Key Compliance Lessons from DOJ’s 2025 False Claims Act Actions

The Justice Department’s annual report on False Claims Act (FCA) enforcement reveals a substantial increase in both government-initiated and whistleblower actions during 2025, with recoveries totaling nearly $7 billion across all sectors.

The report, released earlier this week, shows that while the Department of Justice (DOJ) directly initiated 401 FCA actions, whistleblowers filed more than three times that number, with 1,297 qui tam actions. These whistleblower suits proved particularly lucrative, generating $5.34 billion in settlements and judgments, compared to $1.55 billion from government-initiated cases.

Whistleblowers received more than $330 million in awards for their role in exposing fraud against federal programs. Under the FCA’s provisions, these individuals, known as relators, can receive up to 30 percent of recoveries when bringing forward evidence of companies or individuals defrauding the government.

Healthcare fraud dominated the enforcement landscape, with the Department of Health and Human Services involved in 641 FCA claims that recovered a staggering $60 billion. Meanwhile, the Department of Defense pursued 66 claims, resulting in nearly $634 million in recoveries.

The False Claims Act, which prohibits submitting false claims that cause the government to pay too much or receive too little, allows for treble damages and significant penalties. Originally enacted during the Civil War to combat contractor fraud, the law has evolved into the government’s primary anti-fraud enforcement tool.

Defense contractors faced particularly severe penalties for pricing violations. Raytheon paid $428 million to resolve allegations of false cost data and double-billing practices. L3 Technologies settled for $62 million over inaccurate cost information on communications equipment, while Lockheed Martin paid nearly $30 million for defective pricing related to F-35 fighter jet contracts.

“These cases reflect our commitment to protecting taxpayer dollars and maintaining the integrity of federal procurement systems,” said a senior Justice Department official, speaking on condition of anonymity because they weren’t authorized to comment publicly. “When contractors knowingly provide false information about costs or fail to meet contractual requirements, we will hold them accountable.”

The settlements highlight the critical importance of accurate pricing data under the Truth in Negotiations Act, which requires contractors to disclose cost or pricing information to the government during contract negotiations.

Procurement ethics violations also drew significant penalties. Booz Allen Hamilton, a major government consultant, paid $15.875 million to resolve allegations that employees improperly used confidential government and competitor information to influence contract awards. Meanwhile, DynCorp International settled for $21 million over allegations of passing inflated subcontractor charges on Iraqi police training contracts.

Cybersecurity compliance emerged as another enforcement priority, reflecting the government’s growing concerns about digital vulnerabilities in federal systems. Health Net Federal Services paid $11.2 million for failing to conduct required vulnerability scanning and remediation. Illumina settled for $9.8 million after allegedly selling systems with known security flaws, while MORSECORP paid $4.6 million for inadequate security controls and inaccurate compliance reporting.

Even educational institutions found themselves in the crosshairs, with Pennsylvania State University and Georgia Tech paying $1.25 million and $875,000 respectively for cybersecurity compliance failures.

Industry experts note these enforcement trends signal contractors of all sizes should scrutinize their compliance programs, especially regarding pricing, cybersecurity, and procurement ethics.

“The DOJ is clearly sending a message that they’re looking beyond just healthcare fraud,” said Rebecca Martin, former chief of the Civil Division at the U.S. Attorney’s Office for the Southern District of New York. “Government contractors in all sectors need robust compliance systems to prevent these kinds of violations, which can result in damages far beyond the value of the contracts themselves.”

As federal spending continues to rise, particularly in defense and infrastructure, analysts expect FCA enforcement to remain aggressive throughout 2026, with continued focus on pricing accuracy, cybersecurity compliance, and procurement integrity.