False Claims Act Enforcement Reaches New Heights in 2025 as Government Expands Scope and Coordination

The False Claims Act (FCA) reached unprecedented levels of enforcement activity in 2025, with federal authorities securing record-breaking settlements while expanding their focus to emerging areas of compliance. Government agencies have strengthened coordination efforts and deployed sophisticated tools to combat fraud across healthcare, government contracting, and other sectors receiving federal funds.

Healthcare fraud remained the dominant focus of FCA enforcement, accounting for the majority of recoveries. Several major settlements highlighted the government’s aggressive approach, including nearly $60 million from Pfizer (on behalf of subsidiary Biohaven Pharmaceutical) for alleged Anti-Kickback Statute violations, $98 million from Independent Health Association and its affiliate over Medicare Advantage diagnosis code submissions, and over $62 million from Seoul Medical Group and related entities for similar Medicare Advantage coding issues.

A significant development came in July when the Department of Justice (DOJ) and Department of Health and Human Services (HHS) formally reestablished their FCA Working Group. This initiative brings together leadership from DOJ’s Civil Division, HHS Office of General Counsel, the Centers for Medicare & Medicaid Services, and the HHS Office of Inspector General to streamline investigations and leverage advanced data analytics.

The Working Group targets high-impact enforcement areas including Medicare Advantage risk adjustment fraud, kickbacks, defective medical devices, electronic health record manipulation, and drug pricing schemes. By facilitating real-time data sharing and unified strategic priorities, authorities aim to enhance both the efficiency and effectiveness of FCA investigations.

Constitutional challenges to the FCA’s qui tam provisions, which allow private whistleblowers (relators) to pursue cases on the government’s behalf, generated significant judicial debate. Most federal courts have historically upheld these provisions, with the Fifth, Sixth, Ninth, and Tenth Circuits rejecting constitutional challenges and emphasizing the government’s retained control over litigation.

However, a notable exception emerged from the Middle District of Florida in United States ex rel. Zafirov v. Fla. Med. Assocs., LLC, which held that the qui tam provisions violate the Constitution’s Appointments Clause. This issue remains poised for further judicial scrutiny, with the Eleventh Circuit hearing arguments in the Zafirov appeal in December. Similar reviews are expected in the Third and Sixth Circuits, with judges in the Fifth Circuit indicating interest in reconsidering the matter.

Beyond healthcare, the DOJ maintained aggressive scrutiny of Paycheck Protection Program loans, auditing and investigating applications and forgiveness requests for misrepresentations regarding eligibility, fund usage, and program compliance.

In a notable expansion, FCA enforcement moved aggressively into customs and tariff territory, reflecting the current administration’s trade priorities. The DOJ and U.S. Customs and Border Protection targeted trade fraud, including mislabeling goods, disguising country of origin, and improper classification to avoid duties. The launch of the DOJ-Department of Homeland Security Trade Fraud Task Force in August 2025 underscores this commitment, leveraging resources from both civil and criminal divisions.

Diversity, equity, and inclusion (DEI) practices came under unexpected FCA scrutiny following Executive Order 14173 and related DOJ guidance. The administration has deemed certain DEI policies—particularly race- or sex-based preferences in hiring, admissions, scholarships, or contracting—as potential violations of federal anti-discrimination laws. The DOJ’s Civil Rights Fraud Initiative encourages whistleblowers to bring FCA suits against entities suspected of violating anti-discrimination statutes through their DEI programs.

Cybersecurity compliance emerged as another enforcement priority, with the DOJ using its Civil Cyber-Fraud Initiative to target contractors and grantees who misrepresent their compliance with federal standards like NIST SP 800-171, Cybersecurity Maturity Model Certification, or ISO requirements. Companies have faced multimillion-dollar settlements for false certifications or failing to report cyber incidents as contractually required.

For businesses navigating this heightened enforcement environment, experts recommend strengthening compliance programs, thoroughly reviewing all contractual certifications, closely monitoring regulatory changes, conducting targeted employee training, and engaging specialized legal counsel early when potential issues arise.

As 2026 approaches, all indicators suggest FCA enforcement will likely intensify further, with continued interagency cooperation and expansion into new compliance areas presenting significant risks for organizations receiving federal funds or contracting with government agencies.