Corporate Transparency Act Enforcement Remains Paused
On January 23, 2025, the U.S. Supreme Court issued a stay of the nationwide preliminary injunction issued by a federal district court in Texas in December 2024 in the Texas Top Cop Shop litigation.
However, a second nationwide injunction against the Corporate Transparency Act (CTA) was issued earlier this month in the Smith v. Treasury litigation. The Supreme Court’s order in the Texas Top Cop Shop litigation does not specifically address the injunction in the Smith v. Treasury litigation. Because the injunction in the Smith v. Treasury litigation remains in effect, enforcement of the CTA remains paused.
FinCEN today stated that, because the nationwide injunction issued in the Smith v. Treasury litigation remains in place, reporting companies:
“are not currently required to file beneficial ownership information with FinCEN despite the Supreme Court’s action in Texas Top Cop Shop. Reporting companies also are not subject to liability if they fail to file this information while the Smith order remains in force. However, reporting companies may continue to voluntarily submit beneficial ownership information reports.”
The Texas Top Cop Shop and Smith v. Treasury litigations both originated in the U.S. District Court for the Eastern District of Texas. While the Supreme Court’s order in the Texas Top Cop Shop litigation does not specifically address the injunction in the Smith v. Treasury litigation, Foley’s CTA team would not be surprised if the injunction in the Smith v. Treasury litigation was to be stayed or lifted soon. Therefore, companies may want to keep preparing their beneficial ownership information reports so that, if CTA enforcement resumes, they will be ready to submit their required reports by the applicable filing deadlines.
Swing and a Miss: The Government Strikes Out in Pharmacy Executive Kickback Trial
Last week, the government submitted its decision to the federal court not to retry partially-acquitted pharmacy executive, Chad Beene, for conspiracy and illegal kickback allegations. At the end of last year, a New Jersey jury partially acquitted Mr. Beene on charges related to an alleged $34 million illegal kickback scheme. At trial, federal prosecutors alleged that Mr. Beene and his colleagues crafted an illegal scheme through which they paid several marketing companies illegal kickbacks for securing prescriptions of “medically unnecessary” and “exorbitantly priced” compounded medications. While three of the indicted alleged co-conspirators pleaded guilty, Mr. Beene took the case to trial and was found not guilty on six counts. The jury was unable to reach a verdict on nine additional counts. These remaining counts left the door open for prosecutors to retry the case against Mr. Beene in an attempt to secure a conviction.
A federal grand jury indicted Mr. Beene and his alleged co-conspirators in July of 2020 for allegedly using their positions as pharmacy executives at Main Avenue Pharmacy to identify the most expensive medications, such as compounded scar creams, pain creams, migraine medication, and vitamins, and create pre-written prescription pads to encourage doctors to write prescriptions that would result in the highest pharmacy reimbursement, even where the medications were not medically necessary. The defendants then allegedly disbursed the prescription pads nation-wide through their contacts with marketing companies. As part of the scheme, the marketers would pay telehealth companies and healthcare providers to authorize the prescriptions, which were then sent back to the conspirators’ pharmacy and filled. The defendants would then submit requests for reimbursement from patient’s private health insurance, Tricare, and Medicare. After receiving their reimbursements, the defendants allegedly paid kickbacks to the marketers for the prescriptions received.
Federal prosecutors argued that the signed contracts with the marketers laid out the illicit kickback arrangement with the pharmacy. In total, the defendants, along with Main Avenue Pharmacy, were alleged to have received almost $34 million in reimbursements.
Two of the defendants, Jeffrey Andrews, the former pharmacy Chief Financial Officer, and Adam Brosius, the former pharmacy Director of Business Development and President, pleaded guilty to charges of conspiracy earlier this year. The remaining defendant Robert Schneiderman had previously pled guilty in 2022 to conspiracy to commit health care fraud and conspiracy to violate the Anti-Kickback Statute. Sentencing is scheduled for June 2025.
Mr. Beene did not agree to a plea deal and proceeded to trial where he argued that there was insufficient evidence of an illegal conspiracy and that he acted in “good faith”, or, in other words, that in his honest opinion and belief his conduct was entirely legal. Mr. Beene acknowledged that he served as the National Sales Manager of the Main Avenue Pharmacy, where he used his skill and knowledge of graphic software to clean up pre-prepared prescription pads and developed marketing plans, but showed that he had no previous health care work experience. Based on his limited health care training and understanding, Mr. Beene claimed that he lacked the understanding that certain business practices, such as commission-based payments to marketers or insufficient oversight of prescription authorizations, could be considered unlawful. Witnesses against Mr. Beene included his alleged co-conspirators Brosius and Schneiderman, others who worked at the pharmacy, and pharmacy patients.
