How Honest is Honest Enough in Your Job Application? (UK)
In 2019 a Mr Easton applied for a role with the Home Office to work in the Border Force. As part of that process he was required to fill in (without guidance) a blank box headed “Employment History” which he completed with details of prior roles held and the years in which each had begun and ended. While that information was true as far as it went, Easton’s taking that approach had the side-effect of obscuring that in 2016 he had been dismissed for gross misconduct and then been unemployed for three months, both matters which he accepted in cross examination in the Tribunal that the Home Office could well regard as relevant.
As indeed it did, for on its subsequent discovery of Easton’s 2016 dismissal, the Home Office sacked him in 2020 for his alleged lack of honesty in omitting from the application form the details necessary for it to identify any gaps in his employment.
Easton brought a welter of claims against the Home Office including unfair dismissal, victimisation, retaliation for whistle-blowing, and discrimination on grounds of both age and disability. By the time he reached the Employment Appeal Tribunal earlier this month, all his other claims had been abandoned or rejected and the question under appeal had been whittled down to a single issue, though phrased in a number of different ways – (i) did the Home Office have reasonable grounds to believe that his presentation of his employment history had been a deliberate and dishonest attempt to obscure the fact and nature of his 2016 dismissal and the jobless three months? Or, put differently, (ii) had the Home Office adequately considered the possibility that Easton had completed the application form in what he genuinely believed to be an appropriate manner, bearing in mind the absence of instructions on the form as to the detail required? And overall (iii) how could the Home Office reasonably believe him to have answered the question dishonestly simply by virtue of his not providing information it had not asked for?
No-one here suggested that CVs and job application forms attract the same “utmost good faith” obligations as some insurance forms, i.e. any duty to disclose potentially relevant circumstances even if not specifically requested. So from there, the EAT moved to the question of what the form did actually ask for, or rather, what Easton should have realised it was asking for.
Despite getting rave reviews from the EAT for his advocacy skills, Easton fared less well in terms of his actual evidence, parts of which were found to have been eloquently argued but basically untrue. In particular, he advanced simultaneously a number of different and fundamentally incompatible rationales for not adding the give-away details on the form. These included IT failure, the question not being asked, his belief that the Home Office already knew about the dismissal, its being irrelevant to the recruitment anyway, and his having mentioned it at interview, which the Employment Tribunal had found that he didn’t. In the end, once Easton admitted that he had been told by the Home Office pre-application that neither the 2016 dismissal nor the subsequent period of unemployment would necessarily be fatal to his appointment but would be considered case-by-case, he was effectively doomed. He had to have understood from that point that the Home Office would want to know about such incidents, and that that was the purpose of the “Job History” box. His then completing the application form in such a way as to conceal them was enough to allow the Home Office a reasonable basis on which to conclude on a balance of probabilities that that omission was deliberate. As a result, the ET’s original decision that he had been fairly dismissed was upheld.
This case turns on its own facts to some extent, but we can still take some useful pointers from it:
Job candidates are under no general obligation to volunteer information which is not requested.
So if as employer you are looking for details relevant to your assessment of that individual’s suitability for your role, be specific. The EAT said that “the suggestion that it needs to be spelled out to applicants that they should provide sufficiently precise dates to permit the vacancy-holder to understand any gaps has a slight air of unreality about it”, but ignore that – if you want the date of a job change, not just the year, then say so. If you want to know about gaps in employment records, or why your candidate left his last job, or whether he has any unspent convictions, say so.
If the application form comes back without the specific information requested, revert to the candidate and request it again. That kills off the otherwise inevitable argument that if as employer you so badly needed some information that you later sack the employee for not providing it, you shouldn’t have let them start in the first place.
Similarly, if the candidate does provide the requested information and that generates important further questions, ask them before they arrive (particularly in regulated sectors). If the job history reveals a three month gap, for example, was that spent looking for a job, on a pilgrimage, in Broadmoor?
To expand on that, the Home Office’s application form required Easton to tick a box to acknowledge that his application might be rejected or that he could be disciplined if he withheld “relevant details”. That tick was found relevant but not conclusive, since it left the question of what is a “relevant detail” to the job applicant. Here Easton was found to have known that earlier dismissals and periods out of work were seen as relevant, but that would not be the case every time.
But please do keep an eye on the information you seek, since pressing a candidate for details of relevant medical conditions or disabilities can get you into significant trouble if you ask too early, and the application is then refused. In addition, ETs will be very wary about dismissals for purported dishonesty in not disclosing mental health conditions on joining and then having the cheek to seek adjustments later – they may well be sympathetic to a claimant who argues that their condition was under control at the time of the appointment and so did not justify any mention, and/or that they feared not even getting a chance to prove themselves in the job if they told the truth. It may arguably be a form of dishonesty not to disclose such a condition, but there are few good arguments open to the employer for not recruiting them as a result. It might have been entirely legitimate for the Home Office not to have appointed Easton if there had been something in his earlier dismissal or time out of work which particularly bothered it, but it will be a brave employer indeed which argues that had it known of a candidate’s health condition, and despite their passing all the other entry conditions, it would not have hired them. You wince even just thinking about the reception that would get in Tribunal.
Corporate Transparency Act Filing Requirement Is Back
The new deadline to comply with the Beneficial Ownership Information (BOI) reporting requirements under the Corporate Transparency Act is March 21, 2025, as the nationwide injunctions preventing enforcement by the Financial Crimes Enforcement Network (FinCEN) have been lifted1. Most entities (corporations, limited liability companies, and limited partnerships) have until March 21, 2025, to file initial, corrected, and updated BOI reports. Newly formed entities will have 30 days from the date of formation to file their initial BOI reports. Reporting companies that previously submitted BOI reports do not need to take any further action unless there has been a change to the initially reported information.
