This is the sixth in our 2025 Year in Preview series examining important trends in white collar law and investigations in the coming year. We will be posting further installments in the series throughout the next several weeks. Our previous post, "Year in Preview: Review of and Insights into Investigations by the 119th Congress" can be found here.
The Attorney General and key Department of Justice leadership are now in place and appear to have hit the ground running. As the new administration looks to deploy the False Claims Act (FCA) aggressively and in new ways, we consider below what these changes portend. First, to the extent that past may be prologue, we provide a comparative analysis of FCA enforcement under President Trump's first term and President Biden's term. Second, we consider both historically important priorities for enforcement and areas that have become significant in the early days of the second Trump administration. We conclude with a review of some of the most watched decisions in 2024 and the early days of 2025.
I.By the Numbers
False Claims Act enforcement is a seemingly evergreen focus of the government, with billions of dollars annually flowing to the government from resolution of these actions. And FCA cases can be brought by private parties (called Qui Tam Relators) who bring claims in the name of the government and stand to receive a substantial financial bounty if successful – those economics remain as a powerful incentive for new cases to be brought regardless of the level of government enforcement. With the second Trump term now underway, we look back at the first Trump administration and the Biden administration to understand what these precedents tell us. These are imperfect predictors, especially given the pace and extent of change already undertaken in the early days of this administration, but the historical trends show the powerful financial incentives for the government and relators to continue bringing FCA cases.
Of the newly filed FCA cases brought in 2024, 70% (979) were initiated by a relator and only 30% (423) were initiated by the government. Looking at all FCA cases that were resolved in 2024 (which would include many cases brought in prior years) there was a total of $2.9 billion recovered. Of that $2.9 billion, just over $500 million is attributable to cases initiated by the government, while $2.4 billion was recovered in relator-initiated cases, with the vast majority of those recoveries ($2.2 billion) coming in relator-initiated cases in which the government intervened (elected to participate as a plaintiff). These numbers represent a high-water mark for newly-initiated FCA matters, though the total amount recovered sits squarely in line with median recoveries of late.
So now with data closed for the last full year of Biden's term, are there relevant differences between the Justice Department's False Claims Act focus under Biden versus Trump? Based solely on the numbers, not necessarily.
There were a roughly comparable number of new matters brought in the first two years of the Biden presidency as there were throughout the first Trump presidency. See Chart A below. In 2023 and 2024, we saw a noticeable uptick in new cases, in both non-qui tam FCA and qui tam FCA actions, with 1,218 new cases in 2023 and 1,402 new cases in 2024. Before 2023, annual new cases had approached but not exceeded the 1,000 mark. One distinction worth noting between the first Trump term and Biden's term concerns the breakdown between government-initiated FCA and relator-initiated FCA matters: In all but the first year of Biden's term, there was a greater percentage of relator-initiated FCA matters than in any year of Trump's first term. Indeed, growth in relator-initiated FCA matters has been driving the overall increase in FCA matters.
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Looking at the size of the aggregated recoveries year to year, as shown in Chart B, the government realized generally larger settlements in the first Trump term than in Biden's term, with a significant exception in 2021. Thus in 2017, the government recovered over $3.4 billion; in 2018, nearly $3 billion; in 2019, just over $3 billion; and in 2020, over $2.2 billion. Meanwhile, in 2021, the government realized over $5.6 billion in recoveries, attributable to a significant opioid settlement; in 2022, approximately $2.2 billion; in 2023, nearly $2.8 billion; and in 2024, approximately $2.9 billion. In each administration – the first Trump term and Biden's term – government-initiated FCA actions drove the substantial majority of the totals recovered (excepting for 2021).
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Within those qui tam recoveries, intervened matters were responsible for the lion's share of recoveries in all but 2022, as reflected in Chart C. Here too, there is not a seismic difference between the first Trump administration and the Biden administration, and thus we see the highest annual recovery in intervened matters in the first year of Trump's first term and the second highest in the last year of Biden's term.
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II. Priority Areas of FCA Enforcement
Health Care
As discussed in our recent post on Health Care Fraud Enforcement in 2025, health care will continue to be a focus of FCA enforcement under the second Trump administration.
