Following our previous alert, Healthcare Fraud Enforcement Gets a Lift,Assistant Attorney General Colin M. McDonald, head of the National Fraud Enforcement Division (NFED), issued Directive 26-12 on October 1, 2026, outlining the NFED’s approach to corporate investigations and prosecutions.
Key Takeaways
- Directive 26-12 expressly prioritizes investigation and prosecution of fraud schemes impacting the healthcare industry, including healthcare fraud, distribution of controlled substances, and violations of the Federal Food, Drug, and Cosmetic Act.
- When recommending outcomes in corporate enforcement matters, prosecutors are directed to give substantial weight to specified, nonexclusive factors, including management’s knowledge of or involvement in misconduct, concealment, duration, geographic scope, and financial harm.
- Importantly, these nonexclusive factors are not prerequisites to prosecution, according to the Directive.
The Directive expressly prioritizes the investigation and prosecution of fraud schemes impacting the healthcare industry, including healthcare fraud, the distribution of controlled substances, and violations of the Federal Food, Drug, and Cosmetic Act. When recommending outcomes in any corporate enforcement matter, prosecutors are directed to give substantial weight to the following nonexclusive factors:
- Management’s knowledge of or involvement in misconduct.
- Concealment from agencies or auditors, or efforts to do so.
- Conduct that furthers schemes for at least three (3) years.
- Actions that threaten the safety or security of Americans (including military readiness).
- Conduct that causes substantial financial hardship to a taxpayer funded program or government function.
- Conduct that affects at least three (3) federal districts.
- Conduct that results in financial harm to twenty-five (25) or more victims or $25 million or more in losses.
- Conduct that involves extracting American dollars to support foreign adversaries.
- Conduct that involves immigration offenses.
Importantly, these nonexclusive factors are not prerequisites to prosecution, according to the Directive. Healthcare providers, manufacturers, distributors, and other industry members should consider reviewing billing practices, controlled substance safeguards, regulatory compliance, and internal reporting mechanisms. The Directive reiterates that prompt investigation of concerns, documented remediation, and timely assessment of voluntary disclosure options may assist organizations in obtaining fairer consideration under DOJ’s corporate enforcement policies. McCarter’s Healthcare team is available to assist organizations in evaluating these developments and considering appropriate compliance, remediation, and disclosure strategies.