The trial record indicates that the jury intently reviewed the evidence and jury instructions, sending notes to the judge during deliberations asking for specific pieces of evidence or copies of relevant statutes. In their verdict, the jury acquitted Mr. Beene of all counts related to the allegations that he caused the pharmacy to submit allegedly fraudulent claims to Medicare and other health care plans. However, after five days of deliberations, the jury could not come to a conclusion on the counts of conspiracy to commit health care fraud or to violate the Anti-Kickback Statute and other alleged payments of illegal kickbacks. The government’s conspiracy theories rested on Mr. Beene entering into an agreement with others to commit the crimes. After the verdict was issued, a juror reached out to defense counsel offering to speak regarding the verdict offering to answer any questions about the case and stating “ . . . I want you to know your team did a fantastic job at trial . . . I wanted to ensure I exhausted all options in securing a Not Guilty verdict on all counts. We were so close . . . I am unsure of the chances for a retrial, but the government’s case is weak.”
Mr. Beene’s acquittal is a reminder that the government does not win every case it brings to trial, especially where the regulations are complex and intent is not easily proven. In heavily regulated industries like health care, it can be difficult for industry participants to parse through convoluted regulatory framework. For jurors without any health care industry experience, it can be even more difficult to understand or focus on the non-criminal intent behind convoluted business practices. While the Department of Justice continues to aggressively pursue health care fraud cases, Mr. Beene’s acquittal shows that proving illicit intent in the midst of the increasing complexities of regulatory compliance is difficult and a conviction is not a foregone conclusion simply because the government alleges that individuals “knew” that their conduct was improper. The government must prove knowledge beyond a reasonable doubt.
A Ticking Time Bomb—Universal Injunctive Relief at Risk – SCOTUS Today
The U.S. Supreme Court has stayed the nationwide injunction that had been blocking the enforcement of the Corporate Transparency Act (CTA) while the merits of the CTA are pending a decision in the U.S. Court of Appeals for the Fifth Circuit, which will hear oral argument on March 25 in McHenry v. Texas Top Cop Shop, Inc.
The CTA requires more than 32 million existing businesses to disclose their beneficial owners. That number is expected to grow by five million new businesses per year. Texas Top Cop Shop, a firearms retailer, has challenged the CTA’s constitutionality.
During this interim period, it is unclear what, if any, action the Treasury Department’s Financial Crimes Enforcement Network (FinCEN) will take. Today’s decision does not reinstate the previous January 13 filing deadline. Throughout the tortured history of this case, FinCEN has updated earlier compliance deadlines, but with a new administration, it is possible for the agency to await the action of the Fifth Circuit, which many believe is a commodious environment for firearms purveyors. Others stress the importance of a law designed in part to disclose foreign and domestic criminals who use anonymous U.S. companies to launder profits from drugs such as fentanyl or mask cybercrime-related transactions.
The purpose of this post is not to give legal advice but to describe important developments in the law. We do recommend that affected businesses consult with their own counsel as they survey the road ahead. We also caution, with respect to this current chapter in the life of the CTA, that there is a ticking time bomb that not only might undermine the enforcement of this act but also might augur fundamental change to the remedies available across administrative law writ large.
The Supreme Court’s order is a simple one, occupying eleven lines of text. What follows that text, also concise, is potentially more important. Justice Jackson dissented from the grant of the stay, believing that imminent injury is unlikely given the expedition being offered in the Fifth Circuit. However, the more impactful statement is that of Justice Gorsuch, who concurred in the granting of the stay. In doing so, he stated that he not only agreed “that the government is entitled to a stay of the district court’s universal injunction” [emphasis added], but that he would “go a step further and . . . resolve definitively the question whether a district court may issue universal injunctive relief.”
The issue of the geographic scope of injunctive relief has been discussed before in this blog and elsewhere, but Justice Gorsuch is attempting to give it new energy.
With what many observers think will be the retirement of at least one justice during the new Trump term and President Trump’s likely appointment of a significantly right-of-center successor adding to that leaning in the Court, it is not improbable for Justice Gorsuch’s preference to gain sufficient traction to provide at least the necessary four votes to grant cert. in a given case, and maybe a fifth vote to set off the decisional explosion. This is an issue upon which I’d place the “to be confirmed” warning label.
EU Updates Codes of Conduct on Countering Illegal Hate Speech Online
The European Commission has strengthened its framework for combating illegal hate speech online through an enhanced Code of Conduct, building upon the success of its 2016 predecessor. This updated version, known as the Code of Conduct on countering illegal hate speech online +, aligns with the Digital Services Act (DSA) and represents a significant step forward in the EU’s efforts to create a safer digital environment.
The Code brings together major technology platforms as signatories, including established participants like Google (YouTube), Meta platforms, and Microsoft, alongside newer additions such as TikTok, LinkedIn, and Twitch. These companies have committed to reviewing the majority of illegal hate speech notifications within 24 hours, with an ambitious target of processing at least 67% of notices from designated Monitoring Reporters in this timeframe.
Key improvements in the updated Code include enhanced transparency requirements, structured monitoring processes, and strengthened multi-stakeholder cooperation. Signatories must maintain clear terms and conditions prohibiting illegal hate speech and implement efficient notice-and-action mechanisms in compliance with the DSA.