A “reporting company” is a domestic entity created by filing with the Secretary of State of any state or a foreign entity registered to do business with the Secretary of State of any state, subject to 23 exemptions. Reporting companies must report the full legal name, birthdate, residential address, and a unique identifying number from a passport or driver’s license (along with a copy of the passport or driver’s license) for any person who directly or indirectly has at least a 25% ownership interest in the reporting company or exercises substantial control over the reporting company. Reporting companies can complete the BOI reports directly through FinCEN’s website.
FinCEN has also announced its intention to revise the BOI reporting rule to reduce the burden on “lower-risk entities.2” However, FinCEN has not provided details on the nature of the proposed revisions.
The Corporate Transparency Act is still being challenged in several cases across the country. On February 10, 2025, the U.S. House of Representatives unanimously passed a bill that would extend the filing deadline for reporting companies formed before January 1, 2024, by one year, to January 1, 20263. The bill has been referred to the Senate Committee on Banking, Housing, and Urban Affairs, but no action has been taken.
We continue to monitor ongoing legal challenges and proposed legislation related to the Corporate Transparency Act.
1 Smith, et al. v. U.S. Department of the Treasury
2 https://www.fincen.gov/sites/default/files/shared/FinCEN-BOI-Notice-Deadline-Extension-508FINAL.pdf
3 H.R.736 – Protect Small Businesses from Excessive Paperwork Act of 2025
First Circuit Joins Sixth and Eighth Circuits in Adopting “But-For” Causation Standard Under the Federal Anti-Kickback Statute for False Claims Act Liability
In 2010, as part of the Affordable Care Act, Congress resolved a highly litigated issue about whether a violation of the Anti-Kickback Statute (AKS) can serve as a basis for liability under the federal False Claims Act (FCA).
Specifically, Congress amended the AKS to state that a “claim that includes items or services resulting from a violation of [the AKS] constitutes a false or fraudulent claim for purposes of the [FCA].”
This amendment, however, did not end the debate over the relationship between the AKS and the FCA. Over the last several years, multiple courts have been called upon to interpret what it means for a claim to “result from” a violation of the AKS. Courts across the country are split on the correct standard. On February 18, 2025, the U.S. Court of Appeals for the First Circuit joined the Sixth and Eight Circuits in adopting a stricter “but-for” standard of causation—while the Third Circuit has previously declared that the government must merely prove a causal connection between an illegal kickback and a claim being submitted for reimbursement.
In United States v. Regeneron Pharmaceuticals, the First Circuit acknowledges that while the Supreme Court has held that a phrase like “resulting from“ imposes a requirement of actual causality (i.e., meaning that the harm would not have occurred but for the conduct), this “reading serves as a default assumption, not an immutable rule.” At the same time, the First Circuit found that nothing in the 2010 amendment contradicts the notion that “resulting from” required proof of but-for causation.
The First Circuit agreed that the criminal provisions of the AKS do not include a causation requirement but observed that different evidentiary burdens can exist for claims being brought for purposes of criminal versus civil liability. The First Circuit concluded that while the AKS may criminalize kickbacks that do not ultimately cause a referral, a different evidentiary burden can and should be applied when the FCA is triggered. As a result, the First Circuit affirmed the lower court’s decision that “to demonstrate falsity under the 2010 amendment, the government must show that an illicit kickback was the but-for cause of a submitted claim.”
Although the U.S. Supreme Court denied a petition to review this specific issue in 2023, it may once again be called upon to weigh in on this issue, as there inevitably will continue to be a division in how the courts interpret this “resulting from” language. Look for our upcoming Insight, where we explore the First Circuit’s decision in detail.
Epstein Becker Green Attorney Ann W. Parks contributed to the preparation of this post.
Trump Administration Makes First Round of Cartel Foreign Terrorist Organization Designations with Focus on Mexico and Venezuela
The US State Department has made its first round of designations pursuant to Executive Order 14157, “Designating Cartels and Other Organizations as Foreign Terrorist Organizations and Specially Designated Global Terrorists,” identifying eight international cartels and transnational organizations as Foreign Terrorist Organizations (FTOs) and Specially Designated Global Terrorists (SDGTs).
As Bracewell discussed earlier this month, these designations create criminal exposure for any entity — US or foreign — determined to have provided “material support” to one of these organizations. An entity may be found liable for providing “material support” to one of these organizations if it provides any property (tangible or intangible) or services, including currency, financial services, lodging, personnel and transportation.
To avoid unwittingly doing business with or providing material support to these newly designated FTOs and SGDTs, it is imperative that companies conduct renewed due diligence on their counterparties and supply chains, and reassess their anti-corruption controls and compliance measures.
