False Claims Act enforcement expands amid shifting white-collar landscape

Reuters

9 hours ago

June 16, 2025 - Although the current administration has deprioritized white-collar enforcement in some traditionally active areas, False Claims Act ("FCA") activity remains robust — and is poised for expansion. The executive branch has signaled that it will pursue FCA cases in new areas, including diversity, equity and inclusion ("DEI") initiatives, antisemitism on university campuses, transgender issues, and customs and tariffs compliance.
These developments signal heightened exposure for a wide range of institutions, from corporations to universities to healthcare providers. Meanwhile, enforcement in traditional FCA strongholds — such as healthcare — continues unabated. Below, we discuss these emerging and continued FCA risks.
From Jan. 1 through May 31, 2025, DOJ announced approximately 128 FCA settlements totaling approximately $1.257 billion — a pace consistent with enforcement under the prior administration. DOJ has shown no signs of scaling back pending matters, signaling continued FCA scrutiny across key sectors.
Healthcare and Paycheck Protection Program ("PPP") cases remain dominant, representing 90 of the 128 settlements (~70%) and accounting for over $1.04 billion — more than 80% — of the total recoveries to date. The emphasis on healthcare and PPP cases is in line with the prior year, when DOJ collected $1.67 billion from healthcare-related settlements and $250 million from pandemic fraud-related actions. False Claims Act Settlements and Judgments Exceed $2.9B in Fiscal Year 2024, U.S. Dep't of Justice: Office of Public Affairs (Jan. 15, 2025).
The importance of whistleblower actions under the FCA's qui tam provisions also remains clear: At least 65% of the settlement value so far in 2025 stems from relator-initiated cases.
DOJ has also initiated new healthcare actions. Recently, DOJ filed an FCA suit against three of the country's largest insurers — Aetna, Elevance, and Humana — as well as three major insurance brokers — GoHealth, SelectQuote, and eHealth. Hannah Albarazi, "Aetna And Humana Accused Of Medicare Kickbacks And Bias," Law360 (May 1, 2025). The complaint alleges a years-long scheme by these insurers to provide kickbacks to insurance brokers who in return allegedly funneled seniors into the Medicare plans most profitable for the insurers.
Although no Answer has been filed yet, the press has reported that the defendants dispute the allegations and intend to fight the case in court. "Trump's DOJ Accuses Medicare Advantage Insurers of Paying 'Kickbacks' for Primo Customers," KFF Health News (May 19, 2025). This case was initially brought by a relator under the FCA's qui tam provisions, but DOJ intervened and unsealed it on May 1, 2025. This case is a strong signal that the healthcare sector will remain a central focus of the new administration's FCA enforcement priorities.
Recent DOJ pronouncements indicate that FCA liability is expanding into areas not previously associated with fraud enforcement, including DEI initiatives, antisemitism, transgender issues, and tariffs.
Just one day into the new administration, the President signed an Executive Order which instructed all executive agencies to enforce civil rights laws and eliminate what it characterized as unlawful DEI programs. Exec. Order No. 14173, 90 Fed. Reg. 8633 (Jan. 31, 2025).
Building on that Executive Order, the Attorney General issued a February 2025 memorandum reaffirming DOJ's position that many DEI initiatives violate federal civil rights laws. Memorandum re: Ending Illegal DEI and DEIA Discrimination and Preferences, Office of the Attorney General (Feb. 5, 2025). The memorandum directed the DOJ Civil Rights Division to pursue investigations and penalties against private companies and academic institutions that receive federal funds whose DEI practices unlawfully "discriminate, exclude, or divide individuals based on race or sex." Id. at 1.
And on May 19, 2025, the U.S. Deputy Attorney General issued a memorandum (the "Memo") announcing a Civil Rights Fraud Initiative (the "Initiative"). Memorandum re: Civil Rights Fraud Initiative, Office of the Deputy Attorney General (Feb. 5, 2025). The Memo instructs DOJ to pursue FCA actions against any federal contractor or federal funds recipient that "knowingly violates federal civil rights laws." The Memo calls for coordination with other federal and state agencies and sets out potential enforcement targets, including:
•Federal funding recipients or federal contractors that falsely certify compliance with civil rights laws while maintaining DEI programs that allegedly assign benefits or burdens based on race, ethnicity, or national origin.
•Federally funded universities that allegedly permit antisemitism on campuses.
