On October 6, the Department of Justice announced an initiative to bring False Claims Act enforcement actions against government contractors who commit fraud related to cybersecurity.  Deputy Attorney General Lisa O. Monaco said in a statement that the initiative was intended to combat threats to the security of sensitive information by incentivizing companies to be proactive in their efforts to ward off criminal actors operating in the cyber realm.  DOJ plans to accomplish this by holding companies to pre-existing cybersecurity standards and punishing companies that fail to disclose cybersecurity events in a timely manner, if they disclose them at all.  DOJ noted that the initiative also hopes to ensure that companies that invest in effective cybersecurity measures are not at a competitive disadvantage to companies that do not meet cybersecurity standards.  The initiative will be led by DOJ’s Civil Fraud Section.

Following a cybersecurity review conducted by the Department at the Direction of Deputy Attorney General Monaco in May, the decision was made to take steps necessary to improve cybersecurity programs among federal government contractors.  The initiative will also target grant recipients, so academic institutions and teams conducting scientific research are likely to see increased scrutiny and liability following cybersecurity events.  Given the prevalence of cyber-attacks against major companies and the fact that most major companies have significant contracts with the federal government, some of the settlements stemming from this initiative are likely to be in the hundreds of millions of dollars, further enticing qui tam relators.  When combining the prevalence of cyber attacks against entities doing business with the federal government and the potential for qui tam relators, we are likely to see an explosion of False Claims Act suits related to cybersecurity in the coming years.  

The attorneys at Chilivis Grubman represent clients of all types and sizes in connection with False Claims Act investigations and qui tam litigation.  If you need assistance with such a matter, please contact us today.