As the second Trump Administration concludes its sixth month, the U.S. Department of Justice has identified its top False Claims Act (FCA) enforcement priorities. Those goals reflect continuity with previous administration’s priorities in some areas, such as combatting health care fraud, and wholesale changes in other areas, such as using the FCA to promote the Trump Administration’s major policy goal of eliminating diversity, equity, and inclusion (DEI) programs that it believes violate federal anti-discrimination laws. In this environment, entities that receive federal funding, including health care providers, pharmaceutical and medical device companies, educational institutions and others, need to take steps to ensure that they have adequate, up-to-date compliance programs in place and that their labor and employment practices and policies do not run afoul of federal anti-discrimination laws and expose them to the risk of costly FCA claims.
Background
The FCA imposes treble damages and substantial penalties on individuals or entities that knowingly present false or fraudulent claims for payment to the federal government. Originally enacted during the Civil War and strengthened through amendments in 1986, the statute has regularly been used to bring fraud cases against defendants in areas such as health care, defense procurement, and large government relief programs, including the Troubled Asset Relief Program (TARP) and COVID-relief forgivable loans. The FCA also permits private citizens to bring claims as whistleblowers alleging violations of the FCA and to share in any recovery by the government, creating strong incentives for whistleblower lawsuits.
Two recent initiatives – the renewal of the DOJ-HHS False Claims Act Working Group (“FCA Working Group”) and the “Civil Rights Fraud Initiative” – highlight some of the Trump Administration’s main FCA priorities. The Trump Administration’s aggressive use of the FCA to promote its policy initiatives heightens enforcement risks for those doing business with the federal government.
Renewed FCA Working Group
To the surprise of no one who has been practicing in the FCA area for the past two decades, the pursuit of health care fraud continues to be a major FCA enforcement priority in the second Trump Administration, just as it was in prior administrations. On July 2, 2025, the U.S. Department of Justice (DOJ) and the U.S. Department of Health and Human Services (HHS) jointly announced the renewal of the FCA Working Group, a collaboration to advance priority enforcement areas in health care fraud and abuse. The July 2 announcement identified six priority areas for FCA investigations and prosecutions:
- Medicare Advantage;
- Drug, device or biologics pricing, including arrangements for discounts, rebates, service fees, formulary placement and price reporting;
- Barriers to patient access to care, including violations of network adequacy requirements;
- Kickbacks related to drugs, medical devices, durable medical equipment and other products paid for by federal health care programs;
- Materially defective medical devices that impact patient safety; and
- Manipulation of Electronic Health Records systems to drive inappropriate utilization of Medicare-covered products and services.
For the most part, these priorities are consistent with enforcement priorities of prior administrations, particularly in the areas of Medicare Advantage, drug and medical device pricing, kickbacks and product defects that impact patient safety. The focus on barriers to access to care is a new FCA enforcement priority, raising the prospect that insurance companies may have potential FCA exposure if their plans fail to provide sufficient access to health care providers to meet the needs of those enrolled in the companies’ health plans.
In addition to DOJ-initiated claims, the FCA Working Group encourages health care companies and private whistleblowers to identify and report suspected FCA violations in these areas, highlighting the DOJ’s continued reliance on private whistleblower actions as a crucial piece of the DOJ’s enforcement efforts. The Working Group will also leverage HHS resources through enhanced data mining and assessment of HHS and Office of the Inspector General findings.
The FCA Working Group will also consider whether HHS should suspend payments to providers pending investigation of the alleged FCA violation, posing a threat that federal funding will be withheld for long time periods even before an FCA complaint is unsealed. The FCA Working Group will also coordinate to consider dismissal of whistleblower complaints when the DOJ opts not to intervene, although it is too early to tell how frequently the Working Group will exercise that authority, particularly given substantial FCA recoveries often obtained in cases in which the government does not intervene.
