemporaneously — which is why preserving the decision record immediately matters so much.

Should we run an internal investigation? Often yes — but only under privilege, with counsel-defined scope, and with the disclosure question analyzed before you begin. A review structured wrong produces the government’s best evidence and waives protections you cannot get back.

Are we required to self-report under the FAR mandatory disclosure rule? Under FAR 3.1003(a)(2), a principal’s knowing failure to timely disclose credible evidence of certain Title 18 violations or a civil FCA violation is a cause for suspension and debarment until three years after final payment. But “credible evidence” is a real standard, not a hair trigger. Investigate under privilege first, then decide. Disclosing prematurely, or disclosing the wrong thing, can create the case against you.

Will we be suspended or debarred while this is pending? It is possible, and it is a separate proceeding from the criminal or civil case. Suspension requires only adequate evidence and can be imposed before any charge. The realistic goal is to engage the suspension and debarment official early with a present-responsibility showing rather than waiting for the case to resolve.

Will I lose my Medicare billing privileges or my license? Those are separate proceedings with separate timelines, and they can move faster than the FCA case. Exclusion under § 1320a-7, revocation under 42 C.F.R. § 424.535, and Medical Board action each need to be managed from the beginning — not after a settlement locks in facts that trigger them.

We think we know who the whistleblower is. Can we deal with it internally? No. Any adverse action creates independent retaliation liability under § 3730(h) and gives the government a story it will tell at every stage. Route it to counsel and take no other step.

How long do we have to respond to a CID or subpoena? The document states a return date. Section 3733 requires only a “reasonable period,” commonly three to four weeks in practice. Extensions and scope narrowing are frequently negotiated through counsel — and that conversation is far harder after the date passes.

Can our contracting officer help us resolve this? No. Once an OIG or DOJ file is open, the CO has no authority to close it, and conversations with the CO become evidence. Route all contact through counsel.

Our prime / hospital system / MSO says its lawyers are handling it. Are we covered? Assume you are not. That firm represents the prime or the system. In flow-down certification, supply chain, employment, and compensation arrangements, the larger party and the smaller one frequently end up adverse. Get your own read on your own exposure.

Do you take cases outside San Diego? Yes. This is a federal practice. We defend clients in federal investigations and False Claims Act matters nationwide, and we associate local counsel where required.

What does this cost? We will give you scope and structure on the first call. Defense of a federal fraud matter is priced against exposure, and the largest cost driver by far is how late counsel is brought in.

Talk to a San Diego False Claims Act Defense Lawyer Today

If you are holding a civil investigative demand, an OIG or grand jury subpoena, a target letter, or an unsealed qui tam complaint — or if federal agents have contacted anyone at your organization — the useful next step is a conversation with counsel who defends these cases and only these cases.

Watson & Associates LLC — Federal False Claims Act, Healthcare Fraud, and Procurement Fraud Defense

Defendants only. Former DOJ prosecutors, including a former Major Frauds AUSA from the Southern District of California, alongside a former DoD procurement official, a former federal Contracting Officer, and a former SBA Senior Attorney. Civil, criminal, and eligibility tracks handled under one strategy.

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Attorney advertising. This page is general information and does not create an attorney-client relationship or constitute legal advice. Prior results do not guarantee or predict a similar outcome in any other matter. Statutory citations, regulatory provisions, and penalty amounts are current as of the date of publication and are subject to change. Watson & Associates LLC is headquartered in Denver, Colorado, with an office in Washington, DC; our practice is federal and nationwide, and we associate local counsel where required.