The newly designated FTOs and SDGTs, and their leadership as alleged by US law enforcement, include:
Tren de Aragua (TdA). Key leadership includes: Hector Rusthenford Guerrero Flores, a/k/a “Niño Guerrero,” [1] Yohan Jose Romero, a/k/a “Johan Petrica,”[2] and Giovanny San Vicente, a/k/a “Giovanni.”[3]
La Mara Salvatrucha (MS-13). Key leadership includes: Edenilson Velasquez Larin, a/k/a “Agresor,” “Saturno,” “Tiny,” “Erick,” and “Paco;” andHugo Diaz Amaya, a/k/a “21” and “Splinter.”[4]
Cártel de Sinaloa. Key leadership includes: Ismael Zambada-Garcia, a/k/a “El Mayo,” and Joaquin Guzman Lopez, son of “El Chapo” Guzman.[5]
Cártel de Jalisco Nueva Generación (CJNG). Key leadership includes: Nemesio Rubén Oseguera Cervantes, a/k/a “El Mencho.”[6]
Cártel del Noreste (CDN). Key leadership includes: Juan Gerardo Trevino-Chavez, a/k/a “Huevo.”[7]
La Nueva Familia Michoacana (LNFM). Key leadership includes: Johnny Hurtado Olascoaga, a/k/a “El Pez,” and Jose Alfredo Hurtado Olascoaga, a/k/a “El Fresa.”[8]
Cártel del Golfo (CDG). Key leadership includes: Jose Alfredo Cardenas-Martinez, a/k/a “El Contador.”[9]
Cártel Unidos (CU).
In addition to international cartels that operate primarily in Mexico, this list includes two transnational organizations mentioned specifically in E.O. 14157: TdA, which originated in Venezuela but is also active in parts of South America, including Chile, Colombia and Peru; and MS-13, which originated in Los Angeles but is also active in Mexico and parts of Central America, including El Salvador, Guatemala and Honduras.
Companies conducting business in the countries listed above should beware of the organizations’ infiltration of legitimate industries. La Nueva Familia Michoacana and Cártel Unidos, for example, are heavily involved in the agricultural landscape of Michoacán, Mexico, particularly in the production of avocados. US law enforcement alleges that the Cártel de Jalisco Nueva Generación ran an elaborate time share fraud scheme that targeted US owners of time shares in Mexico.[10] Many cartels also operate legitimate businesses in order to launder money.
For more information, see “Guiding Your Company Through Trump’s New Latin America Enforcement Policy” or reach out to Bracewell’s government enforcement and investigations team for guidance.
[1] https://www.state.gov/reward-for-information-hector-rusthenford-guerrero-flores
[2] https://www.state.gov/reward-for-information-yohan-jose-romero/
[3] https://www.state.gov/reward-for-information-giovanny-san-vicente/
[4] https://www.justice.gov/usao-edny/pr/two-national-ms-13-gang-leaders-and-other-ms-13-members-and-associates-indicted
[5] https://www.ice.gov/about-ice/hsi/news/hsi-insider/notorious-sinaloa-cartel-leaders-arrested
[6] https://www.state.gov/nemesio-ruben-oseguera-cervantes-el-mencho-2
[7] https://www.ice.gov/news/releases/leader-cartel-del-noreste-arrested-following-ice-hsi-investigation
[8] https://ofac.treasury.gov/media/929446/download?inline
[9] https://www.ice.gov/news/releases/head-gulf-cartel-indicted-following-ice-hsi-federal-partner-assisted-investigation
[10] https://home.treasury.gov/news/press-releases/jy2465
Statute and Precedent Support Special Counsel’s Challenge to Termination
Late on February 7, President Donald Trump fired Special Counsel Hampton Dellinger, the head of the Office of Special Counsel (OSC). Dellinger quickly challenged his termination in court, arguing that the White House did comply with the for-cause removal protections afforded to the Special Counsel.
On February 12, the U.S. District Court for the District of Columbia issued a temporary restraining order (TRO) in favor of Dellinger preventing the White House from removing him from his position as Special Counsel. While the Trump administration appealed this order to both the D.C. Circuit and the Supreme Court, both courts chose not to weigh in on the issue before the TRO expires on February 26.
The termination of Special Counsel Dellinger is a dangerous decision which undermines the whistleblower system for federal employees, whistleblowers who are critical to rooting out waste, fraud and abuse in the federal government.
However, the statutory language is clear in protecting the Special Counsel from removal without-cause, and the constitutionality of that protection is in line with Supreme Court decisions on related protections.
The District Court ruling found that a TRO was suitable in this case because “there is a substantial likelihood that plaintiff will succeed on the merits,” pointing to the clear statutory language and the Supreme Court’s positioning on the constitutionality of the statute.
A hearing is scheduled for February 26, where the District Court Judge may issue a ruling on Dellinger’s motion for a preliminary injunction requesting the court to permit him to stay in his job and complete his 5-year term of office.
The Office of Special Counsel’s Statutory Background
The OSC, headed by the Special Counsel, was first established as part of the Merit Systems Protection Board (MSPB) with the passage of the Civil Service Reform Act of 1978. The Whistleblower Protection Act of 1989 expanded the powers of the OSC and removed it from within the MSPB, establishing the OSC as an independent agency.
The OSC increases transparency and accountability within the federal government by protecting federal employees from whistleblower retaliation and providing a secure channel for federal employee whistleblowers to report wrongdoing.
Under federal statute (5 U.S. Code § 1211) the Special Counsel “shall be appointed by the President, by and with the advice and consent of the Senate, for a term of 5 years.”
And the statute clearly states that “The Special Counsel may be removed by the President only for inefficiency, neglect of duty, or malfeasance in office.”
In its brief notice to Dellinger alerting him of his termination, the White House did not point to any issues with his performance as Special Counsel and has not raised any cause for doing so subsequently.
In its ruling, the District Court notes that “the effort by the White House to terminate the Special Counsel without identifying any cause plainly contravenes the statute. It further states that the statute’s language “expresses Congress’s clear intent to ensure the independence of the Special Counsel and insulate his work from being buffeted by the winds of political change.”