As we addressed here, FCA settlements and judgments have annually returned billions of dollars to the federal treasury, including increasing recoveries for health care fraud. Large FCA health care fraud recoveries have continued in the beginning of the second Trump Administration. For example, on July 7, a court in the Southern District of New York awarded $542 million in statutory penalties in connection with an FCA case involving the submission of false prescription claims for patients. With trebling of the $135.6 million in damages previously awarded by the jury, the total award came to $949 million. With the renewal of the FCA Working Group, pursuing health care fraud will remain a key priority in President Trump’s second term.
Civil Rights Fraud Initiative
On May 19, 2025, Deputy Attorney General Todd Blanche issued a memorandum establishing a Civil Rights Fraud Initiative (Initiative). The Initiative “vigorously enforces” the FCA by investigating and pursuing claims, with the collaboration of private whistleblowers, “against any recipient of federal funds that knowingly violates federal civil rights laws,” including Title IV, Title VI, Title VII or Title IX of the Civil Rights Act of 1964.
The memorandum sets forth that the FCA may be implicated when a federal contractor or recipient of federal funds falsely certifies compliance with civil rights laws and violates those laws by “engaging in racist preferences, mandates, policies, programs, and activities, including through… DEI programs that assign benefits or burdens on race, ethnicity, or national origin.” The DOJ made clear that colleges and universities are key targets of the Initiative, citing as potential FCA violations a university that “encourages antisemitism, refuses to protect Jewish students, allows men to intrude into women’s bathrooms, or requires women to compete against men in athletic competitions.” Common workplace programs that may also now pose at least the potential of FCA risk under the Initiative may include training initiatives, mentoring programs, networking events, and internal employee recognition programs, particularly if they are offered to some employees but not others.
The Initiative follows President Trump’s January 21 “Ending Illegal Discrimination and Restoring Merit-Based Opportunity” Executive Order. As we addressed here, the Executive Order directed federal agencies to “combat illegal private-sector DEI preferences, mandates, policies, programs, and activities.” The Executive Order compels federal agencies to include provisions in contracts and grants requiring parties or recipients to agree that conforming to all applicable federal anti-discrimination laws is “material to the government’s payment decisions” pursuant to the FCA, as well as “certify that [the counterparty or recipient] does not operate any programs promoting DEI that violate any applicable Federal anti-discrimination laws.” Such express certifications could form the basis for a claim under the FCA.
The Civil Rights Fraud Initiative directs the Civil Division’s Fraud Section and Civil Rights Division to identify a team of attorneys “to aggressively pursue” this work and directs each United States Attorney’s Office to identify an Assistant United States Attorney to advance these efforts. Moreover, the DOJ expressly “strongly encourages” private qui tam relators to file lawsuits and litigate claims under the FCA. It remains to be seen whether the labor and employment plaintiffs’ bar will now seek to add FCA claims to garden-variety employment discrimination claims to attempt to increase negotiation leverage.
What You Need to Know
With the announcement of the renewal of the FCA Working Group, the Trump Administration has signaled that it intends to aggressively pursue health care fraud under the FCA, which has long been a top FCA enforcement priority. Through the Civil Rights Fraud Initiative, the Trump Administration has also made clear that it intends to use the FCA as an enforcement tool to promote its public policy goals of eliminating diversity, equity, and inclusion programs that it believes violate federal anti-discrimination laws. Health care providers, life science companies and other entities doing business with the government should consider having counsel review and update their compliance programs to ensure they are current and functioning properly and consistently with relevant guidance documents issued by HHS and the U.S. Equal Employment Opportunity Commission to minimize the risk of potential FCA liability.
Harris Beach Murtha’s Government Compliance and Investigations Practice Group closely monitors actions by federal agencies to be in optimal position to counsel clients. If you have questions or want more information about steps to take to minimize the risk of FCA liability, please reach out to Terrance P. Flynn at (716) 200-5120 and tflynn@harrisbeachmurtha.com; Glenn M. Jones at (516) 880-8494 and gjones@harrisbeachmurtha.com; Christopher C. Palermo at (914) 298-3032 and cpalermo@harrisbeachmurtha.com; or the Harris Beach Murtha attorney with whom you most frequently work.
Summer Associate Evan C. Breitbeck contributed to this report.
This alert does not purport to be a substitute for advice of counsel on specific matters.
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