The Code introduces a robust monitoring framework involving specialized Monitoring Reporters – non-profit or public entities with expertise in illegal hate speech. Annual monitoring exercises will evaluate the performance of signatories, with results published by the European Commission.
A notable innovation is the establishment of regular exchange forums for sharing best practices and addressing emerging challenges. The Code also emphasizes the importance of awareness-raising initiatives and educational programs to promote online civility and counter-narratives.
While voluntary in nature, this Code serves as a practical framework for implementing DSA requirements specifically related to illegal hate speech, demonstrating the EU’s commitment to combining regulatory oversight with industry collaboration in the fight against online hate speech, which is becoming increasingly relevant in the current global political climate.
Apple’s PFAS Consumer Fraud Lawsuit the Latest in Growing Trend
Directly on the heels of our article this week regarding the latest PFAS consumer fraud lawsuit (this time, against Samsung for its smart watches), Apple finds itself in a similar lawsuit over its smartwatches. The number of product types targeted for these lawsuits are growing and diverse in terms of the industries targeted. While there has been at least one significant settlement in these lawsuits to date, recently a few of the lawsuits that we previously reported on related to PFAS consumer fraud allegations were dismissed by separate courts.
However, this has not deterred plaintiffs from filing these types of cases, and in fact there are other lawsuits that successfully defeated Motions to Dismiss. The latest PFAS consumer fraud lawsuit targets Apple and shows that the number of consumer fraud lawsuits is likely to continue, and consumer goods industries, insurers, and investment companies interested in the consumer goods vertical must pay careful attention to these lawsuits.
PFAS Consumer Fraud Lawsuit – Overview
The consumer fraud PFAS lawsuits filed to date follow a very similar pattern: various plaintiffs bringing suit on behalf of a proposed class allege that companies market consumer goods as safe, healthy, environmentally friendly, etc., or that the companies themselves market their corporate practices as such, yet it is allegedly discovered that certain products marketed with these buzzwords contain PFAS. The lawsuits allege that since certain PFAS may be harmful to human health and PFAS are biopersistent (and therefore environmentally unfriendly), the companies making the good engaged in fraud against consumers to entice them to purchase the products in question.
In the Complaints, plaintiffs typically allege the following counts:
Violation of state consumer protection laws and the federal Magnuson-Moss Warranty Act
Violations of various state consumer protection laws
Breach of warranty
Fraud
Constructive fraud
Unjust enrichment
The plaintiffs seek certification of nationwide class action lawsuits, with a subclass defined as consumers in the state in which the lawsuits are filed. In addition, the lawsuits seeks damages, fees, costs, and a jury trial. Representative industries and cases that have recently been filed include:
Cosmetics industry:
Brown v. Cover Girl, New York (April 1, 2022)
Anderson v. Almay, New York (April 1, 2022)
Rebecca Vega v. L’Oreal, New Jersey (April 8, 2022)
Spindel v. Burt’s Bees, California (March 25, 2022)
Hicks and Vargas v. L’Oreal, New York (March 9, 2022)
Davenport v. L’Oreal, California (February 22, 2022)
Food packaging industry:
Richburg v. Conagra Brands, Illinois (May 6, 2022)
Ruiz v. Conagra Brands, Illinois (May 6, 2022)
Hamman v. Cava Group, California (April 27, 2022)
Azman Hussain v. Burger King, California (April 11, 2022)
Little v. NatureStar, California (April 8, 2022)
Larry Clark v. McDonald’s, Illinois (March 28, 2022)
Food and drink products:
Bedson v. Biosteel, New York (January 27, 2023)
Lorenz v. Coca-Cola, New York (December 28, 2022)
Toribio v. Kraft Heinz, Illinois (November 29, 2022)
Apparel products:
Krakauer v. REI, Washington (October 28, 2022)
Hygiene products:
Esquibel v. Colgate-Palmolive Co., New York (January 27, 2023)
Dalewitz v. Proctor & Gamble, New York (August 26, 2022)
Feminine hygiene products:
Gemma Rivera v. Knix Wear Inc., California (April 4, 2022)
Blenis v. Thinx, Inc., Massachusetts (June 18, 2021)
Destini Canan v. Thinx Inc., California (November 12, 2020)
Latest PFAS Consumer Fraud Lawsuit
In Dominique Cavalier and Kiley Krzyzek v. Apple Inc., the plaintiffs alleges that they purchased various Apple smart watches designed to encourage and support personal fitness goals of consumers. The products, plaintiffs argue, were marketed as promoting human health, environmentally sustainable, and suitable for everyday use and wear. Upon testing, the watches were found to have various types of PFAS. Plaintiffs allege that they were therefore deceived by Apple, and never would have purchased the product if they knew that they contained PFAS. Plaintiffs seeks a class certification of all purchasers of the products in question for the time period in question, with a subclass of all purchasers of the products from California.