The White House’s firing of Special Counsel without cause is thus a clear violation of the law.
Constitutionality of For-Cause Removal Protections
According to the District Court ruling, the White House’s “only response to this inarguable reading of the text is that the statute is unconstitutional.” However, as the ruling elucidates, the Supreme Court has upheld for-cause removal protections for positions similar to the OSC and even recently explicitly carved the OSC out of a pronouncement about the President’s removal authority.
For close to a century, the Supreme Court has repeatedly weighed in on whether statutory protections for federal officials appointed by the President counter the removal powers of the Executive and are therefore unconstitutional. The Court’s rulings are clear that positions at independent agencies which exercise some level “quasi-judicial” powers can be protected through some form of for-cause removal limits.
In 1926, the Supreme Court ruled in Myers v. United States that the President had authority to remove a postmaster without Senate approval and that an 1876 law requiring Senate approval was unconstitutional as it interfered with the President’s constitutional duty of seeing that the laws be faithfully executed.
In subsequent rulings, however, the Supreme Court has clarified and narrowed this precedent by ruling that “the character of the office” at hand determined whether for-cause removal protections were constitutional.
In Humphrey’s Executor v. United States and Wiener v. United States, the Supreme Court held that the Myers precedent only held for executive officers restricted to the performance of executive functions. The Court ruled that for-cause protections are constitutional for officers at independent agencies who carry out quasi-legislative or quasi-judicial duties.
In its ruling, the District Court pointed to recent Supreme Court decisions striking down for-cause removal protections for specific offices and noted the clear distinctions drawn out by the Supreme Court between those posts and the Special Counsel.
For example, in striking down for-cause removal protections for the head of the Consumer Finance Protection Bureau (CFPB) in 2020 in Seila Law LLC v. Consumer Fin. Prot. Bureau, the Court affirmed that the OSC is distinct and not implicated in that ruling because the Special Counsel “exercises only limited jurisdiction to enforce certain rules governing Federal Government employers and employees” and “does not bind private parties at all.”
The District Court also pointed to the Supreme Court’s 2021 ruling in Collins v. Yellin, which found that a statute prohibiting the President’s firing of the Federal Housing Finance Agency (FHFA) director violated the separation of powers. In that ruling, the Supreme Court pointed to the FHFA’s ability to impact ordinary Americans through direct regulation or action. The OSC by contrast, “is not an agency endowed with the power to articulate, implement, or enforce policy that affects a broad swath of the American public or its economy,” according to the District Court ruling.
“In sum, the OSC is an independent agency headed by a single individual, but otherwise, it cannot be compared to those involved when the Supreme Court found the removal for cause requirement to be an unconstitutional intrusion on Presidential power,” the District Court ruled.
Conclusion
The role of the Special Counsel is critical to the functioning of the system of whistleblower protections in place for federal employees. Recognizing the need for his position to be free from Presidential interference, Congress explicitly prohibited the termination of the Special Counsel without cause, a prohibition backed up by Supreme Court precedent.
This dangerous decision to terminate Special Counsel Dellinger should thus be struck down in court. In doing so, the Special Counsel can continue its critical work in protecting federal employee whistleblowers and empowering federal employees to expose corruption, fraud, waste, and abuse and, in turn, save taxpayers billions of dollars.
The District Court’s TRO is an important first step, and future court rulings should follow suit given the clear statutory language and the Supreme Court’s previous rulings on Presidential removal authority.
Geoff Schweller also contributed to this article.
Waffles, Passports and Trustee Directors – Part Two
Part one of this blog covered the new requirement for company directors (including trustee directors) and persons with significant control to verify their identity with Companies House. They will be able to do this voluntarily from 25 March 2025 (the week during which national cocktail-making day, national cleaning week and international waffle day will be celebrated in the US). This requirement is part of measures introduced under the Economic Crime and Corporate Transparency Act 2023 (ECCTA). But are these measures proportionate? Surely there can’t be that many companies in England and Wales registered for fraudulent purposes?
In 2023, the BBC reported that between June and September of that year alone, over 80 companies had been set up using the residential addresses of unsuspecting people living in the same street in Essex. Experts speculated that these companies had been registered in order to launder money or to take out bank loans before closing down the companies and disappearing.
In another case in March 2024, one individual managed to file 800 false documents at Companies House in a short space of time, which recorded the false satisfaction of charges registered by lenders against a total of 190 different companies. Having an accurate register of charges at Companies House is important because it governs the order of priority of payment of debts and, if a company is in financial difficulties, it influences the route by which administrators are appointed and to whom notice must be given.
Meanwhile, Tax Policy Associates, a not for profit company, has published details of its many investigations into fraudulent entities that have been able to set up and use UK registered companies as cover. The investigations it has carried out provide a fascinating insight into the magnitude of the problem. In a few quick steps, Tax Policy Associates demonstrates on its website how it was able to identify a £100 trillion fake company registered at Companies House. It has also highlighted a new scam letter being sent to directors of newly incorporated UK companies from “Company Registry” requiring them to pay a fee, which is one of the ways in which your personal data, published by Companies House, is being used by criminals.
If all this talk of fraud, and the ready availability of personal data filed at Companies House, is making you feel a bit uncomfortable then there is some potentially good news.
An individual whose residential address is/has been used as a registered office address in the past (whether knowingly or unknowingly) can apply to have their residential address supressed on Companies House records.
