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Stephen M. Byers is a partner in the firm's White Collar & Regulatory Enforcement Group and serves on the group's steering committee. He is also a member of the firm's Government Contracts Group and E-Discovery & Information Management Group. Mr. Byers's practice involves counseling and representation of corporate and individual clients in all phases of white collar criminal and related civil matters, including: internal corporate investigations; federal grand jury, inspector general, civil enforcement and congressional investigations; and trials and appeals.

Mr. Byers's practice focuses on matters involving procurement fraud, health care fraud and abuse, trade secrets theft, foreign bribery, computer crimes and cybersecurity, and antitrust conspiracies. He has extensive experience with the federal False Claims Act and qui tam litigation, the Foreign Corrupt Practices Act, the Economic Espionage Act, and the Computer Fraud and Abuse Act. In addition to defense of government investigations and prosecutions, Mr. Byers has represented corporate victims of trade secrets theft, cybercrime, and other offenses. For example, he represented a Fortune 100 U.S. company in parallel civil and criminal proceedings that resulted in a $275 million criminal restitution order against a foreign competitor upon its conviction for trade secrets theft.

A recently-announced False Claims Act (FCA) settlement illustrates how government contractors and other FCA defendants can take advantage of a Department of Justice (DOJ) policy that rewards voluntary self-disclosure to, and subsequent cooperation with, the government.Continue Reading False Claims Act Settlement Illustrates Value of Disclosure and Cooperation

A recent decision in a non-intervened qui tam suit in the Northern District of Georgia provides an example of a defendant threading the needle to avoid dismissal of its counterclaims despite those counterclaims arguably implicating the conduct that the relator alleged violated the False Claims Act (FCA). It also stands as a rare instance where a company’s counterclaims against an FCA relator have survived early court scrutiny and, as such, provides FCA defendants with a potential strategy to combat opportunistic relators.Continue Reading Counterclaims Against Compliance-Officer-Turned-Relator Survive Motion to Dismiss

Criminal Investigations and the False Claims Act

In this episode, Steve Byers, Jason Crawford, and Agustin Orozco discuss the intersection between False Claims Act investigations and parallel criminal proceedings. “Let’s Talk FCA” is Crowell & Moring’s podcast covering the latest developments with the False Claims Act.

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On October 4, 2023, Deputy Attorney General (DAG) Lisa O. Monaco announced the Department of Justice’s (DOJ) new safe harbor policy for voluntary self-disclosures made in connection with mergers and acquisitions (Safe Harbor Policy).  Following other announcements from DOJ over the past two years aimed at encouraging voluntary self-disclosures, the Safe Harbor Policy was adopted because DOJ does not want to “discourage companies with effective compliance programs from lawfully acquiring companies with ineffective compliance programs.”  Through this new policy, DOJ is aiming to incentivize acquirers to timely disclose misconduct discovered during the M&A process (including pre-closing diligence and post-closing integration).Continue Reading DOJ Announces Safe Harbor for Acquirers Who Disclose Pre-Acquisition Misconduct

A False Claims Act (FCA) settlement recently announced by the U.S. Department of Justice stands at the intersection of two evolving trends:  DOJ’s increasing focus on cybersecurity lapses by government contractors as part of its Civil Cyber-Fraud Initiative, and DOJ policies incentivizing corporations to voluntarily self-disclose violations of federal law.

On September 5, 2023, DOJ announced a $4 million settlement with Verizon Business Network Services LLC (Verizon) addressing allegations that Verizon violated the FCA because certain telecommunications services it provided to federal agencies under its General Services Administration (GSA) contracts did not comply with applicable cybersecurity requirements, namely the Office of Management and Budget’s Trusted Internet Connections (TIC) initiative.  DOJ specifically alleged that Verizon’s Managed Trusted Internet Protocol Service (MTIPS)—an information technology service that allows federal agencies to securely connect to public internet and external networks—did not comply with three security controls in the Department of Homeland Security’s TIC Reference Architecture Document, including a control that required the use of FIPS 140-2 validated cryptography.  The Verizon settlement represents the latest example of DOJ’s continued focus on cybersecurity cases, a trend that we believe will only continue to escalate going forward.Continue Reading Civil Cyber-Fraud Settlement Highlights Potential for Cooperation Credit

