lobal consulting firm McKinsey & Co. has agreed to pay $650 million to settle a Department of Justice investigation into the firm’s consulting work with opioids manufacturer Purdue Pharma. The DoJ had accused McKinsey of fueling the opioid epidemic with its aggressive sales and marketing advice to Purdue, including a 2013 engagement in which McKinsey advised on steps to “turbocharge” sales of OxyContin.

McKinsey has agreed to pay a penalty of over $231 million, a forfeiture amount of over $93 million and a payment of $2 million to the Virginia Medicaid Fraud Control Unit to resolve the criminal allegations.

The settlement marks the first time a management consulting firm has been held criminally responsible for advice resulting in the commission of a crime by a client and reflects the Justice Department’s ongoing efforts to hold those responsible for their roles in the opioid crisis to account. The resolution is also the largest civil recovery for such conduct.

“For the first time in history, the Justice Department is holding a management consulting firm and one of its senior executives criminally responsible for the sales and marketing advice it gave resulting in the commission of crime by a client,” said Attorney Christopher Kavanaugh for the Western District of Virginia. “This ground-breaking resolution demonstrates the Justice Department’s ongoing commitment to hold accountable those companies and individuals who profited from our Nation’s opioid crisis.”

McKinsey also has entered into a civil settlement agreement in which it will pay over $323 million to resolve its liability under the False Claims Act for allegedly providing advice to Purdue that caused the submission of false and fraudulent claims to federal healthcare programs for medically unnecessary prescriptions of OxyContin, as well as allegedly failing to disclose to the U.S. Food and Drug Administration conflicts of interest arising from McKinsey’s concurrent work for Purdue and the FDA. This brings the total payments under the global resolution to $650 million.

McKinsey’s Criminal Liability for Misbranding

The criminal misbranding charge was based on McKinsey’s advice to the titan opioids manufacturer. Between 2004 and 2019, McKinsey contracted with Purdue on 75 different occasions in the United States. In 2007, a Purdue affiliate pleaded guilty to misbranding OxyContin, from 1996 through 2001, by falsely marketing it as less addictive, less subject to abuse and diversion, and less likely to cause dependence and withdrawal than other pain medications, and Purdue entered into a five-year corporate integrity agreement with the Department of Health and Human Services Office of Inspector General. After the 2007 guilty plea, McKinsey partners maintained close contact with Purdue, and in 2009, worked with Purdue to enhance “brand loyalty” for OxyContin and protect market share.

In 2010 McKinsey worked with Purdue to obtain FDA approval for a version of OxyContin that was reformulated with abuse-deterrent properties. Following the introduction of reformulated OxyContin in August 2010, OxyContin sales immediately began to decline. Purdue studied the drivers for this decline and attributed it, in large part, to a drop in prescriptions for individuals abusing OxyContin and increases in regulatory safeguards intended to hinder medically unnecessary prescribing of OxyContin.

In May 2013, Purdue retained McKinsey to conduct a rapid assessment of the underlying drivers of OxyContin performance, identify key opportunities to increase near-term OxyContin revenue and develop plans to capture priority opportunities. This 2013 effort was called Evolve to Excellence, or “E2E,” and included McKinsey advising Purdue on how to “turbocharge” the sales pipeline for OxyContin by, among other strategies, intensifying marketing to High Value Prescribers, included prescribers who were writing opioid prescriptions for uses that were unsafe, ineffective, and medically unnecessary.

McKinsey consultants spoke with Purdue about the concerns and increasing reluctance of pharmacists and pharmacy chains to fill prescriptions for OxyContin as abuse of the drug rose. McKinsey consultants also went on several “ride-alongs” with Purdue sales representatives in the field, as these sales representatives called on prescribers and pharmacists. In notes about one of these ride-alongs, a McKinsey consultant wrote, in part, “Pharmacist; [had] a gun and was shaking; abuse is definitely a huge issue[.]”

In August 2013, McKinsey partners met with certain members of the Purdue Board of Directors to present McKinsey’s findings and proposal; as one McKinsey partner reported afterwards, “[b]y the end of the meeting the findings were crystal clear to everyone and they gave a ringing endorsement of ‘moving forward fast.’” McKinsey also described for Purdue the financial value at stake: “hundreds of millions, not tens of millions.”

For Purdue and McKinsey, E2E was a financial success. Their targeting of High Value Prescribers slowed OxyContin’s declining sales and kept Purdue’s profits flowing at the expense of public health. After the conclusion of McKinsey’s work for Purdue on E2E, McKinsey performed additional work with Purdue that also sought to maximize OxyContin sales by further targeting sales efforts to High Value Prescribers.