Recent Rulings In Consumer Fraud PFAS Lawsuits
In California, the Yeraldinne Solis v. CoverGirl Cosmetics et al. case made allegations that cosmetics were marketed as safe and sustainable, yet were found to contain PFAS. The defendants in the lawsuit filed a Motion to Dismiss, arguing in relevant part that the plaintiff had no standing to file the lawsuit because she did not sufficiently allege that she suffered any economic harm from purchasing the product. The plaintiff put forth two theories to counter this argument: (1) the “benefit of the bargain” theory, under which the plaintiff alleged that she bargained for a product that was “safe”, but received the opposite. The court dismissed this argument because the product packaging did not market the product as safe, and the ingredient list explicitly named the type of PFAS found in testing; and (2) an overpayment theory, under which plaintiff alleged that if she knew the product contained PFAS, she would not have paid as much for it as she did. The Court dismissed this argument because the product packaging specifically listed the type of PFAS at issue in the case.
In Illinois, the Richburg v. Conagra Brands, Inc. alleged that popcorn packaging was marketed as containing “only real ingredients” and ingredients from “natural sources”, yet the popcorn contained PFAS (likely from the packaging itself), which was allegedly false and misleading to consumers. The defendant moved to dismiss the lawsuit on several grounds and the Court found in defendant’s favor on one important ground. The Court held that the statements on the popcorn packaging would not mislead an ordinary and reasonable consumer because a consumer would understand “ingredients” to mean those items that are required to be disclosed by the FDA and not materials that may have migrated to the food from the product packaging. In fact, the Court ruled that the FDA “exempts substances migrating to food from equipment or packaging;” and those “do not need to be included in the ingredients list.” The defendant argued that reasonable consumers would not consider PFAS to be an “ingredient” under this regime. In other words, whether or not PFAS migrated into the popcorn, the representations that the popcorn contained “only real ingredients” and “100% ingredients from natural sources” were “correct as a matter of law.” The court dismissed plaintiffs claims on this basis.
Conclusion
Several major companies now find themselves embroiled in litigation focused on PFAS false advertising, consumer protection violations, and deceptive statements made in marketing and ESG reports. The lawsuits may well serve as test cases for plaintiffs’ bar to determine whether similar lawsuits will be successful in any (or all) of the fifty states in this country. Companies must consider the possibility of needing to defend lawsuits involving plaintiffs in numerous states for products that contain PFAS. It should be noted that these lawsuits would only touch on the marketing, advertising, ESG reporting, and consumer protection type of issues. Separate products lawsuits could follow that take direct aim at obtaining damages for personal injury for plaintiffs from consumer products. In addition, environmental pollution lawsuits could seek damage for diminution of property value, cleanup costs, and PFAS filtration systems if drinking water cleanup is required.
While the above rulings are encouraging for companies facing consumer fraud PFAS lawsuits, it is far too early to tell if the trend will continue nationally. As the recent California case shows, plaintiffs continue to file PFAS consumer fraud cases despite the recent dismissals. Different courts apply legal standards differently and these cases are very fact specific, which could lead to differing results. This has been the case in several jurisdictions, where PFAS consumer fraud cases have been permitted to proceed to litigation after initial challenges were made.
It is of the utmost importance that businesses along the whole supply chain in the consumer products industry evaluate their PFAS risk. Public health and environmental groups urge legislators to regulate PFAS at an ever-increasing pace. Similarly, state level EPA enforcement action is increasing at a several-fold rate every year. Now, the first wave of lawsuits take direct aim at the consumer products industry. Companies that did not manufacture PFAS, but merely utilized PFAS in their manufacturing processes, are therefore becoming targets of costly enforcement actions at rates that continue to multiply year over year. Lawsuits are also filed monthly by citizens or municipalities against companies that are increasingly not PFAS chemical manufacturers.
Detention Bill ‘Laken Riley Act’ Heads for President’s Signature
The Laken Riley Act is the first bill that will come to President Donald Trump’s desk for signature as the 47th President.
Passed with bipartisan support, the bill:
Mandates the detention and possible deportation of migrants who enter the country without authorization and are charged with, arrested for, or convicted of:
Theft-related crimes, including burglary, theft, larceny, and shoplifting
Assaulting a police officer
Crimes resulting in death or serious bodily injury, including drunk driving that results in death or serious bodily injury
Gives states the right to sue the federal government if an individual with uncertain legal status is paroled into the country and commits a crime against a state or an individual (causing physical or financial harm “in excess of $100”)
Three criticisms of the bill are:
Individuals (who may be innocent) can be detained and deported even if they have not been convicted of a crime
It does not include funding, but enactment will require a significant increase in U.S. Immigration and Customs Enforcement (ICE) capabilities for enforcement and detention facilities, including an estimated cost of $27 billion (up from $3.2 billion) in the first year
ICE estimates 110,000 people would be eligible for detention under the bill
ICE also believes it would need to expand detention beds to 151,500, up from 41,500
It focuses on lesser offenders, making it difficult for ICE to go after more egregious offenders
The Laken Riley bill is named after a Georgia nursing student who was killed by an undocumented immigrant who had previously been convicted of shoplifting. Although research indicates that immigrants commit fewer crimes than those born in the United States, Republicans maintained that if this bill had been in effect, Ms. Riley would not have been murdered.
