The number of False Claims Act cases, both those filed by the government and those filed by qui tam relators, is increasing. As a result, potential False Claims Act liability is increasingly important for companies and for their D&O insurers. At the same time, there have been recent court decisions, applying an expansive reading of D&O insurance policies, that have rejected D&O insurers’ attempts to deny coverage for False Claims Act claims against their policyholders. The recent decisions suggest that companies subject to False Claims Act claims potentially may be able to obtain coverage under their D&O insurance policies – and not only for defense expense, but for settlement amounts as well. An October 26, 2021 Insurance Journal article discussing the insurance implications of the growing number of False Claim Act cases can be found here.
Continue Reading Increased Numbers of False Claims Act Actions and the D&O Insurance Coverage Implications

In addition to all of the other risks, liabilities and exposures arising from cybersecurity concerns, you can now add the possibility of a whistleblower action for cybersecurity fraud. According to a July 31, 2019 press release from counsel for the whistleblower involved (here), Cisco Systems has agreed to an $8.6 million settlement in what the press release claims is the “first cybersecurity whistleblower case ever successfully litigated under the False Claims Act.” Cisco has agreed to pay the amount to settle allegations that the company knowingly sold vulnerable and defective video surveillance software to federal, state, and local government agencies, exposing the systems to unauthorized access. As discussed below, this development even further expands the range of concerns companies must take into account when assessing their cybersecurity exposures. An August 12, 2019 memo from the Jones Day law firm about the settlement and its implications can be found here.
Continue Reading Cybersecurity Whistleblower Claim under the False Claims Act Settled