False Claims to Federal Healthcare Programs and the FDA

The department’s civil False Claims Act settlement relates to allegations that, from 2013 to 2014, McKinsey, by advising Purdue to turbocharge OxyContin marketing to High Value Prescribers as a means to increase OxyContin sales, and despite its awareness of the opioid crises, knowingly caused false and fraudulent claims for OxyContin to be submitted to Medicare, Medicaid, TRICARE, the Federal Employees Health Benefit Program and the Veterans Health Administration.

The large $650 million fine also settles allegations that, from 2014 to 2017, McKinsey knowingly misled the FDA by assigning consultants to concurrently work on both FDA projects and competitively sensitive Purdue projects, contrary to McKinsey US’ conflict of interest policy. While soliciting a contract from the FDA, McKinsey US represented to the FDA that it had a conflict-of-interest policy in which its consultants serving the FDA would not be assigned to a competitively sensitive project for a significant period of time following an assignment for FDA.

The FDA then awarded McKinsey US the first in a series of contracts on a project relating to the monitoring of the safety of FDA-regulated products. McKinsey US admitted that it did not inform the FDA that its consultants worked on the Purdue projects around the same time those consultants also worked on the FDA project.

McKinsey’s Remedial Measures

As part of the resolution, McKinsey has agreed to implement a significant compliance program, including a system of policies and procedures designed to identify and assess high-risk client engagements. As part of this compliance program, McKinsey will implement new document retention procedures and training for all partners, officers and employees who provide or implement advice to clients. This compliance program is in addition to the provisions negotiated between McKinsey and the DoJ in a concurrent resolution with McKinsey & Company Africa that was announced on December 5^th.

McKinsey has also agreed that it will not do any work related to the marketing, sale, promotion or distribution of controlled substances during the five-year term of the DPA. The settlement requires McKinsey’s Managing Partner to certify, on an annual basis, the firm’s compliance with its obligations under the DPA and federal law.  

Jacob Horowitz is a contributing editor at Compliance Chief 360°

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cKinsey and Company Africa, which operates in South Africa as a subsidiary of international consulting firm McKinsey & Co., will pay over $122 million to resolve an investigation by the Justice Department into a scheme to pay bribes to government officials in South Africa between 2012 and 2016. A former McKinsey senior partner who participated in the bribery scheme has also pleaded guilty in the case.

McKinsey Africa also entered into a three-year deferred prosecution agreement (DPA) with the department in connection with criminal information filed in the Southern District of New York charging the company with one count of conspiracy to violate the anti-bribery provisions of the Foreign Corrupt Practices Act (FCPA). Vikas Sagar, a former senior partner of McKinsey who worked in McKinsey Africa’s South Africa office, previously pleaded guilty to one count of conspiracy to violate the FCPA.

According to court documents and admissions, McKinsey Africa, acting through a senior partner, agreed to pay bribes to then-officials at Transnet, South Africa’s state-owned custodian of ports, rails, and pipelines, and at Eskom, South Africa’s state-owned energy company. Between at least 2012 and 2016, McKinsey Africa obtained sensitive confidential and non-public information from Transnet and Eskom regarding the award of lucrative consulting contracts and submitted proposals for multimillion-dollar consulting engagements, while knowing that South African consulting firms with which McKinsey Africa had partnered would pay a portion of their fees as bribes to officials at Transnet and Eskom. As a result of the bribery scheme, McKinsey and McKinsey Africa earned profits of approximately $85,000,000.

“McKinsey Africa bribed South African officials in order to obtain lucrative consulting business that generated tens of millions of dollars in profits,” said Principal Deputy Assistant Attorney General Nicole M. Argentieri, in a statement. “The resolution announced today — the department’s third coordinated resolution with South African authorities in only two years — is evidence that our International Corporate Anti-Bribery (ICAB) initiative, which we announced in November 2023, is bearing fruit.”

“This settlement underscores our unwavering commitment to holding companies accountable that willfully engage in corrupt activities around the world,” said Assistant Director Chad Yarbrough of the FBI Criminal Investigative Division. “This misconduct is a blatant violation of law and a breach of public trust. No matter what country the crime occurs in, the FBI will always work closely with our international partners to root out corruption.”