5 Trends to Watch: 2025 Financial Services Litigation
Increasing Focus on Payments — Payments litigation will likely continue and increase in 2025 in the United States and globally, along with increased use of Automated Clearing House (ACH) transfers and wires, bank and non-bank competition, state regulation, and more sophisticated fraud schemes. This trend should continue regardless of the incoming administration’s enforcement priorities. Borrowing from Europe, the United States could see increasing pressure for a Payment Services Regulation or other laws to shift more risk of payment fraud to financial institutions. State-based efforts to regulate interchange fees may create additional risk.
Increasing Use of Mass Arbitration and Rise of International Arbitration — Mass arbitration in the United States is likely to continue and increase, particularly as plaintiffs’ counsels become more equipped, efficient, and coordinated at lodging these attacks. International arbitration also is likely to increase, given globalization and diversification, driven by the growing complexity of cross-border issues. The strategic advantage of leveraging global litigation offices in regions like Latin America, Europe, and the Middle East will be crucial, as these areas continue to be hot spots for international business activities and disputes. Reliance on local knowledge will become increasingly important as parties seek more efficient and culturally sensitive resolutions.
Anti-Money Laundering (AML), Know Your Customer (KYC), and Compliance-Related Issues — There was increased activity over the past year on AML-related matters globally, and this trend appears likely to continue. This increase also is likely to carry over to civil litigation, including complex fraud and Ponzi schemes and allegations relating to improper asset management or trust disputes, where financial institutions are being more heavily scrutinized over actions taken by their customers, and the plaintiffs’ bar is expected to try to create more hospitable case law and jurisdictions. As regulatory scrutiny intensifies globally, financial institutions will continue to find themselves at the intersection of civil litigation and concurrent regulatory/criminal investigations, creating additional risks. The growing complexity of these cases underscores the need for banks to maintain vigilance and adaptability.
Changing Enforcement and Regulatory Risks — A slowdown of Consumer Financial Protection Bureau (CFPB)-related activity, including a relative slowdown of crypto enforcement, could take place over the course of the year due to the change of administration and agency leadership, but there could be an increase in certain states’ attorneys general activity. State-based regulation and legislation would pose additional risks, creating jurisdictional and other challenges. State regulatory agencies may continue enforcement efforts related to consumer protections in the financial services space. There also may be continued focus on fair lending practices, with potential litigation concerning artificial intelligence’s (AI) role in lending or other decisions. The rise of digital currencies also has introduced new legal challenges. Cryptocurrency exchanges are being held accountable for frauds occurring on their platforms and ongoing uncertainties in digital asset regulations are resulting in compliance challenges and related litigation.
Information Use and Security — The increasing use of new technologies and AI likely will result in increased risks and a rise in civil litigation. Litigation may emerge over AI tools allegedly infringing on copyrights. Another area would be AI-based pricing algorithms being scrutinized for potential collusion and antitrust violations or discrimination and bias. More U.S. states are proposing and passing comprehensive AI and other laws that do not have broad financial institution or Graham Leach Bliley Act-type exemptions, so there could be additional regulation. States also could continue efforts to pass new laws in the privacy area to address areas not currently regulated through federal laws.
HHS-OIG Issues Favorable Opinion on Free Vaccines Offered by Drug Manufacturer to Patients Receiving Its Treatments
Highlights
A favorable opinion from HHS-OIG involves a drug manufacturer covering the costs of meningococcal vaccines for patients with increased risk of infections due to the manufacturer’s drug treatments
The HHS-OIG found the proposed arrangement improved patient safety and access to treatment for several different rare disorders
The proposed arrangement included several factors that limited risk under the CMP and Anti-Kickback Statutes
The U.S. Department of Health and Human Services’ Office of Inspector General (HHS-OIG) recently released Advisory Opinion 24-11, a favorable opinion regarding the federal Anti-Kickback Statute (AKS) and civil monetary penalty laws against beneficiary inducements (CMP) as applied to free meningococcal vaccines provided by a drug manufacturer for patients who receive its treatments. The advisory opinion was requested by the manufacturer of infusion treatments for rare disorders whose treatments greatly increase a patient’s risk of meningococcal infections.
Due to various barriers faced by patients in obtaining recommended meningococcal vaccines prior to treatment, the drug manufacturer proposes to provide free vaccines to patients that: 1) have been prescribed one of the manufacturer’s treatments, 2) enroll in the manufacturer’s patient support program, and 3) have a prescription for a meningococcal vaccine (or vaccines). The patients will receive the vaccines after the manufacturer ships the vaccines to a third-party vendor contracted with the manufacturer, or the patient’s healthcare provider.
If the third-party vendor administers the vaccines, it will not bill any federal healthcare programs or third-party payors for any costs associated with vaccine administration. If the patient’s healthcare provider administers the vaccines, the provider must attest it will not bill any payor for the cost of the vaccines. However, they may still bill an administration fee of approximately $20 to the federal healthcare programs and other payors.
