Record-Breaking Year for False Claims Act Enforcement Amid Constitutional Challenges

The False Claims Act (FCA) reached unprecedented heights in fiscal year 2025, with recoveries soaring to a record $6.8 billion—more than double the totals from each of the previous three fiscal years and exceeding the previous record by $1.1 billion. The landmark year also saw the Trump Administration expand the statute’s use into new territories to advance key domestic policy objectives.

These achievements come at a pivotal moment for the FCA, as the U.S. Department of Justice (DOJ) is appealing a 2024 district court decision that, for the first time, ruled the statute’s qui tam provisions unconstitutional. These provisions, which allow private citizens to file lawsuits on behalf of the government, have long been the engine driving FCA enforcement.

Healthcare fraud remained the dominant area of FCA recoveries, accounting for an extraordinary $5.7 billion—more than 80% of the total. Major settlements targeted Medicare Advantage fraud, prescription drug schemes, and medically unnecessary care. In the managed care space, several insurers faced allegations of submitting unsupported diagnosis codes for Medicare Advantage enrollees, with Independent Health agreeing to pay up to $98 million to resolve such claims.

The prescription drug sector saw some of the year’s largest settlements, including a $948.8 million judgment against Omnicare for dispensing prescription drugs without valid prescriptions. The court found the company submitted more than three million fraudulent claims, with parent company CVS held jointly liable for $164 million of the penalties. Teva Pharmaceuticals agreed to pay $425 million to resolve allegations it violated the Anti-Kickback Statute by paying Medicare patient copays.

Federal procurement fraud investigations yielded $600 million in recoveries—nearly 10% of the total and a six-fold increase over the previous year. Raytheon’s $428 million settlement for double-billing and pricing violations marked the second-largest government procurement fraud settlement in FCA history.

The Trump Administration has significantly expanded FCA enforcement in the area of tariff and customs avoidance, establishing a new cross-agency Trade Fraud Task Force. This initiative produced the largest-ever customs-related FCA resolution—a $54.4 million settlement with Ceratizit USA LLC for allegedly evading duties on Chinese imports through misrepresentation of country of origin and product classifications.

Pandemic relief program fraud continued to be a priority, with more than 200 resolutions exceeding $230 million in aggregate. Notable cases included a $20 million consent judgment against a Florida businessman for misrepresentations in Paycheck Protection Program applications, and an $8.1 million settlement with Delta Air Lines for allegedly violating executive compensation caps under the CARES Act.

Looking ahead to fiscal year 2026, DOJ officials have confirmed the Trump Administration plans to further expand FCA enforcement. According to Deputy Assistant Attorney General Brenna Jenny, the department will continue prioritizing healthcare fraud, particularly in managed care programs, while increasingly leveraging data analytics to identify potential violations.

Meanwhile, the constitutionality of the FCA’s qui tam provisions faces serious challenges. In United States ex rel. Zafirov v. Florida Medical Associates, LLC, a district court in the Eleventh Circuit held that these provisions violate the Constitution’s Appointments Clause. The court found that relators exercise “significant authority” but lack presidential appointment. This ruling is now under appeal, with oral arguments having occurred in December 2025.

If upheld, the decision could dramatically reshape FCA enforcement. At minimum, all pending non-intervened qui tam cases in the Eleventh Circuit would likely be dismissed or stayed pending Supreme Court review. A broader ruling could potentially lead to dismissal of all relator-initiated suits in the circuit. The number of future FCA cases filed would also likely plummet, as relators would seek to bring cases in more favorable jurisdictions.

The Trump Administration has also signaled its intent to use the FCA to advance policy priorities beyond traditional fraud enforcement. In a controversial expansion, DOJ has launched several investigations targeting corporate diversity, equity, and inclusion (DEI) practices as part of its Civil Rights Fraud Initiative. Attorney General Pamela Bondi has directed the Civil Rights Division to “investigate, eliminate, and penalize illegal DEI practices” in the private sector and educational institutions receiving federal funds.

Similarly, DOJ’s Fraud Section has been instructed to investigate potential FCA violations related to gender-affirming care, particularly for patients under 19 years old. The department has already issued numerous subpoenas to healthcare providers in this area, though several courts have granted motions to quash these requests, criticizing DOJ’s legal theories.

As fiscal year 2026 progresses, the Trump Administration’s expansion of the FCA into these politically charged areas raises questions about the statute’s future application and whether such novel enforcement priorities will withstand judicial scrutiny—particularly regarding materiality requirements established by the Supreme Court.