Details of McKinsey Africa’s Credit for Cooperation

The Justice Department has agreed to credit up to one-half of the criminal penalty against amounts McKinsey pays to authorities in South Africa in related proceedings. In addition, both McKinsey and McKinsey Africa have agreed to, among other things, continue cooperating with the Criminal Division’s Fraud Section and the U.S. Attorney’s Office for the Southern District of New York in any ongoing or future criminal investigation arising during the term of the DPA. McKinsey and McKinsey Africa have also agreed to enhance their compliance program where necessary and appropriate and to report to the government regarding remediation and implementation of their enhanced compliance program.

The Justice Department reached this resolution with McKinsey Africa based on a number of factors, including, among others, the nature and seriousness of the offense. McKinsey Africa received credit for its cooperation with the department’s investigation, which included:

• Immediately and proactively cooperating from the inception of the department’s investigation.
• Making numerous factual presentations to the department over the course of its investigation, derived from information obtained through the company’s internal investigation.
• Collecting, reviewing, and producing voluminous records, including those located abroad, in response to requests from the department.
• Promptly reporting the discovery of document-deletion efforts by the McKinsey partner involved in the conduct found during its internal investigation, taking additional investigative steps to uncover information and evidence regarding those efforts, and producing such information and evidence to the department.
• Reporting, in real time, newly discovered information and documents that allowed the department to preserve and obtain evidence as part of its independent investigation.
• Tracing complex internal accounting money-flows and currency exchange-information in response to requests from the department
• Preserving, collecting, and producing to the department documents located abroad, and engaging a third-party forensics consultant to analyze key electronic devices and providing to the department the results of that analysis.

McKinsey and McKinsey Africa also engaged in timely remedial measures, including:

• Putting the McKinsey partner involved in the criminal scheme on leave when it learned of the partner’s role in the scheme, subsequently separating that partner from McKinsey after discovering his deletion activity, and requiring that partner’s continued cooperation post-separation.
• Conducting additional anti-corruption training for employees in South Africa and elsewhere in Africa, and ceasing work with all state-owned enterprises (SOEs) for a period of time while it conducted its internal investigation.
• Enhancing due diligence processes for third-party partners, including instituting controls to ensure that due diligence is completed before work begins on an engagement and imposing a more rigorous risk-review for public sector clients.
• Carrying out an enhanced review process for all sole-source work that requires advance-approval before the engagement can begin.
• Voluntarily repaying, in 2018 and 2021, all revenues that McKinsey and McKinsey Africa received from potentially tainted contracts to the SOEs in South Africa from which they received contracts as a result of the criminal scheme.

In light of these considerations as well as McKinsey’s prior history, the criminal penalty calculated under the U.S. Sentencing Guidelines reflects a 35 percent reduction off the fifth percentile of the otherwise applicable guidelines fine range.  

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anadian-based TD Bank will pay more than $3 billion in a historic settlement with U.S. authorities who said that the financial institution’s lax practices allowed significant money laundering over multiple years. The bank pleaded guilty to conspiracy to commit money laundering, the largest bank in U.S. history to do so, Attorney General Merrick Garland said.

“TD Bank created an environment that allowed financial crime to flourish,” Garland said. “By making its services convenient for criminals, it became one.”

TD Bank, the 10th largest bank in the United States, agreed to pay over $1.8 billion in penalties to resolve the Justice Department’s investigation into violations of the Bank Secrecy Act (BSA) and money laundering, the Justice Department said in a statement. A TD Bank statement said the full expense would exceed $3 billion for the firm, which must also upgrade its current anti-money laundering operations. It also will face a more stringent approval process for new products, stores, services and markets.

The bank pleaded guilty to conspiring to fail to maintain an anti-money laundering (AML) program that complies with the BSA, fail to file accurate Currency Transaction Reports (CTRs), and launder money.

TD Bank’s guilty pleas are part of a coordinated resolution with the Board of Governors of the Federal Reserve Board (FRB), as well as the Treasury Department’s Office of the Comptroller of the Currency (OCC) and Financial Crimes Enforcement Network (FinCEN).

“By making its services convenient for criminals, TD Bank became one,” . “Today, TD Bank also became the largest bank in U.S. history to plead guilty to Bank Secrecy Act program failures, and the first US bank in history to plead guilty to conspiracy to commit money laundering,” said Garland. “TD Bank chose profits over compliance with the law — a decision that is now costing the bank billions of dollars in penalties. Let me be clear: our investigation continues, and no individual involved in TD Bank’s illegal conduct is off limits.”

