Private equity investment in health care companies has garnered increasingly critical attention from the federal government, including recent scrutiny by Congress: In March 2021, the Oversight Subcommittee of the U.S. House of Representatives' Ways and Means Committee held a hearing on "Examining Private Equity's Expanded Role in the U.S. Health Care System." The tenor of the hearing is encapsulated in the opening remarks of the Oversight Subcommittee's Chairman, U.S. Representative Bill Pascrell Jr. (D-N.J.), who kicked off the discussion by cautioning that: "It's past time for a bright light to be shined on how private equity ownership and our health care system affects patient safety, cost, and jobs." Noting that 2020 saw $66 billion in private equity investment across the health care industry—a 21% increase from 2019—Chairman Pascrell expressed concern that "private equity's main focus—profit—is often at odds with what is best for patient care."

What would that bright light look like? The hearing discussed legislative proposals to increase transparency of private equity ownership and related party transactions. But panelists also discussed a well-established statute, the False Claims Act, that is already a primary tool for federal enforcement actions involving health care fraud. Indeed, the Congressional panel comes at a time when the Department of Justice (DOJ) has recently investigated and penalized private equity owners millions of dollars for false claims made by their health care portfolio companies, settlements that mark a new development in who is targeted in False Claims Act cases. Taken together, the Congressional hearing and the recent DOJ actions signal compliance priorities for private equity companies investing in health care portfolio companies.