On November 19, 2020, the U.S. Department of Justice announced that it had entered into settlement agreements with a Johnson & Johnson subsidiary and a private equity firm, the Gores Group. The settlement with TGG related to alleged False Claims Act violations by a former TGG portfolio company. This settlement is the latest indication of a continuing trend in FCA enforcement actions against private equity firms. It underscores for private equity firms the need to assess the heightened risk of FCA liability in connection with portfolio companies operating in certain industries where FCA claims are more likely, such as in the health care and life sciences space, to incorporate such assessments into their diligence process for new acquisitions, and to consider carefully their level of involvement in the operations of portfolio companies particularly in these industries.