“For years, TD Bank starved its compliance program of the resources needed to obey the law. Today’s historic guilty plea, including the largest penalty ever imposed under the Bank Secrecy Act, offers an unmistakable lesson: crime doesn’t pay — and neither does flouting compliance,” said Deputy Attorney General Lisa Monaco. “Every bank compliance official in America should be reviewing today’s charges as a case study of what not to do. And every bank CEO and board member should be doing the same. Because if the business case for compliance wasn’t clear before — it should be now.”

‘Pervasive and Systemic Deficiencies’

According to court documents, between January 2014 and October 2023, TD Bank had long-term, pervasive, and systemic deficiencies in its U.S. AML policies, procedures, and controls but failed to take appropriate remedial action. Instead, senior executives at TD Bank enforced a budget mandate, referred to internally as a “flat cost paradigm,” requiring that TD Bank’s budget not increase year-over-year, despite its profits and risk profile increasing significantly over the same period. Although TD Bank maintained elements of an AML program that appeared adequate on paper, fundamental, widespread flaws in its AML program made TD Bank an “easy target” for perpetrators of financial crime.

Over the last decade, TD Bank’s federal regulators and TD Bank’s own internal audit group repeatedly identified concerns about its transaction monitoring program, a key element of an appropriate AML program necessary to properly detect and report suspicious activities. Nonetheless, from 2014 through 2022, TD Bank’s transaction monitoring program remained effectively static, and did not adapt to address known, glaring deficiencies; emerging money laundering risks; or TD Bank’s new products and services. For years, TD Bank failed to appropriately fund and staff its AML program, opting to postpone and cancel necessary AML projects prioritizing a “flat cost paradigm” and the “customer experience.”

Throughout this time, TD Bank intentionally did not automatically monitor all domestic automated clearinghouse (ACH) transactions, most check activity, and numerous other transaction types, resulting in 92% of total transaction volume going unmonitored from Jan. 1, 2018, to April 12, 2024. This amounted to approximately $18.3 trillion of transaction activity. TD Bank also added no new transaction monitoring scenarios and made no material changes to existing transaction monitoring scenarios from at least 2014 through late 2022; implemented new products and services, like Zelle, without ensuring appropriate transaction monitoring coverage; failed to meaningfully monitor transactions involving high-risk countries; instructed stores to stop filing internal unusual transaction reports on certain suspicious customers; and permitted more than $5 billion in transactional activity to occur in accounts even after the bank decided to close them.

TD Bank’s AML failures made it “convenient” for criminals, in the words of its employees. These failures enabled three money laundering networks to collectively transfer more than $670 million through TD Bank accounts between 2019 and 2023. Between January 2018 and February 2021, one money laundering network processed more than $470 million through the bank through large cash deposits into nominee accounts. The operators of this scheme provided employees gift cards worth more than $57,000 to ensure employees would continue to process their transactions. And even though the operators of this scheme were clearly depositing cash well over $10,000 in suspicious transactions, TD Bank employees did not identify the conductor of the transaction in required reports.

In a second scheme between March 2021 and March 2023, a high-risk jewelry business moved nearly $120 million through shell accounts before TD Bank reported the activity. In a third scheme, money laundering networks deposited funds in the United States and quickly withdrew those funds using ATMs in Colombia. Five TD Bank employees conspired with this network and issued dozens of ATM cards for the money launderers, ultimately conspiring in the laundering of approximately $39 million. The Justice Department has charged over two dozen individuals across these schemes, including two bank insiders. TD Bank’s plea agreement requires continued cooperation in ongoing investigations of individuals.

As part of the plea agreement, TD Bank has agreed to forfeit $452 million and pay a criminal fine of $1.4 billion, for a total financial penalty of $1.8 billion. TD Bank has also agreed to retain an independent compliance monitor for three years and to remediate and enhance its AML compliance program. TD Bank has separately reached agreements with the FRB, OCC, and FinCEN, and the Justice Department will credit $123 million of the forfeiture toward the FRB’s resolution.

Partial Cooperation Credit

The Justice Department reached its resolution with TD Bank based on a number of factors, including the nature, seriousness, and pervasiveness of the offenses, as a result of which TD Bank became the bank of choice for multiple money laundering organizations and criminal actors and processed hundreds of millions of dollars in money laundering transactions. Although TD Bank did not voluntarily disclose its wrongdoing, it received partial credit for its strong cooperation with the Department’s investigation and the ongoing remediation of its AML program. TD Bank did not receive full credit for its cooperation because it failed to timely escalate relevant AML concerns to the Department during the investigation. Accordingly, the total criminal penalty reflects a 20% reduction based on the bank’s partial cooperation and remediation.