From summer 2025, individuals will be able to apply to have their date of birth appearing in documents that were filed before 10 March 2015 supressed. (Since 10 March 2015, Companies House has only ever published the month and year of birth.) Documents containing personal data, such as directors’ appointment forms, continue to be publicly available even after you have ceased to act as a director of a company.
In a similar vein, from summer 2025, individuals will also be able to request that their business occupation and signature are supressed in documents appearing at Companies House.
We do not have the detail around this yet, so it may be that the process and costs involved with redacting public documents might prove disproportionate for the majority of people. By way of example, the process for seeking to suppress a residential address involves identifying each document that needs to be redacted, completing a form and paying a £30 fee for each document that you want to get amended. Nor can you submit a subject access request to Companies House asking it to identify all documents that contain your personal data, because Paragraph 5 of Schedule 2 Part 1 of the Data Protection Act 2018 would likely exempt Companies House from this requirement. You would need to do the trawl yourself through a company’s filing history at Companies House.
It is to be hoped that in the not too distant future, there will be some sort of AI tool that will facilitate this process, meaning that submission of one request would result in the redaction of all sensitive personal data from Companies House publicly available records. Until then, however, it might prove a bit of a challenge if you are seeking to suppress any personal data published at Companies House, even once that facility becomes available. If you are interested in pursuing this, or would like further information or assistance, please speak with your usual SPB contact.
So, what will you be doing during the third week in March? Perhaps you will be celebrating the first anniversary of TPR’s general code of practice, which came into force on 28 March 2024.
First Circuit Clarifies FCA Liability Standard for AKS Violations, Deepening Circuit Split
The First Circuit has issued its long-anticipated opinion in United States v. Regeneron Pharmaceuticals, Inc., clarifying the standard for establishing False Claims Act (“FCA”) liability based on Anti-Kickback Statute (“AKS”) violations. The First Circuit held that an AKS violation must be the “but-for” cause of a claim for it to be considered “false” under the FCA. In reaching this conclusion, the First Circuit sided with the Sixth and Eighth Circuits, positioning all three courts against the Third Circuit, which has held that a mere link between an AKS violation and a claim is sufficient to establish falsity under the FCA.
A copy of the opinion can be found here.
The First Circuit’s Opinion
Regeneron Pharmaceuticals, Inc. manufactures Eylea, a drug used to treat neovascular age-related macular degeneration (a/k/a, wet AMD). Regeneron allegedly donated over $60 million to an independent charity, the Chronic Disease Fund (“CDF”), which provides financial assistance to patients who need Eylea. Regeneron’s contributions to the CDF were allegedly intended to function as an indirect co-pay subsidy for patients, effectively inducing Medicare reimbursements for Eylea prescriptions and thereby violating the AKS.
On summary judgment, the government disputed the need to establish but-for causation between the alleged kickback and the submitted claim. Instead, it maintained that any claim involving a patient who benefited from an illegal payment or referral was tainted and should be considered false for purposes of the FCA. The First Circuit disagreed, relying on Supreme Court precedent interpreting the term “resulting from” as implying a presumptive but-for causation standard. In reaching its conclusion, the First Circuit rejected the government’s arguments in support of the lower “link” standard of causation.
The First Circuit rejected each of the government’s core contentions. First, the government contended that because the AKS imposes criminal liability without requiring proof that a claim was, in fact, influenced by a kickback, the same standard should apply in the civil FCA context. The First Circuit rejected this position, reasoning that FCA liability fundamentally differs from criminal liability and that the 2010 amendment to the AKS explicitly introduced a causation element that the government must meet. The First Circuit emphasized that while criminal liability under the AKS aims to prevent corruption in medical decision-making, the FCA’s focus is on financial recovery for false claims, requiring a more direct causal link. Thus, by requiring but-for causation, the First Circuit aimed to ensure that claims brought under the FCA are truly the product of illegal inducements rather than merely associated with them.
Second, the government contended that Congress enacted the 2010 amendment against a backdrop of case law that had linked AKS violations to FCA liability without requiring proof of but-for causation. The First Circuit, however, found no indication that Congress intended to eliminate the need for causation, concluding that the amendment merely established a new pathway for proving falsity without overriding existing legal principles regarding causation. Absent explicit language in the amendment removing the requirement of causation, the First Circuit declared, the default presumption of but-for causation should apply. It further noted that previous case law interpreting similar statutory language has consistently required a direct causal link, reinforcing the assumption that Congress intended the same standard to govern FCA claims predicated on AKS violations.
Finally, the government attempted to rely on legislative history, pointing to statements made by the sponsor of the 2010 amendment suggesting that the amendment was designed to ensure that all claims “resulting from” AKS violations were false. The First Circuit rejected this argument as well, noting that legislative history cannot override the plain meaning of statutory text. Rather, the First Circuit held, the phrase “resulting from” necessarily implies a but-for causation standard unless Congress explicitly provides otherwise. Here, the First Circuit reasoned that while legislative history can offer insight into congressional intent, it cannot contradict clear statutory language. Additionally, it underscored that a broad interpretation of “resulting from” would risk imposing liability even where an AKS violation had no actual influence on a submitted claim, a result inconsistent with the FCA’s purpose of targeting fraudulent claims.
