When a concern surfaces, organizations are often balancing competing priorities. They want to understand what happened, minimize disruption, and avoid escalating the issue unnecessarily. Those instincts are reasonable. But they can also lead to decisions that make the situation more difficult to manage over time.

Internal investigations serve an important role and are often the right starting point. But they require judgment about when that approach is no longer sufficient. That determination turns less on capability and more on structure, credibility, and how the investigation will be evaluated outside the organization.

Most healthcare and life sciences companies do not set out to create whistleblowers. Yet many do, often without realizing it. What begins as an internal concern can evolve into something much larger if it is not handled carefully. A question about billing, a concern about a physician relationship, or an issue raised through a compliance channel may seem manageable at first. But once that concern leaves the organization, it can take on a very different character

While many healthcare and life sciences enforcement actions are initiated by regulators, most investigations actually start internally—with a complaint, a billing question, or a concern that something does not look right. The challenge for many organizations is not whether an issue exists. It is deciding what to do next.

The HHS-OIG Self-Disclosure Protocol is designed to encourage healthcare providers, suppliers, contractors, and grantees to self-report evidence of potential fraud or violations of federal healthcare program requirements. By voluntarily disclosing such conduct, entities may benefit from reduced penalties, a presumption against exclusion from federal programs, and a more collaborative resolution process, as opposed to facing government-initiated investigations or litigation.

The FDA defines Software as a Medical Device (SaMD) as software “intended to be used for one or more medical purposes that perform these purposes without being part of a hardware medical device.” In plain English: if your app, algorithm, or platform is intended to diagnose, cure, treat, mitigate, or prevent disease, the FDA may consider it a medical device — even if it’s just running on a smartphone.

Here are the five compliance blind spots that catch early-stage digital health companies off guard — and how to avoid them before they become expensive lessons.

For founders in digital health, biotech, or life sciences, compliance isn’t optional — but it also can’t become a black hole for resources. The challenge is building a compliance infrastructure that protects the company and satisfies regulators without spending like an enterprise.

Most founders think of compliance as overhead — a checklist to satisfy investors or legal counsel. In reality, compliance is the operating system for trust. It dictates how your product interacts with patients, payers, and partners.

Every business faces risk — but not all risks come from competitors, market shifts, or economic downturns. Some come from within: legal and compliance risks that can quietly grow until they trigger lawsuits, fines, or regulatory investigations.

For healthcare providers, suppliers, and businesses, few penalties are as devastating as exclusion from Federal healthcare programs. When the HHS Office of Inspector General (HHS-OIG) excludes an individual or entity, they are barred from participating in Medicare, Medicaid, and other federal health programs. This not only cuts off a vital revenue stream but can also damage reputation and cripple operations.

In 2025, the Department of Justice (DOJ) and the Department of Health and Human Services (HHS) announced the creation of a new False Claims Act (FCA) Working Group (https://www.justice.gov/opa/pr/doj-hhs-false-claims-act-working-group). This collaborative initiative brings together prosecutors, regulators, and investigators from across the federal government to aggressively pursue fraud, waste, and abuse in federal healthcare programs.

On May 12, 2025, the U.S. Department of Justice's (DOJ) Head of the Criminal Division, Matthew R. Galeotti, i ssued a memorandum titled...