IRS Criminal Investigation, the Federal Deposit Insurance Corporation Office of Inspector General, and Drug Enforcement Administration investigated the case. The Morristown Police Department, U.S. Attorney’s Office for the District of Puerto Rico, Homeland Security Investigations, U.S. Customs and Border Protection, and New York City Police Department provided substantial assistance.  

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The complaint alleges that TikTok and ByteDance failed to comply with the COPPA requirement to notify and obtain parental consent before collecting and using personal information from children under the age of 13.

“TikTok knowingly and repeatedly violated kids’ privacy, threatening the safety of millions of children across the country,” said FTC Chair Lina Khan. “The FTC will continue to use the full scope of its authorities to protect children online—especially as firms deploy increasingly sophisticated digital tools to surveil kids and profit from their data.”

“The Justice Department is committed to upholding parents’ ability to protect their children’s privacy,” said Principal Deputy Assistant Attorney General Brian Boynton. “This action is necessary to prevent the defendants, who are repeat offenders and operate on a massive scale, from collecting and using young children’s private information without any parental consent or control.”

ByteDance and its related companies allegedly were aware of the need to comply with the COPPA Rule and the 2019 consent order and knew about TikTok’s compliance failures that put children’s data and privacy at risk. Instead of complying, ByteDance and TikTok spent years knowingly allowing millions of children under 13 on their platform designated for users 13 years and older in violation of COPPA, according to the complaint.

As of 2020, TikTok had a policy of maintaining accounts of children that it knew were under 13 unless the child made an explicit admission of age and other rigid conditions were met, according to the complaint. TikTok employees allegedly spent an average of only five to seven seconds reviewing each account to make their determination of whether the account belonged to a child.

The company allegedly continued to collect personal data from these underage users, including data that enabled TikTok to target advertising to them—without notifying their parents and obtaining their consent as required by the COPPA Rule. Even after it reportedly changed its policy not to require an explicit admission of age, TikTok still continued to unlawfully maintain and use personal information of children, according to the complaint.

TikTok’s practices prompted its own employees to raise concerns. As alleged, after failing to delete numerous underage child accounts, one compliance employee noted, “We can get in trouble … because of COPPA.”

TikTok Allowed Children to Bypass the Age Requirement

In addition, the complaint alleges that TikTok built back doors into its platform that allowed children to bypass the age gate aimed at screening children under 13. TikTok allegedly allowed children to create accounts without having to provide their age or obtain parental consent to use TikTok by using credentials from third-party services like Google and Instagram. TikTok classified such accounts as “age unknown” accounts, which grew to millions of accounts, according to the complaint.

TikTok also allegedly made it difficult for parents to request that their child’s accounts be deleted. When parents managed to navigate the multiple steps required to submit a deletion request, TikTok often failed to comply with those requests. TikTok also imposed unnecessary and duplicative hurdles for parents seeking to have their children’s data deleted. That practice allegedly continued even after the executive responsible for child safety issues told TikTok’s then-CEO, “we already have all the info that’s needed” to delete a child’s data when a parent requests it, yet TikTok would not delete it unless the parent fills out a second, duplicative form. If the parent did not do that, the executive allegedly added, “then we have actual knowledge of underage user[s] and took no action!”

Additionally, the complaint alleges that TikTok failed to:

• Notify parents about all of the personal data they were collecting from children;
• Obtain parental consent for the collection and use of that data;
• Limit the collection, use, and disclosure of children’s personal information; and
• Delete children’s personal information when requested by parents or when it was no longer needed.

The complaint asks the court to impose civil penalties against ByteDance and TikTok and to enter a permanent injunction against them to prevent future violations of COPPA.  

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The program offers monetary awards to those provide original information relating to financial crimes, bribery or healthcare fraud. If such information results in a forfeiture greater than $1 million, the whistleblower will be entitled to a financial award granted that the whistleblower.

“With this program we’re doubling down on a proven strategy to ferret out criminal activity that might otherwise go unreported,” said Deputy Attorney General Lisa Monaco. “Law enforcement has long offered rewards to coax tipsters to report crimes — from the “Wanted” posters of the Old West to the reforms in Dodd-Frank that created whistleblower programs at the SEC and the CFTC. Those agencies alone have received thousands of tips, paid out many hundreds of millions of dollars, and disgorged billions in ill-gotten gains from corporate bad actors.”

