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Preston Pugh

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Preston Pugh helps companies, board committees and large organizations conduct internal investigations and respond to government investigations, often stemming from high stakes whistleblower complaints. He is a partner at Crowell & Moring and co-leads its False Claims Act Practice. For more than 20 years, he has helped clients navigate many different types of crises—including commercial and government contract fraud investigations; C-suite corporate ethics concerns; whistleblower retaliation claims; broad-based harassment and discrimination complaints; investigations by Congress; and related litigation. He has been recognized by the Legal 500 for his work in investigations.

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The continual push and pull between the courts and Congress over the contours of the False Claims Act (“FCA”) has once again spawned proposed legislation unfavorable to FCA defendants, this time poised to curtail defense arguments that continued government payment of claims in the face of alleged noncompliance with contractual or other legal requirements demonstrates a lack of materiality.

On July 25, 2023, a bipartisan group of senators proposed legislation entitled the “False Claims Act Amendments of 2023.”  Spearheaded by Senator Chuck Grassley (R-IA), the principal author of the 1986 FCA amendments, the bill purportedly attempts to close certain FCA defense “loopholes” left open by the U.S. Supreme Court’s decision in Universal Health Services, Inc. v. United States ex rel. Escobar, 579 U.S. 176 (2016) (“Escobar”).  Senator Grassley has been an outspoken critic of more recent FCA judicial developments, which he deems a gradual curbing of the power of the “single greatest tool in the fight against fraud.”  These newest proposed amendments are another example of Grassley’s advocacy for stronger and more rigid fraud enforcement than courts have been willing to impose based on the text of the FCA. …

Continue Reading He’s a Material Guy in a Material World: Senator Grassley Proposes FCA Amendments to Weaken Materiality Defense Where Government Pays Despite Knowledge of Non-Compliance

March 2, 2023, marked the 160-year anniversary of the enactment of the False Claims Act (FCA). Signed into law by the sixteenth president, the statute known as “Mr. Lincoln’s Law” was passed in response to the actions of contractors that sold rancid food, faulty rifles, and shoddy uniforms to the Union Army.  Eight score after the law’s passage, the FCA has become the government’s primary enforcement tool in cases involving allegations of fraud, and today the Civil War era statute is applied in cases involving industries and federal programs that would have exceeded Lincoln’s wildest imagination.

Continue Reading Lincoln’s Law Turns 160

Government Contractors who are concerned with how their companies are navigating environmental, social, and governance (ESG) efforts will want to read a new report by Crowell & Moring. A recent survey of top decision-makers by Crowell & Moring finds that nearly 80% of responding companies have identified and adopted environmental performance goals beyond what regulations…

2020 was one of the first years in memory when many multinationals saw a reduction in the number of internal whistleblower complaints, and a sharp increase in the number of external whistleblower complaints. In this environment, several countries around the world are finding ways to incentivize external whistleblower complaints, including—following the United States’ lead—providing bounties …

Over the past few years, both the government and False Claims Act relators (whistleblowers) have targeted more types of defendants than they have ever previously.  Against this backdrop, Congress passed two of the largest relief bills in modern history and thus even more companies find themselves involved with the federal government in a new way…

Yesterday, February 17, 2021, Senator Chuck Grassley (R-IA) and Acting Assistant Attorney General of the Civil Division, Brian Boynton, highlighted the central role that the False Claims Act (FCA) has held and will continue to play in the government’s civil fraud enforcement toolkit for years to come. In prepared remarks at the Federal Bar Association’s 2021 Qui Tam Conference, Grassley confirmed that he is drafting legislation intended to curb what he called the government’s incorrect interpretation that the Department of Justice (DOJ) has unfettered authority to dismiss qui tam lawsuits brought by relators. In an apparent reference to the Supreme Court’s landmark decision in Universal Health Services v. United States ex rel. Escobar, 136 S. Ct. 1989 (2016), Senator Grassley also asserted that the courts have weakened the statute by dismissing cases based on a misapplication of the FCA’s materiality requirement, another area that he suggested was ripe for Congressional intervention. In separate remarks, Boynton highlighted DOJ’s top priority areas for FCA enforcement in the coming years as well as tools the government is developing to increase its ability to uncover complex fraudulent schemes.
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Continue Reading “You Have to Come Down with a Sledgehammer, Not a Toothpick!” – Senator Grassley Previews Potential Amendments to Increase False Claims Act Enforcement and Recoveries

On January 19, 2021, the Eleventh Circuit affirmed a district court’s rejection at summary judgment of a disgruntled employee’s False Claims Act (FCA) retaliation claim in Hickman v. Spirit of Athens, No. 19-10945 (11th Cir. Jan. 19, 2021). The Court’s decision makes clear that, despite expansions to the FCA in 2009 and 2010 protecting employees who engage in “efforts to stop 1 or more violations” of the FCA, plaintiffs must nevertheless establish that they held an objectively reasonable belief that they were attempting to prevent the submission of false claims to the government for their conduct to constitute protected activity.

The plaintiffs worked for Spirit of Athens, a nonprofit organization. The executive director became concerned in reviewing tax returns that $61,000 of the organization’s expenses were generally categorized as “other expenses” without any further explanation. The executive director verbally retracted her signature on the tax forms, but the organization’s president signed and submitted them himself. The executive director and her assistant then arranged for the board members to receive a copy of the tax documents, shared their concerns with the president, and even hired an outside firm to audit the organization’s tax returns. Apparently unhappy with the executive director and her assistant’s conduct, the president fired them. The two then brought suit against the organization, claiming that they were terminated for “their attempts to combat the organization’s misuse of federal funds.” The district court granted summary judgment for the defendant, finding that plaintiffs had failed to establish that they had engaged in protected activity under the FCA.…

Continue Reading Eleventh Circuit Holds that a Sincere Belief is not the Same as a Reasonable One Under the False Claims Act’s Retaliation Provision

The Trump administration continues to pursue enforcement of its Executive Order 13950 (the EO), while lawsuits filed by two civil rights groups’ work their way through federal courts. The EO bans federal contractors from utilizing training that “inculcates in its employees any form of race or sex stereotyping,” which is defined as “ascribing character traits,…

The NAACP Legal Defense and Education Fund, Inc. has filed suit on behalf of the National Urban League and the National Fair Housing Alliance in the United States District Court for the District of Columbia challenging the lawfulness and validity of Executive Order 13950, Combating Race and Sex Stereotyping, issued on September 22, 2020.…

On July 28, 2020, the U.S. Small Business Administration (SBA) Office of the Inspector General (OIG) issued a report titled, “Serious Concerns of Potential Fraud in the Economic Injury Disaster Loan Program Pertaining to the Response to COVID-19.” The report identifies and summarizes OIG’s “serious concerns” of potential fraud and calls for “immediate attention and…