DOJ Revises Justice Manual to Strengthen False Claims Act Enforcement

DOJ Revises Justice Manual to Strengthen False Claims Act Enforcement

On September 18, the US Department of Justice (DOJ) announced revisions to the Justice Manual aimed at strengthening False Claims Act (FCA) enforcement through what it described as “clearer standards that promote fair and effective enforcement.”

The revisions address two areas. First, the DOJ reinstated and expanded upon its previous policy that sub-regulatory guidance documents cannot impose legal obligations beyond those established by statute or regulation. DOJ components may not issue guidance documents that purport to create rights or obligations binding on parties outside the executive branch, nor issue guidance documents that create binding standards by which the DOJ will determine compliance with existing regulatory or statutory requirements. Accordingly, the DOJ “may not bring actions based solely on allegations of noncompliance with guidance documents” and “must establish a violation by reference to statutes and regulations.” Previously, the DOJ policies regarding agency guidance likewise provided that an enforcement action could not be based exclusively on a guidance document. The revision permits the continued use of guidance documents for evidentiary purposes, including as scienter, professional or industry standards, and context.

Second, the DOJ revised the Justice Manual to clarify that it should consider exercising its dismissal authority when it declines to intervene in qui tam actions and should revisit that assessment as appropriate during litigation. The revised qui tam dismissal policy substantially mirrors the DOJ’s earlier policy. The revision identifies a non-exhaustive list of factors supporting dismissal, including curbing meritless qui tam actions, preventing parasitic or opportunistic suits that duplicate a pre-existing government investigation and do not add useful information, preserving government resources, and safeguarding classified information and national security interests. Prior approval of the Assistant Attorney General or US Attorney before seeking dismissal of a qui tam action is still required.

Read the DOJ’s press release here. The Justice Manual revisions are available here and here.

DOJ Sues Georgia Lab Executives Over Medicare Fraud Targeting Faith-Based Communities and Seniors

On September 17, the DOJ filed a complaint against Genus3, LLC and Jay Johnson and Austin Whiles, former executives of Atlanta-based clinical laboratory Capstone Diagnostics. The defendants are accused of orchestrating two testing schemes that caused Medicare to pay more than $13 million for medically unnecessary genetic and respiratory pathogen panel tests in violation of the FCA and federal common law. The government intervened in a qui tam action originally filed in 2019.

According to the complaint, the first alleged scheme used church-sponsored health fairs and religious conferences to generate genetic testing through alleged unlawful kickbacks and without individualized treating-provider judgment. The complaint further alleges that Capstone personnel swabbed attendees at mass events and then used physician names, signatures, and standing orders to make the testing appear properly ordered and medically necessary.

The complaint alleges that in the second scheme, Johnson and Whiles exploited senior living communities’ demand for COVID-19 testing to generate larger-reimbursing respiratory pathogen panels through community-wide standing orders, copied or altered physician signatures, and standardized diagnosis codes.

The complaint also alleges that Whiles secretly captured approximately $4.75 million in volume-based commissions by routing money through Whitson Medical, a company he owned and controlled, and that Johnson transferred millions of dollars to his now-former wife, Sarah Haslock. 

As previously reported, Capstone and its owner, Andrew Maloney, pleaded guilty to conspiracy to pay health care kickbacks and, as part of the plea, agreed to pay $14.3 million. In addition, Johnson was indicted in December 2025 for conspiracy to commit health care and wire fraud for his alleged role in the church health fair genetic testing scheme; that prosecution remains pending. 

The claims asserted in the complaint are allegations only. There has been no determination of liability. 

The case is United States ex rel. Allen v. Capstone Diagnostics, LLC, et al., Case No. 1:19-CV-5598-SEG in the US District Court for the Northern District of Georgia.

Read the DOJ’s press release here.

First Circuit Affirms Prison Sentence and $6.5 Million Restitution Order in Health Insurance Fraud Scheme

On September 21, the US Court of Appeals for the First Circuit affirmed the 99-month prison sentence and $6.5 million restitution order imposed on psychiatrist Dr. Gustavo Kinrys. Kinrys was convicted of submitting approximately $19 million in fraudulent claims to private and public health insurers for thousands of alleged treatment sessions that never took place.

Kinrys challenged the District Court’s reliance on the full billed amount as the intended loss figure for sentencing, arguing that the in-network contracted rates of approximately $8.3 million more accurately captured his intended loss. The First Circuit held that the district court did not clearly err. The District Court found that pro se civil lawsuits filed by Kinrys against insurers undermined his claim that he only intended to collect at the contracted rates.

The court also affirmed the $6.5 million restitution order, rejecting Kinrys’s argument that it should be offset by allegedly legitimate claims for which he was not paid. 

The case is United States v. Kinrys, Case Nos. 24-1592, 24-1716, in the US Court of Appeals for the First Circuit.