The HHS-OIG concluded the proposed arrangement implicated both the AKS and CMP and would not fall directly within any exception or safe harbor. However, the agency decided the risk of fraud and abuse is sufficiently low and it would not impose sanctions in connection with the proposed arrangement.
The HHS-OIG cited the following factors as limiting the possibility for fraud and abuse:
The proposed arrangement’s chief value to patients is in the form of convenience and safety rather than in the form of financial value because, even absent the proposed arrangement. Medicare enrollees would not incur out-of-pocket expenses related to the vaccinations.
The proposed arrangement is unlikely to result in inappropriate additional costs to federal healthcare programs because the vaccines are not billed to any payors, and healthcare providers administering the vaccines only bill federal healthcare programs for a nominal administration fee.
To the extent those administration fees increase costs to federal healthcare programs, those are costs that the government – through the Food and Drug Administration (FDA) – has actively encouraged in its Risk Evaluation and Mitigation Strategy (REMS) with Elements to Assure Safe Use (ETASU) requirements.
The proposed arrangement would likely lower the costs incurred by federal healthcare programs because the vaccines are provided for free by the manufacturer.
The nominal administration fee is unlikely to motivate a provider to order more products from the manufacturer.
In most cases, the provider ordering one of the manufacturer’s treatments is not the same provider who administers the vaccine, so the administration fee is not likely to corrupt the medical decision-making of the ordering provider.
The manufacturer does not provide any additional free treatment which could influence a patient to select and receive the manufacturer’s drugs.
As a result, the HHS-OIG determined the proposed arrangement was low risk and it would not impose sanctions on the drug manufacturer in connection with the arrangement.
Takeaways
This opinion, like several previous opinions, continues to demonstrate leniency by the HHS-OIG toward arrangements that improve patient safety and access to patient care without significant risks of fraud and abuse. Drug manufacturers should continue to revisit and review their patient support programs in light of the guidance provided in these opinions.
Five Compliance Best Practices for … CTPAT Compliance Requirements
As an accompaniment to our biweekly series on “What Every Multinational Company Should Know About” various international trade, enforcement, and compliance topics, below find an update to our series on compliance checks that every multinational company should consider. Give us two minutes and we’ll give you five suggested compliance best practices that will benefit your international regulatory compliance program.
The Customs-Trade Partnership Against Terrorism (CTPAT) program is a voluntary supply chain security program whereby a company agrees to work with U.S. Customs & Border Patrol (CBP) to improve the security of the company’s supply chain. Participating in the CTPAT program offers several benefits to companies, including expedited processing times, enhanced security, reduced Customs inspections, and cost savings — as well as access to special CBP training, workshops, and resources — all of which helps companies strengthen their supply chain security practices. Although the provision is aimed at terrorism, becoming part of CTPAT helps shore up the reliability and accountability of a company’s supply chain more generally.
Nonetheless, CBP imposes significant compliance obligations on CTPAT participants, which CBP has significantly strengthened in the last few years. Some key areas to examine to determine if your organization meets the latest requirements include:
Confirm Your Company Has a CTPAT Compliance Program, Including Coverage of the Social Compliance Program Requirements: CBP expects that CTPAT participants will have a compliance program designed to implement minimum security requirements that justify the loosened scrutiny of imports by CTPAT participants. You should ensure that your compliance program covers all required security elements and is consistent with current CBP requirements.
Confirm Your Company Meets Current Minimum Security Criteria, Including Updated Criteria for Corporate Security, People and Physical Security, and Transportation Security: In 2019, Customs updated the CTPAT criteria to add additional coverage points, especially in the areas of cybersecurity, protection of the supply chain against agricultural contaminants and pests, and prevention of money laundering and terrorism financing. The minimum security requirements also were updated to include heightened requirements for business partner security and the security of cargo containers. You should confirm your company has implemented these procedures to match the enhanced compliance expectations.
Confirm Your CTPAT Compliance Incorporates New Social Responsibility Requirements: CTPAT includes social responsibility requirements focused on protecting workers’ rights within the supply chain. CTPAT expects its certified partners to ensure fair treatment of workers, prohibit forced labor, and promote a safe and healthy work environment. This includes maintaining policies against child labor, ensuring safe working conditions, providing fair wages and hours, and addressing any abuse or harassment. Compliance with these standards is essential for CTPAT certification and fosters a supply chain that respects both security and ethical standards.
Confirm Your CTPAT Compliance Incorporates New Forced Labor Requirements: CTPAT requirements have been updated to include forced labor requirements in the areas of supply chain mapping, code of conduct requirements, evidence of social compliance program implementation, supplier training, and non-compliance remediation plans. These new requirements are intended to bring existing U.S. forced labor requirements into the CTPAT infrastructure, including the need for CTPAT participants to take concrete actions to identify risk points for the use of forced labor at any point in their supply chains. If it has not done so, your organization should review the latest CTPAT Trade Compliance Handbook to ensure it is implementing these new supply chain requirements.
