Takeaways for healthcare companies on Justice Department's Corporate Whistleblower Awards Pilot Program

Reuters

4 hours ago

June 12, 2025 - The risk healthcare companies face when whistleblowers come forward to report civil and criminal offenses to the government has never been greater. The federal False Claims Act (FCA) has long provided for the prospect of significant financial payouts to relators who report fraud or kickback violations in connection with federal programs.
Last August, the Department of Justice (DOJ) announced the Corporate Whistleblower Awards Pilot Program (CWA), which created new financial incentives for whistleblowers to report information about corporate crime in certain priority areas, including healthcare matters not covered by the FCA. And through separate incentive programs offering the prospect of leniency (rather than money) announced in 2024, DOJ's Criminal Division and multiple U.S. Attorneys' Offices seek to attract reports of healthcare crimes (and other offenses).
On May 12, 2025, as part of a sweeping announcement regarding white-collar enforcement priorities and policy changes, Matthew Galeotti, Head of DOJ's Criminal Division — which created and administers the CWA — made clear the Trump administration is not only keeping the CWA, but expanding its scope, adding offenses about which DOJ seeks to attract tips.
Significantly, through a memorandum released the same day, Galeotti directed prosecutors to be "laser-focused on the most urgent criminal threats to the country," including healthcare fraud. In remarks on June 10, 2025, at the Global Anti-Corruption, Ethics & Compliance Conference in New York City, Galeotti noted that since expanding the CWA, DOJ has received new tips in all program areas.
This article explores the genesis of the CWA, the types of healthcare cases the government is seeking to incentivize whistleblowers to report, recent revisions to the CWA, and practical takeaways for healthcare companies given: (1) heightened whistleblower risks; (2) DOJ's high prioritization of healthcare offenses; and (3) the Criminal Division's revised Corporate Enforcement and Voluntary Self-Disclosure Policy (CEP), unveiled alongside the CWA updates.
Genesis and purpose of the CWA
The CWA's purpose is for DOJ to attract information about crimes that would otherwise go unprosecuted, or not be identified as rapidly. DOJ modeled the CWA after the Securities and Exchange Commission's successful whistleblower program.
Yet, other regulators' whistleblower programs have limited jurisdiction, and qui tam actions are only available for fraud against the government. Accordingly, DOJ launched the CWA to help "fill the gaps in this patchwork" of whistleblower programs, as stated by former Deputy Attorney General Lisa Monaco on Aug. 1, 2024, in a speech in Washington, D.C., displayed on the DOJ website. DOJ's choice to expand the CWA early in the new administration is consistent with bipartisan support for whistleblower programs.
Unlike certain whistleblower programs, there are no congressional appropriations for the CWA. However, the CWA is authorized by statute: Under 28 U.S.C. § 524(c)(1)(C), the U.S. Attorney General, in her discretion, can award payment in return for information leading to civil or criminal forfeiture.
The CWA adds a layer of guidance atop that statutory framework, providing whistleblowers with an opportunity to receive a financial award if they (i) report original information (ii) about one of the CWA's enumerated crime types (iii) that enables DOJ to obtain a forfeiture greater than $1 million — and (iv) did not play more than a minimal role in the criminal activity, as defined in U.S.S.G. § 3B1.2 cmt. n.4.
The newly revised CWA seeks to attract tips about eight types of violations by corporations, i.e., those involving: (1) financial institutions (including money laundering); (2) foreign corruption; (3) domestic corruption; (4) violations committed by or through companies related to (a) federal health care offenses and related crimes involving health care benefit programs, and (b) fraud against patients, investors, and other non-governmental entities in the health care industry; (5) federal contract and federal program fraud not involving healthcare or illegal health care kickbacks; (6) trade, tariff, and customs fraud; (7) federal immigration law; and (8) sanctions offenses, material support of terrorism, or cartels and transnational criminal organizations.
One rationale for the CWA's creation was to put a thumb on the scale in a company's calculus regarding corporate self-disclosure by increasing the probability that DOJ could learn about misconduct from another source. DOJ and other agencies, like the U.S. Department of Health and Human Services, Office of Inspector General, and the U.S. Department of Commerce, heavily promoted policies concerning voluntary self-disclosure by corporations and individuals in recent years, all while extolling the virtues of effective compliance programs.
These incentives extend across administrations, and this administration has doubled down by simplifying and increasing rewards for self-disclosure.