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

On June 27, 2023, the Small Business Administration (SBA) Office of Inspector General (OIG) reported its estimate that SBA disbursed over $200 billion of potentially fraudulent COVID relief, including Economic Injury Disaster Loans (EIDL) and Paycheck Protection Program (PPP) loans.  These possibly fraudulent loans represent at least 17% of all EIDL and PPP funds—or 21%

Next Tuesday, April 18, 2023, the highest court in the land will hear arguments in what is poised to be the most influential False Claims Act (FCA) case since the landmark decision in Universal Health Servs. v. United States ex rel. Escobar, 136 S. Ct. 1989 (2016).  On January 13, 2023, the U.S. Supreme Court granted certiorari to hear two consolidated appeals from the U.S. Court of Appeals for the Seventh Circuit in United States ex rel. Schutte v. SuperValu Inc., 9 F.4th 455 (7th Cir. 2021) and United States ex rel. Proctor v. Safeway, Inc., 30 F.4th 649 (7th Cir. 2022).  The Court’s decision will likely have far-reaching ramifications for FCA cases involving ambiguous contractual or regulatory requirements and may also provide benchmarks for assessing the key element of scienter across all FCA cases.  

In Supervalu and Safeway, the Seventh Circuit joined several of its sister circuits in applying the scienter standard articulated by the Supreme Court in Safeco Insurance Company of America v. Burr, 551 U.S. 47 (2007) to the FCA, finding that a defendant’s conduct is not reckless when (1) acting under an objectively reasonable, albeit erroneous, interpretation of an ambiguous regulation or contract provision; and (2) no authoritative guidance existed to warn the defendant away from that interpretation. Continue Reading Fair Warning Protection or a “Free Pass to Fleece the Public Fisc”?: SCOTUS Takes Up the Safeco Objective Reasonableness Standard and Subjective Intent Under the FCA

The Department of Justice has announced a $14 million False Claims Act (FCA) settlement with Coloplast, a medical product manufacturer, after Coloplast self-disclosed violations of the Trade Agreements Act (TAA) and Price Reduction Clause (PRC) while under contract with the Department of Veterans Affairs (VA).  The TAA requires contractors to furnish end products that are U.S.-made or “substantially transformed” in designated countries.  Coloplast disclosed that it misapplied the substantial-transformation standard, causing Coloplast to report incorrect countries of origin for products and to improperly retain certain products on contract after manufacturing moved to non-designated countries.  Coloplast also disclosed that it overbilled the Government by failing to provide the VA with discounts pursuant to the terms of the PRC, which normally requires tracking discounts offered to designated commercial customers and offering corresponding downward price adjustments to VA customers.  Continue Reading FCA Settlement Offers Reminder of the Importance of TAA and PRC Compliance

On September 12, 2022, the Department of Justice (DOJ) announced the first-ever settlement with a Paycheck Protection Program (PPP) lender.  The lender, Prosperity Bank, agreed to pay $18,673.50 to resolve allegations it improperly processed a PPP loan on behalf of an ineligible applicant.  The announcement coincides with DOJ’s creation of three COVID-19 fraud “Strike Force” teams designed to enhanced DOJ’s efforts to combat and prevent COVID-19 related fraud.

Pursuant to the Coronavirus Aid, Relief and Economic Security (CARES) Act, lenders who originated PPP loans were entitled to receive a fixed fee from the Small Business Administration (SBA) ranging from 1% to 5% of the loan amount.  Prosperity Bank, a regional bank with branches throughout Texas and Oklahoma, was one of those lenders. Continue Reading DOJ Announces First-Ever False Claims Act Settlement with PPP Lender and Creation of COVID-19 Fraud Strike Force Teams