Ensure Your Organization is Identifying CTPAT-Related Red Flags and Following Up on Potential Breaches: CTPAT violations often can be identified by monitoring and by following up on red flags within a supply chain that signal potential security or social compliance issues. These red flags include inconsistencies in shipment documentation, vague supplier information, missing employment records, or unusually low labor costs, which may indicate exploitative labor practices. Additionally, evidence of restricted worker movement, signs of forced labor, and an excessively high turnover rate may point to issues such as inadequate worker protections or substandard working conditions. Conducting regular audits, reviewing supplier contracts, monitoring for signs of falsified records, and interviewing employees anonymously are effective ways to identify these red flags and prevent CTPAT violations.
Identity Verification—What You Need to Know
Background
The Economic Crime and Corporate Transparency Act 2023 (the Act) seeks to prevent economic crime and to enhance the transparency of companies and other legal entities.
It is part of a wider policy of government to tackle corporate abuse, money laundering, fraud and identity theft. The Act provides greater powers to the registrar of companies (the Registrar) and (together with the Economic Crime (Transparency and Enforcement) Act 2022) underpins the government’s commitment to strengthen the corporate registration framework and transform the role of Companies House.
Identity Verification
A key component of the reforms set out in the Act is the introduction of an identity verification regime, with the objective of improving the accuracy and reliability of the information held by the Registrar and preventing fraudulent appointments.
Who Will Be Subject to the Identity Verification Process?
New and existing company directors, people with significant control of a company (PSCs)1 and those presenting documents for filing at Companies House will need to comply with the provisions of the Act and verify their identity with the Registrar.2
How to Comply With Identity Verification
There are two methods for complying with identity verification:
Directly with Companies House; and
Indirectly through an authorised corporate service provider (ACSP).
Direct verification with Companies House will be, in the main, via a digital service and the verified person will be linked to a document such as a passport or driving licence (a primary identity document). Technology will be used to match a photograph taken by the individual to their likeness in the primary identity document. Companies House will provide alternatives for those without access to, or otherwise unable to use, the digital service.
Indirect verification will involve using a third party such as a legal adviser or formation agent authorised by the Registrar as an ACSP. The ACSP regime requires such third parties to be registered with a supervisory body for anti-money laundering purposes (for example, the Solicitors Regulation Authority for solicitors in England and Wales) and, therefore, have an existing obligation to conduct due diligence on their clients. An ACSP will be able to provide a service to verify the identity of those individuals subject to the regime. ACSPs must carry out verification in accordance with the required standards set out in legislation and this must be confirmed in a statement by the ACSP to the Registrar.
An individual (including an ACSP) will be given a unique identifier number once verified. It is expected that individuals will only be required to verify their identity once (unless Companies House requires otherwise) but individuals will need to confirm their identity for each new appointment.
When Do the Identity Verification Provisions Come Into Effect?
Companies House published a policy paper on 24 October 2024, outlining a transition plan for the changes set out in the Act with the following expected timelines in relation to identity verification (the timeline is subject to parliamentary time being available):
By spring 2025, introduce the first steps to allow professional service providers to register to become ACSPs. This will allow them to carry out identity verification services for their clients. Additionally, Companies House will allow individuals to complete voluntary identification verification.
By autumn 2025, commence the new identity verification requirements where all directors and PSCs for new incorporations will be required to verify their identity as part of the incorporation process. Identity verification will also be compulsory for all newly appointed directors and new PSCs. There will be a transition period of 12 months for existing directors of existing companies to comply with identity verification (companies will be required to provide identity verification credentials for their directors when their confirmation statement is due) and existing PSCs will also be subject to identity verification by way of transitional arrangements.
By spring 2026, Companies House will require identity verification for those presenting documents for filing (including the requirement for a third-party service provider filing on behalf of a company to be registered as an ACSP).
By the end of 2026, it is expected that the transition period will be completed for all those subject to the identity verification regime and Companies House will start sanctions for any noncompliance.
Next Steps
The Act introduces some of the most significant changes to Companies House since corporate registrations were established and the identity verification regime is a key part of the reforms.
Companies should prepare by ensuring that the board is up to date with the timetable for the reforms and ensure that directors, PSCs (and relevant officers of relevant legal entities and those presenting documents for filing at Companies House have identity documentation readily available.
Footnotes
1 The identity verification regime extends to relevant officers of registrable relevant legal entities (corporate PSCs).
2 It is anticipated that reforms applying to limited partnerships will be introduced no sooner than spring 2026 and are not covered in this alert.
Be Wary: Sophisticated Scam Emails Impersonating IP Attorneys
Business owners should be aware of a new email scam circulating impersonating an intellectual property (IP) representative, containing false information, and offering trademark assistance. This nefarious email scam is sent by an operator impersonating a known Australia registered patent and/or trade mark attorney to garner legitimacy. IP Australia has provided an example of the scam and both IP Australia and the Institute of Patent and Trade Mark Attorneys (IPTA) continue to publish alerts regarding this issue.