As outlined in the program’s guidance document, there are multiple criteria to meet in order to qualify for such an award. The whistleblower’s disclosure must be voluntary, the information must be original, the submission must be truthful and complete, including everything the individual knows about the conduct at issue and the individual must cooperate with the DOJ in the investigation, including testifying as required.

Individuals that meet these requirements will be eligible for an award, calculated based on the total proceeds forfeited. Eligible whistleblowers may receive up to 30% of the net proceeds forfeited to the DoJ For the first $100 million in net proceeds. Whistleblowers are eligible to receive up to 5% of any forfeiture between $100 and $500 million. Ultimately, this system sets a maximum award at $50 million.

In determining how much to give as an award the DoJ will consider multiple factors. These factors include the significance of the information; assistance provided by the whistleblower; participation by the whistleblower in the company’s internal compliance systems; any delay or interference in reporting; and if the individual was occupying an oversight role at the company.

The Program Faces Criticism for Implementing a Maximum Award Limit

Although this system has received praise from many of its observers, some have criticized it for its award cap. “Whistleblowers take enormous risks stepping forward, particularly in reporting the kind of wrongdoing targeted by DOJ’s new program,” said Erika Kelton, a partner at whistleblower law firm Phillips & Cohen. “By limiting the amount of an award, individuals may choose to stay silent, particularly because the larger recovery may also increase the risks.”

A Justice Department official noted that the $50 million maximum payment was established considering the history of SEC whistleblower awards, where most have been $50 million or less. According to agency data, the SEC has issued only three awards exceeding $50 million since the whistleblower program’s inception in 2011.

To file a claim for a whistleblower award, an individual must file a claim form located on the DoJ’ website. In order to be considered for an award all claim forms and required attachments must be received by the Department within 90 days of its publications of the successful forfeiture.  

Jacob Horowitz is a contributing editor at Compliance Chief 360° 

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In his final ruling, Judge Amit Mehta held that as a result of suppressing competition by paying billions of dollars to operators of web browsers and phone manufacturers to be their default search engine, Google has become a monopolist and “it has acted as one to maintain its monopoly.”

Judge Mehta emphasized that Google’s illegal practices has resulted in anticompetitive behavior. The tech giant’s exclusive deals with Apple and other large mobile companies that resulted in the preloading of Google’s search engine as the exclusive and default engine displays the company’s illegal practices. These contracts drove Google’s online advertising business as it transformed its search engine into the most convenient platform to access.

“This victory against Google is an historic win for the American people,” said Attorney General Merrick Garland. “No company — no matter how large or influential — is above the law. The Justice Department will continue to vigorously enforce our antitrust laws.” “This landmark decision holds Google accountable. It paves the path for innovation for generations to come and protects access to information for all Americans,” said Assistant Attorney General Kanter. “This victory is a reflection on the tireless efforts of the dedicated public servants at the Antitrust Division and our state law enforcement partners whose work made today’s decision possible.”

In response to the final ruling as well as Attorney Garland’s statement Google’s head of global affairs Kent Walker released his own statement that that displays the company’s dissatisfaction with the ruling. “This decision recognizes that Google offers the best search engine but concludes that we shouldn’t be allowed to make it easily available,” he said in a written statement that quoted complimentary passages from Mehta’s decision. “As this process continues, we will remain focused on making products that people find helpful and easy to use.”

What Does This Mean For the Future of Tech

Since Judge Mehta has yet to impose any penalties since Google has yet to appeal, the implication of this ruling is not completely clear. According to many, the most likely penalty imposed on Google will be a court order to terminate its existing contracts with Apple and other mobile companies. Ultimately, this case paves the way for AI-powered search engines to enter the industry and take control of what Google has to relinquish.

This case also teaches a valuable lesson to big tech companies to be cautious when drafting a contract that entails a sense of exclusivity. “If you’ve got a dominant product, you’ve got to be very careful to make sure that your licensing and contract agreements are open, because making them exclusive can be dangerous,” said University of Pennsylvania Carey Law School antitrust scholar, Herbet Hovenkamp. No longer can companies form contracts that aim to transform a product into a default platform for all users.

Although this decision will play a significant role in Google’s future business practices, it will have an even larger role for the tech industry as a whole. For now on, companies will have to be very careful when engaging in business agreements with third parties to use its products or else they will face a similar result to Google. This case is only the start of big tech antitrust lawsuits as companies such as Apple, Amazon and Meta face their own respective antitrust allegations.  

