DOJ Reaffirms Aggressive False Claims Act Enforcement, Targets Illegal Trade Practices

Justice Department Vows Aggressive False Claims Act Enforcement Under Trump Administration

The U.S. Department of Justice will continue “aggressive” enforcement of the False Claims Act under the Trump Administration, according to Deputy Assistant Attorney General Michael Granston. Speaking at a national conference last week, Granston emphasized the statute’s importance as the administration focuses on government efficiency and eliminating fraud, waste, and abuse.

Granston specifically highlighted the law as a “powerful” enforcement tool against entities attempting to evade new import tariffs, signaling heightened scrutiny for companies engaged in international trade as the administration implements broader tariff policies.

The False Claims Act imposes civil liability on entities that knowingly submit false claims for government funds or make false statements material to such claims. It also covers “reverse false claims,” where false statements are used to avoid or decrease payments owed to the government, such as federal customs duties. Violators face treble damages plus penalties for each violation.

The statute also enables whistleblowers, known as “relators,” to file qui tam actions on behalf of the government and receive a portion of any recovered funds. These provisions have contributed to a surge in enforcement actions in recent years.

According to DOJ data, 2024 saw a record number of qui tam actions—nearly 1,000 cases, representing a 37% increase over the previous year and a 60% jump from 2019. The government initiated 423 investigations on its own, almost triple the number from five years ago. Total recoveries reached nearly $3 billion in settlements and judgments last year, slightly up from $2.8 billion in 2023.

While healthcare programs like Medicare and Medicaid, along with government procurement contracts, historically account for the bulk of FCA cases, the law’s reach continues to expand. The U.S. Supreme Court recently affirmed in Wisconsin Bell, Inc. v. United States ex rel. Heath that the FCA extends to claims for any government-provided funds, even when the government supplies only a portion of the funds or does so through an agent.

In recent years, the DOJ has increasingly used the FCA to enforce customs duties. Notable settlements include a $23 million payment from a company that misclassified products to avoid customs duties, a $22 million settlement for misrepresenting the nature and classification of imported construction supplies, and a $45 million resolution with a company that falsified country-of-origin documentation to avoid antidumping and countervailing duties on imports from China and India.

Granston noted that DOJ’s enforcement efforts are increasingly data-driven. The Commercial Litigation Branch Civil Fraud Section now maintains an in-house data analytics team, as do several federal agencies, enhancing the government’s ability to detect fraudulent patterns and activities.

The Justice Department official also pointed to the recently strengthened Administrative False Claims Act as an important complement to enforcement efforts. The amended statute allows federal agencies to independently investigate and pursue false claims up to $1 million per claim with less DOJ involvement, though with authority to collect double rather than treble damages. This change empowers smaller agencies to contribute more significantly to anti-fraud efforts.

Despite these tools, Granston acknowledged substantial challenges in fraud enforcement, including increasingly complex schemes designed to evade detection. He cited the use of intricate subcontractor networks that obscure product origins as a particular challenge when investigating procurement fraud cases, such as those involving violations of domestic manufacturing requirements.

Attorney General Pam Bondi has similarly expressed support for the False Claims Act during her confirmation hearing, noting its role in “bringing money back to our country” and pledging to defend its constitutionality.

With the administration’s commitment to aggressive enforcement and the continuing rise in qui tam actions, experts anticipate that FCA cases will continue to increase in number and expand across industries. Companies that do business with the government or import goods into the United States are advised to implement robust compliance programs to mitigate potential exposure to FCA investigations and whistleblower allegations.

For businesses navigating these complex regulatory waters, early identification and remediation of compliance issues remains the most effective strategy for avoiding becoming the target of costly FCA enforcement actions.