False Claims Act Enforcement Evolves Under Second Trump Administration

As fiscal year 2025 comes to a close, patterns are emerging in how the Trump Administration is wielding the False Claims Act (FCA), the government’s primary weapon against fraud. While maintaining traditional enforcement areas, the Justice Department has expanded its focus to reflect the administration’s priorities in healthcare, government contracts, and civil rights.

The FCA continues to target healthcare and life sciences industries, where annual recoveries consistently exceed $1 billion. The Medicare Advantage program remains under scrutiny, with two major settlements in FY 2025: a $98 million agreement in December 2024 resolving allegations of inflated patient “risk scores,” and a $62 million settlement in March 2025 related to improper billing for spinal conditions.

Kickbacks also remained a priority, with a pharmaceutical company paying nearly $60 million in January to resolve allegations that its subsidiary paid kickbacks for prescriptions later billed to federal healthcare programs. In September, a laboratory CEO, marketers, and physicians agreed to pay $6 million to settle similar kickback claims.

The opioid epidemic continues to drive enforcement, highlighted by a $350 million settlement in April with a national pharmacy chain accused of filling invalid opioid prescriptions and then billing federal healthcare programs.

Notably, the administration has expanded its healthcare enforcement focus. In April, the Attorney General directed the DOJ Civil Division’s Fraud Section to investigate “false claims submitted to federal health care programs for any noncovered services related to radical gender experimentation.” The memo specifically mentioned physicians prescribing puberty blockers for gender dysphoria while reporting different legitimate purposes to Medicare and Medicaid.

This summer, the DOJ announced it was leveraging cloud computing, artificial intelligence, and advanced analytics to identify emerging healthcare fraud schemes. The department also relaunched the DOJ-HHS False Claims Act Working Group, which will focus on both traditional areas like Medicare Advantage and kickbacks, and “overlooked” issues including network adequacy requirements and materially defective medical devices.

Government contracting remains another key FCA enforcement area. Recent settlements addressed contractors misrepresenting eligibility for small business set-asides, labor mischarging, bid-rigging under Department of Defense contracts, and improper use of confidential government information to influence contract awards.

Cybersecurity compliance has become a particular focus. In March, the DOJ announced a $4.6 million settlement with a government contractor that failed to comply with cybersecurity requirements in Army and Air Force contracts. May saw an $8.4 million settlement with a defense contractor over alleged failures to implement required cybersecurity controls on systems used for DOD contracts. In July, a $1.75 million settlement addressed a contractor’s failure to meet NIST requirements while sharing sensitive defense information with a foreign subcontractor.

Another emerging area involves verification of employment eligibility by government contractors. In January, the DOJ announced a $1 million settlement with a shipbuilder for allegedly billing the Coast Guard for labor performed by ineligible employees. A similar $4 million settlement in September involved a New Jersey shipbuilder whose subcontractors improperly employed unauthorized workers on military vessels.

COVID-19 relief fraud continues to generate FCA cases, aided by Congress’s 2022 extension of the statute of limitations to 10 years for Paycheck Protection Program and Economic Injury Disaster Loan cases. In June, three affiliated companies allegedly too large to qualify for PPP loans agreed to a $13 million settlement. Foreign-owned companies face particular scrutiny, with settlements of $2.8 million in July and $21.6 million in August for falsely certifying PPP eligibility.

Perhaps the most significant shift has come in trade enforcement. In February, a Deputy Assistant Attorney General signaled “aggressive” efforts to use the FCA to enforce trade laws. The DOJ subsequently announced settlements involving evaded customs duties on products including wood flooring, plastic resin, aluminum products, and quartz surfaces. In August, the administration launched a cross-agency “Trade Fraud Task Force” with the Department of Homeland Security, specifically inviting whistleblowers to utilize qui tam provisions to report customs fraud.

The judiciary has reinforced this approach, with the Ninth Circuit recently affirming a nearly $30 million judgment in a qui tam case brought by a domestic manufacturer, rejecting arguments that customs laws provided an exclusive remedy for import fraud.

Civil rights represents another new frontier for FCA enforcement. In May, the DOJ announced its Civil Rights Fraud Initiative, targeting federal contractors or funding recipients who “knowingly violate civil rights laws” while certifying compliance. The Deputy Attorney General specifically mentioned universities that “encourage antisemitism,” “allow men to intrude into women’s bathrooms,” or “require women to compete against men in athletic competitions” as potential FCA violators.

The DOJ and EEOC subsequently issued guidance on “unlawful DEI-related discrimination,” providing a roadmap for investigations under the initiative. The guidance adopts an expansive view of unlawful discrimination, targeting not only explicit actions based on protected characteristics but also practices considering “lived experiences,” geographic targeting, and overcoming hardship.

As the Trump Administration continues to reshape FCA enforcement to match its priorities, companies interacting with the federal government should reevaluate compliance programs and prepare for heightened scrutiny in both traditional and emerging areas of enforcement.