Jacob Horowitz is a contributing editor at Compliance Chief 360° 

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The company said that it expects an administrative order from the SEC to resolve previously disclosed criminal and civil investigations into “improper payments made by Raytheon Company and its joint venture, Thales-Raytheon Systems, in connection with certain Middle East contracts since 2012.”

The company also expects to enter into the deferred agreement and False Claims Act settlement with the DoJ to resolve investigations regarding defective pricing claims for “specific legacy Raytheon Company contracts from 2011 to 2013 and in 2017.”

“The charge also includes the impact of certain voluntarily disclosed export controls violations primarily identified in connection with the integration of Rockwell Collins and, to a lesser extent, Raytheon Company into RTX, including certain violations expected to be resolved pursuant to a consent agreement with the Department of State,” according to RTX’s financial disclosure.

It was reported in 2021 that the U.S. was investigating whether payments made by Raytheon to a consultant for the Qatar Armed Forces were actually bribes intended for a member of the ruling royal family.

“While the financial impact of these items is above what we had previously reserved, we believe the provisions we have taken put these issues behind us financially, and we will continue to cooperate with the government and external monitors as we move forward,” Neil Mitchill Jr., RTX’s chief financial officer, said on an earnings call. The company has described the bribery and contract pricing matters as legacy issues as it merged with United Technologies in 2020.

RTX said that prosecutors will seek to dismiss charges if the company adheres to the deferred prosecution agreements for a three-year period. These agreement mandates the company to enhance its compliance programs and implement other measures to prevent future violations.  

Jacob Horowitz is a contributing editor at Compliance Chief 360° 

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In 2021, Boeing agreed to a deferred prosecution agreement (DPA) which required the company to pay around $244 million in criminal penalties, $1.77 billion in compensation to its airline customer and $500 million to establish a crash victims’ beneficiary fund to compensate the families of those who were killed in the 2018 and 2019 crashes.

In the agreement, Boeing took responsibility for hiding vital information regarding the condition of the 737 Max jets. Boeing specifically held itself accountable for its failure to provide information regarding features that affected the plane’s flight control system. Since then, investigators have determined that the system consisted of faulty sensor readings that could automatically push the plane to nosedive.

DoJ Determines that Boeing Failed to Meet the DPA Conditions

Inherent in a DPA is the government’s agreement to bring charges but not proceed with them while the company being “charged” agrees to take upon itself certain requirements or conditions. Boeing’s DPA required the company to “to design, implement, and enforce a compliance and ethics program to prevent and detect violations of the U.S. fraud laws throughout its operations.”

This DPA underwent intense scrutiny when the families of victims of the crashed flights went to court to challenge the agreement. The families requested that the court compel the DoJ to revise the agreement so that Boeing would no longer be immune from criminal prosecution, but the court declined to do so.

The end of the DPA’s term occurred earlier this year which then turned into a six-month evaluation period in which the government would assess whether Boeing has adhered to the agreement’s terms. The DoJ concluded that Boeing has failed to uphold these requirements and notified the judge of its decision

The families were once again disappointed with the decision of their case when the DoJ decided to accept the plea deal. Erin Applebaum, a partner at Kreindler & Kreindler LLP, which is representing 34 families who lost loved ones on Ethiopian Airlines Flight 302, said in a statement that they are “extremely disappointed that DOJ is moving forward with this wholly inadequate plea deal despite the families’ strong opposition to its terms. “While we’re encouraged that Boeing will not be able to choose its own monitor, the deal is still nothing more than a slap on the wrist and will do nothing to effectuate meaningful change within the company,” Applebaum said in the statement.”

Although this plea deal concludes the controversy surrounding the two crashes, it does not provide immunity for other incidents such as the one that involved a panel that blew off during an Alaska Airlines flight.

Jacob Horowitz is a contributing editor at Compliance Chief 360°

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In Chief Justice John Roberts’s opinion overruling the 40-year-old precedent, the Court strongly emphasized that courts should be the ones to “decide legal questions by applying their own judgment” and “it thus remains the responsibility of the court to decide whether the law means what the agency says.” The ruling essentially strips federal agencies such as the Securities and Exchange Commission from interpreting any ambiguities in a federal law and as a result abandons a doctrine that long been known as a cornerstone of administrative law.

Many in the legal industry believe that this ruling will result in a substantial increase in litigation challenging federal regulations. According to Douglas Hallward-Driemeier, head of the appellate and Supreme Court practice at Ropes & Gray, “litigants who were previously deterred from challenging federal government policies because of their poor odds under the Chevron doctrine will now be emboldened by the leveling of the playing field.”