A criticism of whistleblower rewards has been that they undermine a company's internal reporting mechanisms. Acknowledging this, when the CWA was created, DOJ's Criminal Division issued a temporary amendment to CEP, which allows companies that receive internal reports to still qualify for a declination if they satisfy conditions including reporting to DOJ within 120 days, even if the whistleblower reports to DOJ before the company. This language remains part of the newly revised CEP.
Types of healthcare cases DOJ seeks to incentivize
Federal healthcare programs have long been a DOJ focus, but fraud directed at private insurance plans has received less scrutiny.
The 2024 CWA initially sought information about healthcare fraud schemes in which the overwhelming majority of claims are submitted to private insurance plans, where the majority of the loss was to non-governmental entities, or where the FCA does not reach the conduct. Before the CWA, relators' counsel lacked an incentive to file suits where the volume of alleged private insurance fraud exceeded federal program fraud. Now, the revised CWA seeks such matters as well as cases that do potentially overlap with the federal FCA regime.
DOJ is interested in deterring private insurance fraud given market trends and the large portion of Americans who rely on private health insurance coverage. Prosecutions involving private insurance fraud have involved sizable losses. DOJ is also interested in reports of schemes that pose risks to patients or U.S. investors/shareholders, as the FCA does not offer a financial incentive for such reports unless a federal program was defrauded.
Federal prosecutors also obtained a new statutory tool relevant to private insurance schemes in 2018: the Eliminating Kickbacks in Recovery Act ("EKRA"). While DOJ has been steadily utilizing EKRA — both to combat addiction treatment fraud and to investigate crimes at laboratories — before the CWA, there was no incentive for whistleblowers to report EKRA schemes. This was a notable asymmetry, as the FCA has yielded millions of dollars in rewards to whistleblowers who reported false claims premised on violations of the Anti-Kickback Statute, which prohibits kickback schemes implicating healthcare providers more broadly but only where items or services are reimbursed by government healthcare programs.
Practical takeaways for healthcare company compliance programs
As of late 2024, the CWA had attracted more than 250 unique tips. The first award under the CWA will not likely occur for some time. Nonetheless, incentives for whistleblowers are as strong as they've ever been. Healthcare companies should keep the following in mind:
First, supporting a "speak up" culture and testing internal reporting mechanisms remains crucial. DOJ's Evaluation of Corporate Compliance Programs continues to emphasize anonymous, confidential reporting systems.
Second, the revised CEP may move the needle on the question of whether to self-disclose for some healthcare providers. While it went unremarked upon in Galeotti's speech, unlike in the previous CEP, a disclosure to DOJ will now be considered voluntary as long as a company has no pre-existing obligation to disclose the misconduct to DOJ. Under the old CEP, disclosure would not be voluntary if there was a pre-existing obligation to disclose arising from anywhere, including, for instance, from the Affordable Care Act's 60-day rule. See, e.g., 42 C.F.R. § 422.326(d).
The revised CEP also relaxes the definition of "aggravating circumstances" and recidivism such that companies with prior offenses may newly qualify for declinations. Further, the revised CEP offers concrete benefits to companies that miss the mark on other criteria, but attempt to self-report in good faith: shorter-term non-prosecution agreements with reductions of 75% off the applicable Sentencing Guidelines range. There has only been one CEP declination for a healthcare offense to date, awarded to a Medicare Advantage Organization that was investigated for fraudulently overbilling CMS.
The previous rarity of CEP declinations in the Medicare context was not necessarily surprising given the prior definition of "voluntary." While the revised CEP is an improvement, healthcare providers considering disclosures to DOJ should consult counsel to undertake a fact-driven assessment of whether the rewards outweigh risks.
Third, the CWA has the effect of potentially alerting criminal prosecutors of civil cases earlier than would have otherwise been discovered, as the CWA encourages whistleblowers to over-report misconduct to DOJ even if another program (or the FCA) covers it. Healthcare companies should assume that criminal and civil teams are sharing CWA reports.
Fourth, an effective compliance program will not only better position a company to detect and prevent misconduct, but also assist them during negotiations should an investigation arise. Healthcare companies should likewise be mindful of the CWA's inclusion of trade, tariff, foreign bribery and immigration-related violations by corporations.