What’s Next? Deepening Circuit Splits, Potential Supreme Court Intervention, and Lingering Constitutional Questions
As a threshold matter, this opinion raises the bar for the government to establish FCA liability in AKS-related cases, as it now must demonstrate that an illegal kickback was the direct cause of a false claim rather than merely showing an association between the two. Additionally, the ruling deepens an existing circuit split. With the First Circuit joining the Sixth and Eighth Circuits in requiring but-for causation, only the Third Circuit maintains the broader “link” standard. This divergence increases the likelihood that the Supreme Court will take up this issue to resolve the inconsistency among the Circuits. The potential for Supreme Court review and the deepening circuit split highlight just one of the many ways in which the FCA has recently taken on new prominence. This case unfolds against the backdrop of other developments, including the Trump administration’s stated intent to use the FCA to challenge DEI initiatives among government contractors and ongoing constitutional challenges to the FCA’s qui tam provisions. These developments will shape the future landscape of FCA litigation and compliance. Stakeholders should, accordingly, continue to monitor how courts and regulators navigate these evolving issues.
Corporate Transparency Act Update: Reporting Requirements Now Back in Effect
Beneficial ownership information (BOI) reporting requirements under the Corporate Transparency Act (CTA) are now back in effect. As a result, all entities subject to the CTA are once again obligated to file BOI reports with FinCEN.
Following the most recent order from the U.S. District Court for the Eastern District of Texas in Smith v. U.S. Department of Treasury, FinCEN’s regulations are no longer stayed. With that being said, FinCEN has extended the reporting deadline to March 21, 2025 (30 calendar days from February 19, 2025). In its recent notice extending the deadline, FinCEN also announced that during this 30-day period, reporting deadline modifications will be further assessed in order to reduce regulatory burdens on businesses.
While additional updates from FinCEN are expected prior to the March 21 deadline, reporting companies that were previously required to file before March 21 are currently obligated to file BOI reports by the extended deadline. Companies should continue to closely monitor for updates over the course of the next 30 days.
For information on filing, see our prior alert here.
For more information on the recent update, see the recent FinCEN Notice here.
A Deepened Divide: Appellate Court Joins False Claims Act Circuit Split in Favor of Health Care Defendants
On February 18, 2025, the United States Court of Appeals for the First Circuit issued its opinion in United States v. Regeneron Pharmaceuticals Inc., finding that, in Anti-Kickback Statute (AKS) cases, the government must show a claim would not have been submitted “but for” the AKS violation to establish False Claims Act (FCA) liability.1
This appeal stemmed from allegations that Regeneron Pharmaceuticals induced prescriptions of Eylea, an ophthalmological drug, by covering copayments for certain recipients of the drug. The government contended that the funding of copayments constituted kickbacks and therefore resulted in false claims made to Medicare in violation of the FCA. At issue for the First Circuit was the interpretation of “resulting from” in the 2010 amendment to the AKS, which provides that a “claim that includes items or services resulting from a violation of [the AKS] constitutes a false or fraudulent claim for purposes of [the FCA].”2 The Court ultimately decided that “statutory history provides no reason to deviate from the ordinary course, in which we treat ‘resulting from’ as requiring but-for causation” and that this interpretation would not render it difficult for the government to establish liability. 3
The First Circuit’s ruling is favorable for health care providers, as it sets a higher bar for the government to prove causation in FCA cases involving AKS violations. Nevertheless, the decision deepens a circuit split regarding the causation requirements of FCA claims arising from AKS violations. While this decision aligns the First Circuit with the Sixth and Eighth Circuits, the decision contrasts with the Third Circuit, which requires only a demonstration of a link “between the alleged kickbacks and the medical care received . . .”4 This circuit split will continue to persist until the Supreme Court addresses the issue. However, the timing of such a decision is uncertain, especially after the Supreme Court declined to hear a related appeal from the Sixth Circuit in 2023.5
As courts continue to take on this issue, health care providers and FCA litigants should closely monitor developments in this area, particularly if they operate in jurisdictions without controlling case law. Understanding the applicable causation standard is crucial for navigating FCA litigation effectively and staying informed will be key to managing potential risks and liabilities as the legal landscape evolves.
[1] United States v. Regeneron Pharmaceuticals Inc., No. 23-2086, 2025 WL 520466 (1st Cir. Feb. 18, 2025).
[2] See 42 U.S.C. § 1320a-7b(g).
[3] Regeneron Pharmaceuticals Inc., 2025 WL 520466, at *8-9.
[4] United States ex rel. Greenfield v. Medco Health Solutions, Inc., 880 F.3d 89, 93 (3d Cir. 2018).
[5] United States, ex rel. Martin v. Hathaway, 63 F.4th 1043 (6th Cir. 2023), cert. denied, No. 23-139, 2023 WL 6378570 (Oct. 2, 2023).
Court Ruling Reinstates Corporate Transparency Act Enforcement; Filing Deadlines Now Set
On February 18, 2025, the nationwide injunction against enforcing the Corporate Transparency Act (CTA) was “stayed” by Eastern District Court Judge Jeremy Kernodle (citing the Supreme Court’s ruling in Texas Top Cop Shop), and FinCEN has stated (in a February 18, 2025 notice) that the deadline for most reporting companies to make required filings is now March 25, 2025. Although FinCEN did not explicitly so state, it appears the March 25, 2025 deadline applies to reporting companies formed or registered between January 1, 2024 and February 17, 2025. Reporting companies formed or registered on or after February 18, 2025, must file within 30 days from the date of creation or registration.
In its notice, FinCEN stated that, during the next 30 days, it “will assess its options to further modify deadlines, while prioritizing reporting for those entities that pose the most significant national security risks. FinCEN also intends to initiate a process this year to revise the BOI reporting rule to reduce burden for lower-risk entities, including many U.S. small businesses.”