Thousands of Australians fall victim to email scams each year. In April 2024, the Australian Competition and Consumer Commission (ACCC) reported a 64.8% increase in email scams1 between 2022-2023. IP owners are not immune, often receiving misleading renewal notices sometimes causing payment of unnecessary fees to scammers that do not result in renewal of a trademark.
In an already email heavy environment, it is prudent to exercise a healthy level of caution about emails and correspondence sent from an unknown or new external email address. Be aware of these characteristics often associated with fraudulent emails:
A sense of urgency that require immediate action on behalf of the recipient;
Typographical errors and incorrect grammar; and/or
The sender’s email address may be like a legitimate email address but with a letter missing or added.
Any correspondence that claims to be associated with a government department such as IP Australia or a foreign trade mark registry should be considered carefully. Business owners should also train staff to recognise false invoices and renewal notices.
As we have previously reported here, encouragingly some jurisdictions are prosecuting these sophisticated criminals by imposing significant fines and imprisonment for their fraudulent trade mark renewal schemes. However, scammers are increasingly prevalent, and it is far less costly to prevent a scam, than to remedy one.
Footnotes:
1 Targeting scams: Report of the National Anti-Scam Centre on scams activity 2023 (Report no.1 April 2024) 15.
Trump Administration’s New Immigration Executive Orders and Some New State Supportive Measures
The second Trump administration has moved quickly to implement its campaign promises on immigration, issuing a series of executive orders aimed at tightening border security, curbing illegal immigration, and enhancing interior enforcement. Florida Gov. Ron DeSantis has announced complementary legislative proposals for his state, positioning Florida as a key player in supporting these federal efforts.
Highlights of the New Executive Orders
National Emergency Declaration at the Southern Border
President Trump declared a national emergency to mobilize the U.S. military, expedite border wall construction, and bolster surveillance through drones and advanced technology. This measure aims to deter illegal crossings and improve border integrity.
Designation of Drug Cartels as Foreign Terrorist Organizations
The administration has classified drug cartels as “foreign terrorist organizations.” This designation will facilitate more robust measures against their operations and may influence broader immigration enforcement actions.
End of Humanitarian Parole Programs
The administration continues to affirm plans to terminate programs that had provided legal pathways for migrants from countries like Cuba, Haiti, Nicaragua, and Venezuela, as well as similar programs for Afghans, Ukrainians, and other groups. This signals a shift away from temporary humanitarian admissions and toward stricter immigration controls.
Changes to Asylum and Refugee Policies
The executive orders aim to end “catch and release” practices and significantly restrict asylum rights, reducing the ability of migrants to seek protection upon arrival. These measures may face legal challenges claiming they are inconsistent with existing U.S. and international law.
Additionally, the administration intends to suspend the refugee resettlement program for four months. The refugee resettlement program has, for several decades, allowed hundreds of thousands of people fleeing war and persecution to come to the United States. President Trump similarly suspended the refugee program at the beginning of his first term, and, after reinstating it, significantly reduced the number of refugees admitted annually.
Enhanced Interior Enforcement
Key actions include reinstating the “Remain in Mexico” policy, expanding the 287(g) program—which deputizes state and local officials as federal immigration enforcement agents—and issuing financial penalties to sanctuary cities that do not cooperate with federal immigration authorities. Both actions reflect the Trump administration’s campaign promise to crack down on illegal immigration and carry out mass deportations.
End Birthright Citizenship
One of the key announcements is the effort to end birthright citizenship—one of President Trump’s most ambitious immigration efforts. Birthright citizenship ensures that anyone born in the United States automatically becomes an American citizen. Trump’s effort to end it is expected to face legal challenges.
Reaffirming the 2017 ‘Buy American and Hire American’ Executive Order in the America First Trade Policy
During the first Trump Administration the government was directed to focus on ensuring that policies favored domestic workers. This has ramifications in business immigration policy and workplace enforcement.
Florida’s Role in Supporting Federal Immigration Goals
Gov. DeSantis has proposed legislation designed to align Florida’s state policies with the Trump administration’s federal immigration priorities. These include:
Maximum Participation in the 287(g) Program: Florida will mandate compliance from local officials, imposing penalties for non-compliance.
State Crime for Illegal Entry: The legislation creates a state offense for illegal entry, coupled with a self-deportation mechanism.
Unauthorized Alien Transport Program (UATP): Expansion of this program will facilitate the detention and deportation of unauthorized individuals.
Repeal of In-State Tuition for Undocumented Students: This move underscores a stricter approach to benefits extended to unauthorized residents.
Voter Registration Reforms: Measures will ensure identity verification and impose severe penalties for voter fraud.
Restrictions on Financial Transfers: New rules will require identity verification for foreign remittance transfers, aiming to reduce potential misuse.
Implications and Challenges
These sweeping changes represent a hardline stance on immigration and signal a shift toward aggressive enforcement measures. However, these policies are expected to face legal and logistical challenges:
Legal Challenges: Immigration and civil rights organizations are likely to challenge the restrictions on asylum, the national emergency declaration, and other measures.
Operational Coordination: Effective implementation of expanded 287(g) programs and deportation initiatives will require coordination between federal, state, and local agencies.