Critically, the Memo also "strongly encourages" private plaintiffs to file qui tam suits under the FCA — effectively deputizing employees, students, and other insiders as enforcement partners. Id. at 2. The Memo highlights the potential for private individuals to share in any monetary recovery that results from these cases. Indeed, under the FCA, whistleblowers can receive up to 30% of any monetary recovery, which — under the treble damages provision — could total several times the value of the federal contract or grant at issue.
For federal contractors, universities and other federal funds recipients, the enforcement implications are significant. Organizations found in violation of the FCA can face treble damages and per-claim penalties ranging from $14,000 to $28,000, in addition to reputational harm and follow-on litigation. Adjustments for Inflation to Civil Monetary Penalties, 15 C.F.R. § 6.3 (2025).
DOJ has already launched investigations under this new Initiative. According to recent reports, it is probing Harvard University's admissions practices for potential FCA violations tied to the Supreme Court's Students for Fair Admissions decision, which struck down race-conscious admissions. Michael C. Bender and Michael S. Schmidt, "Trump Administration Escalates Harvard Feud With New Justice Dept. Investigation," N.Y. Times (May 15, 2025).
On Jan. 28, 2025, President Trump issued an Executive Order directing federal and state agencies to take steps to restrict medical treatments related to gender transition for minors. Exec. Order No. 14173, 90 Fed. Reg. 8771 (Feb. 3, 2025). The Executive Order targets the use of puberty blockers, hormone therapies, and transgender surgeries for individuals under the age of 19.
On April 22, 2025, the Attorney General signaled that DOJ would use the FCA to enforce the principles of the Executive Order in a memorandum titled "Preventing the Mutilation of American Children." Memorandum re: Preventing the Mutilation of American Children, Office of the Attorney General (Apr. 22, 2025). This memorandum "direct[s] the Civil Division's Fraud Section to pursue investigations under the False Claims Act of false claims submitted to federal health care programs for any noncovered services related to radical gender experimentation." Id. at 4.
According to the memorandum, "[f]alsely billing the government for the chemical or surgical mutilation of a child is a violation of the False Claims Act and is subject to treble damages and severe penalties." Id. at 4. Notably, the memorandum encourages whistleblowers to come forward under the FCA's qui tam provisions, again highlighting DOJ's interest in leveraging insider information to identify and pursue potential violations. Id. at 4.
Finally, the May 19 Memo also signals DOJ's new focus on transgender issues. The Memo notes that federally funded universities could violate the FCA if they maintain policies that "allow men to intrude into women's bathrooms," or "require women to compete against men in athletic competitions." Memorandum re: Civil Rights Fraud Initiative, Office of the Deputy Attorney General (Feb. 5, 2025).
In line with the Trump administration's announcement of a sweeping new tariff regime in April 2025, DOJ officials have emphasized that FCA enforcement will play a key role in customs and trade compliance. In a February speech, Michael Granston, Deputy Assistant Attorney General in DOJ's Commercial Litigation Branch, called the FCA a "powerful tool" to address tariff evasion and foreign trade violations. Daniel Wilson, "DOJ Official Flags 'Aggressive' FCA Approach Under Trump," Law360 (Feb. 20, 2025). As tariffs rise and enforcement intensifies, the risk of FCA exposure in customs-related matters is expected to grow significantly.
With these developments, federal fund recipients should expect an uptick in both DOJ scrutiny and qui tam activity related to civil rights compliance, transgender issues, and tariff enforcement. Given these new and increasing risks, federal contractors and recipients of federal funds should consider reviewing and, as needed, revising and enhancing their policies and procedures, including with respect to internal whistleblower channels for reporting violations, to ensure continued compliance with the FCA and federal civil rights laws.
With respect to transgender care, healthcare providers and organizations that offer transgender care to minors should assess their billing practices and coverage determinations for compliance with DOJ's new FCA enforcement posture. Particular attention should be paid to documentation, coding, and any federal program reimbursements tied to treatments for individuals under the age of 19.
Finally, businesses involved in importing goods should proactively assess their compliance programs, including tariff classification and documentation procedures, to mitigate the risk of FCA scrutiny. With DOJ increasingly linking trade enforcement to FCA liability, importers should also prepare for heightened oversight and the possibility of whistleblower-driven investigations.
The opinions expressed are those of the authors and do not necessarily reflect the views of their employer, clients, or any of their respective affiliates.
Debevoise associates Hirsa Amin and Nathaniel Quigley contributed to this article.