The government is not expected to appeal Judge Kernodle’s ruling. The next ruling that could alter the status quo (absent legislation, executive order, or new FinCEN rule) is likely to be following the oral arguments scheduled to occur on March 25, 2025 in the Texas Cop Shop case.
CNIPA Rejects 63 Attempts to Maliciously Register DeepSeek Trademarks
On February 24, 2025, China’s National Intellectual Property Administration (CNIPA) announced that it rejected 63 trademark applications attempting to maliciously register DeepSeek and graphic. CNIPA stated that, “some agencies are suspected of providing illegal services, with obvious intentions of ‘riding the wave’ and seeking improper benefits. CNIPA resolutely cracked down on such malicious applications.”
China has previously rejected en masse applications and ex-officio cancelled trademarks that have been maliciously applied for and registered, respectively. For example, in 2022, CNIPA cancelled trademarks for Olympic mascots and athletes for “infringing on the personality rights and other legitimate rights and interests of others, has caused significant adverse social impact, and damaged the good image of China’s strict protection of intellectual property rights.” CNIPA rejected 429 trademark applications, including those for Eileen Gu (谷爱凌 and homonyms). CNIPA also cancelled, ex-officio, 43 trademarks, 20 of which were for Eileen Gu.
The original announcement and full list of rejected applications is available here (Chinese only).
Compliance Still Matters: The Future of FCPA Enforcement
Shifts in Enforcement
On January 20, President Trump issued an Executive Order designating certain international cartels as Foreign Terrorist Organizations (FTOs) or Specially Designated Global Terrorists (SDGTs). As stated in the order, it is now U.S. policy “to ensure the total elimination of these organizations’ presence in the United States and their ability to threaten the territory, safety, and security, of the United States through their extraterritorial command-and-control structures.”
On February 5, Attorney General Pamela Bondi issued fourteen memos on new enforcement priorities. Notably, the “Total Elimination of Cartels and Transnational Criminal Organizations” memo (the “Directive”) directs the DOJ to eliminate cartels and transnational criminal organizations (TCOs). The Directive requires the DOJ’s FCPA Unit to “prioritize investigations related to foreign bribery that facilitates the criminal operations of cartels and [TCOs],” shifting “focus away from investigations and cases that do not involve such a connection.” The Directive references examples, including “bribery of foreign officials to facilitate human smuggling and the trafficking of narcotics and firearms.”
On February 10, President Trump issued an Executive Order that: (1) pauses enforcement of the FCPA for an 180-day period; (2) directs the DOJ to issue revised guidance around FCPA enforcement, consistent with the administration’s national security and foreign affairs interests; (3) calls for the DOJ to review all open and pending FCPA investigations and enforcement actions, taking appropriate action as aligned with the order’s objectives; as well as (4) contemplates the DOJ reviewing prior enforcement actions to determine if “remedial measures” are appropriate.
Together, these actions demonstrate a profound shift in FCPA enforcement by moving away from traditional corporate corruption within otherwise legitimate industries to organized criminal syndicates. Companies are no doubt questioning the implications of these recent developments. Below we examine case studies of what these new enforcement areas may look like and offer advice for how companies can prepare for these enforcement shifts.
Case Studies
The shift in enforcement priorities on cartels and TCOs can be interpreted broadly, which may impact how companies evaluate their operations, especially those companies with activities in jurisdictions with heightened risks of cartel and TCO influence.
Lafarge
In October 2022, Lafarge S.A., a French multinational cement company, pleaded guilty in the United States to charges of conspiring to provide material support to designated foreign terrorist organizations, specifically ISIS and the al-Nusrah Front. From 2013 to 2014, Lafarge’s Syrian subsidiary made payments totaling approximately $5.92 million to these groups to maintain operations at its cement plant in Jalabiya, Syria. These payments were intended to secure protection for employees, ensure continued plant operations, and gain a competitive advantage in the Syrian cement market. As part of the plea agreement, Lafarge agreed to pay $778 million in fines and forfeitures. This case marked the first instance of a corporation being charged and pleading guilty in the U.S. to providing material support to foreign terrorist organizations.
According to then Deputy Attorney General Lisa Monaco, the case sent a “clear message to all companies, but especially those operating in high-risk environments, to invest in robust compliance programs, pay vigilant attention to national security compliance risks, and conduct careful due diligence in mergers and acquisitions.”
Chiquita
In March 2007, Chiquita Brands International, a major U.S. banana producer, pleaded guilty to charges of engaging in transactions with a designated terrorist organization. The company admitted to paying over $1.7 million between 1997 and 2004 to the United Self-Defense Forces of Colombia (AUC), a paramilitary group recognized by the U.S. government as a terrorist organization since 2001. These payments were purportedly made to protect Chiquita’s employees and operations in Colombia’s volatile regions.
Despite the AUC’s designation as a terrorist organization, Chiquita continued the payments, rationalizing them as necessary for employee safety. Internal documents revealed that company executives were aware of the legal and ethical implications but proceeded with the payments, describing them as the “cost of doing business in Colombia.” As part of a plea agreement with the DOJ, Chiquita consented to a $25 million fine and five years of corporate probation. According to then U.S. Attorney Jeffrey A. Taylor, “[f]unding a terrorist organization can never be treated as a cost of doing business…American businesses must take note that payments to terrorists are of a whole different category. They are crimes. But like adjustments that American businesses made to the passage of the [FCPA] decades ago, American businesses, as good corporate citizens, will find ways to conform their conduct to the requirements of the law and still remain competitive.”