Within his majority opinion, Chief Justice Roberts provided support for his conclusion. “Even when an ambiguity happens to implicate a technical matter, it does not follow that Congress has taken the power to authoritatively interpret the statute from the courts and given it to the agency,” Roberts said. “Courts, after all, do not decide such questions blindly,” but rely on the briefs and facts that the parties provide, including the records and reports of the expert agencies involved.

Although the end of the Chevron doctrine marks a significant transfer of power from agencies to the judicial system, it does not entirely prevent courts from deferring to an agency’s interpretation of an ambiguous law. The Court’s ruling merely states that courts are no longer required to assume that legal ambiguities require them to defer to the agency’s interpretation.

Agencies’ interpretations of laws will continue to receive a level of persuasiveness based on the influence of the agencies’ views. Factors influencing this persuasiveness may include how soon after the statute’s enactment the agency adopted the interpretation and the consistency with which the agency has maintained that interpretation over time.

Implications of the Court’s Abandonment of Chevron

 In abandoning the Chevron doctrine, the Court has seemingly ruled in favor of those who are often dissatisfied with agency decision: businesses and property owners. Meg Tahyar, head of the financial institutions and fintech team at Davis Polk & Wardwell, believes that such a ruling will put a substantial amount of pressure on federal agencies. According to Tahyar, agencies will “feel more pressure to shore up the reasoning they provide for the policy decisions they make. They won’t dare to be as creative and search through old statutes to fit new and novel problems.”

This significant Supreme Court decision hands a significant amount of power to judges who are now free to interpret many laws as they see fit. This Court decision effectively introduces a sense of uncertainty into all types of regulations including labor, technology, the environment and healthcare; an uncertainty that large corporations and businesses hope to take advantage of. Essentially, the real effect of this ruling will likely emerge over years of litigation, as courts, agencies, and Congress navigate its practical consequences.  

Jacob Horowitz is a contributing editor at Compliance Chief 360° 

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“Protecting taxpayer dollars from fraud and abuse is of paramount importance to the Department of Justice – and these enforcement figures prove it,” said Acting Associate Attorney General Benjamin Mizer. “The False Claims Act remains one of our most important tools for rooting out fraud, ensuring that public funds are spent properly, and safeguarding critical government programs.”

The False Claims Act penalizes those who knowingly and falsely claim money from the United States or knowingly fail to pay money owed to the United States. Its purpose is to safeguard government programs and operations that provide access to medical care, support our military and first responders, protect American businesses and workers, help build and repair infrastructure, offer disaster and other emergency relief, and provide many other critical services and benefits.

“As the record-breaking number of recoveries reflects, those who seek to defraud the government will pay a high price,” said Assistant Attorney General Boynton, head of the DoJ’s Civil Division. “The American taxpayers deserve to know that their hard-earned dollars will be used to support the important government programs and operations for which they were intended.”

Of the more than $2.68 billion in False Claims Act settlements and judgments reported by the DoJ this past fiscal year, over $1.8 billion related to matters that involved the health care industry, including managed care providers, hospitals, pharmacies, laboratories, long-term acute care facilities, and physicians. The $1.8 billion only include recoveries arising from federal losses, but in many of these cases, the department was instrumental in recovering additional amounts for state Medicaid programs.

Health Care Fraud

In 2023, health care fraud remained a leading source of False Claims Act settlements and judgments. These recoveries restore funds to federal programs such as Medicare, Medicaid, and TRICARE, the health care program for service members and their families. But just as important, enforcement of the False Claims Act deters others who might try to cheat the system for their own gain, and in many cases, also protects patients from medically unnecessary or potentially harmful actions. As in years past, the act was used to pursue matters involving a wide array of health care providers, goods, and services.

In one of its largest settlements, The Cigna Group agreed to pay more than $172 million for allegations that it submitted inaccurate diagnosis codes for its Medicare Advantage Plan enrollees in order to increase its payments from Medicare. The DoJ obtained another $22.5 million from Martin’s Point Health Care for similar allegations.

The Department also received numerous settlements and judgements from companies who engaged in unnecessary services and substantial care, the opioid epidemic, and unlawful kickbacks.

Although these actions exhibit the DoJ’s focus on the healthcare industry, the recoveries in 2023 also reflect the department’s focus on key enforcement priorities, including fraud in pandemic relief programs and alleged violations of cybersecurity requirements in government contracts and grants. However, considering the trends of the past year, it is reasonable to anticipate that healthcare will continue to be a primary focus for the Department.  

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