Although the Lafarge and Chiquita cases turned on violations of anti-terrorism laws, they underscore the significant challenges multinational corporations face when operating in high-risk jurisdictions, especially those companies with complex global supply chains, third party engagements, and/or local government interaction in these regions. Further investment in compliance under these circumstances is advisable given the heightened risks these companies may face.
What Should Companies Keep In Mind?
The Directive and related Executive Orders should not be interpreted as a repeal of the FCPA or FEPA, nor a nullification of the importance of compliance. Both the FCPA and FEPA remain valid and fully in force despite the 180-day enforcement pause, meaning that companies subject to the FCPA are still required to comply with the statute’s provisions. Maintaining robust, well-resourced, and effective compliance programs is not only essential but also expected, regardless of shifting enforcement priorities.
Companies should consider the following issues as they navigate this shift:
Voluntary Self-Disclosure. The Criminal Division’s Corporate Enforcement and Voluntary Self-Disclosure policy remains in place. This policy lays out the benefits – ranging from reduced criminal or monetary penalties to non-prosecution or deferred prosecution agreements – of self-reporting, assuming the standards for voluntary self-disclosure are met. The DOJ’s Whistleblower Pilot Program also remains intact; companies should continue to ensure that internal whistleblower programs are adequately staffed and complaints timely addressed.
Foreign Legal Frameworks. Many countries, including the U.K. and France, have enacted anti-bribery laws that have a broad reach and continue to rigorously enforce those laws. As the U.S. shifts its FCPA enforcement focus, especially towards non-U.S. companies, foreign regulators may increase scrutiny on U.S. entities. Additionally, the U.S. remains obligated under the OECD’s Convention on Combating Bribery of Foreign Public Officials in International Business Transactions, which requires signatories to criminalize bribery involving foreign government officials, potentially causing friction with the administration’s new enforcement directives.
Broader Discretion for United States Attorney’s Offices’ (USAOs). The Directive authorizes USAOs to pursue FCPA cases involving cartels or TCOs with just 24-hours of notice to the DOJ’s FCPA Unit, removing the requirement to first obtain approval from the DOJ’s Criminal Division’s Fraud Section. This arguably grants USAOs more discretion and flexibility to pursue FCPA cases linked to cartels and TCOs, which could result in increased FCPA enforcement activity following the initial 180-day pause.
Current Open and Pending FCPA Matters. There is no indication that ongoing or pending FCPA investigations and enforcement actions will be immediately closed. Rather the February 10 Executive Order instructs an internal review of current FCPA investigations and enforcement actions in light of shifting priorities. Regardless, companies under investigation by the DOJ for potential FCPA violations should not assume dismissal is a foregone conclusion.
Statute of Limitations. The FCPA’s anti-bribery provisions carry a five-year statute of limitations, while the accounting provisions have a six-year limit. These periods can be extended while DOJ seeks foreign evidence under Mutual Legal Assistance Treaty requests. Recent, ongoing, or future violations could still be fair game under the current administration, regardless of refocused enforcement priorities, as well as the next administration.
SEC Enforcement. While many may anticipate that the SEC will follow suit, announcing similar priority shifts to FCPA enforcement as the DOJ, the SEC, at present, appears to be business as usual enforcing FCPA violations. In other words, issuers falling under the SEC’s jurisdiction should continue to be mindful of their obligations under the FCPA.
Compliance Program Assessment. Companies should continue to evaluate their risk profiles by assessing their industry sector, where they operate, the extent of third-party engagements, interactions with government officials, the current regulatory landscape, and other emerging risks they may face. Under forthcoming guidance, companies may need to conduct a more targeted assessment of their activities in higher-risk markets for cartel and TCO involvement, considering specific business activities and interactions that could expose the company to heightened risks associated with cartels and TCOs. As a result, companies may identify potential gaps in their compliance programs, leading them to, for instance, improve financial oversight, refocus on employee training and internal communications, revise third party due diligence processes and contractual terms and conditions, and/or enhance internal controls around suppliers, vendors, local partners, and other third parties.
Takeaways
Effective and robust compliance programs help to mitigate not only bribery and corruption risks, but also money laundering, sanctions issues, human rights violations, and financial fraud risks. Duties of loyalty and oversight responsibilities for boards of directors require implementing a range of internal compliance controls, including effective reporting channels, to assess company risks. Compliance frameworks help promote fairness across a company’s operations, including through, for instance, employee incentive programs that encourage ethical behavior. Further, comprehensive compliance measures facilitate the management of third-party engagement risks through diligent vetting, ongoing monitoring, and stringent payment controls.
Compliance is not only good business, it is insurance in the event of enforcement. The DOJ has consistently given credit to companies with robust compliance programs when considering enforcement resolutions, monetary penalties, and post-resolution compliance obligations. Companies with strong compliance programs are better positioned to negotiate favorable outcomes in the event enforcement actions arise, making proactive investment in compliance crucial.
Compliance still matters. While the recent shift in enforcement priorities is important, it is not a repeal of the FCPA or FEPA, nor is it a license to stop investing in compliance. Well-designed, effective compliance programs expedite efficient responses to new enforcement trends. Companies should continue to ensure their compliance programs align with the DOJ’s Evaluation of Corporate Compliance Program guidance and consider using the 180-pause to reassess the effectiveness of their compliance programs and cultures as recent directives and orders usher in FCPA enforcement shifts.