2024 and early 2025 have seen FCA settlements in the health care space ranging from the hundreds of thousands to hundreds of millions of dollars. These included settlements from pharmaceutical companies, pharmacies and pharmacy benefit managers, clinical laboratories, skilled nursing facilities, and substance use disorder treatment clinics, among others. The settlements have involved a variety of alleged unlawful activity, including the following:
- Issuing (in the case of prescribers) and dispensing (in the case of pharmacies) opioid prescriptions without a legitimate medical basis;
- Marketing opioids to high-volume prescribers for non-medically accepted indications;
- Billing for prescriptions that were processed but never picked up by beneficiaries;
- Billing for treatment services that were unreasonable, unnecessary or unskilled, or simply were not provided;
- Failing to properly discharge patients who no longer needed inpatient treatment;
- Billing for medically unnecessary tests;
- Paying unlawful kickbacks to physicians and insurance agents;
- Submitting false average sales price reports to Centers for Medicare and Medicaid Services (CMS) that excluded certain price concessions; and
- Failing to accurately report rebates from drug manufacturers.
In one particularly sizable set of settlements, Teva Pharmaceuticals USA Inc. and Teva Neuroscience Inc. ("Teva") agreed to pay $425 million and $25 million to resolve two matters involving alleged violations of the Anti-Kickback Statute ("AKS") and the FCA. The larger of the two matters stemmed from a complaint filed in the U.S. District Court for the District of Massachusetts in 2020 alleging that Teva coordinated and conspired with a specialty pharmacy and various copay assistance foundations to cover Medicare patients' copays for the multiple sclerosis drug Copaxone over a period of more than 10 years. The second matter came out of the U.S. District Court for the Eastern District of Pennsylvania and involved allegations that Teva violated the AKS by conspiring with competing generic drug manufacturers to fix prices and allocate markets for generic drugs. The distinct conduct at issue in these two matters serves as a powerful example of how diversely the FCA can be used against companies in the health care space, and we do not expect the government to quell its attempts at creativity in this regard in the near term.
Government Contracting and DEI
Government and defense contracting will also continue to be a focus of FCA enforcement in the coming years.
Since the start of 2024, there have been FCA settlements in the government contracting space ranging from the hundreds of thousands to tens of millions of dollars. These settlements involved companies of various sizes and specialties, including aerospace companies Sikorsky Support Services Inc. and Derco Aerospace Inc., ship manufacturer Austal USA LLC, and Booz Allen, an advanced technology company. The settlements involved a variety of alleged unlawful activities, including the following:
- Overcharging the U.S. military for spare parts and materials needed to repair and maintain military aircraft;
- Supplying valves for combat ships that did not meet military specifications;
- Using illegally divulged confidential government contracting and budget information to obtain government contracts;
- Billing the government for hours not actually worked.
Sikorsky Support Services Inc. and Derco Aerospace Inc. paid $70 million to resolve allegations that they had overcharged the U.S. Navy for aircraft parts, while Austal USA LLC paid almost $812,000 to resolve allegations that it had supplied inadequate valves for U.S. Navy combat ships.
Given President Trump's commitment to the recently launched DOGE-initiative, as well as statements by the Secretary of Defense and other Cabinet officials, emphasizing a need to find a perceived "billions" in fraud and waste, we can expect that the second Trump administration will continue using the FCA to combat fraud in all areas of government contracting, grants, and payments.
Over the course of the next year, we are also likely to see a new target of FCA enforcement in the government and defense contracting space: contractors who continue to maintain diversity, equity, and inclusion (DEI) and other affirmative action programs, given Trump's January 21, 2025 executive order targeting affirmative action and DEI initiatives in the federal government.
The executive order (EO), titled "Ending Illegal Discrimination and Restoring Merit-Based Opportunity," revoked several prior active executive orders, including dating back to 1965. The DEI Executive Order broadly deems DEI programs and policies illegal, and it specifically addresses higher education institutions, stating an intention to root out all race- and sex-based preferences used by higher education institutions (among many other "critical and influential institutions of American society"). The DEI Executive Order also creates new compliance obligations for all government contractors and grant recipients, heightening risk under the FCA.
Key provisions of the EO include:
- A requirement that any federal government contract or grant award contain terms requiring that the contracting party or grant recipient agree that its compliance with federal anti-discrimination laws is material to the government's payment decisions for purposes of the False Claims Act.
- A prohibition on federal contractors and subcontractors being able to consider "race, color, sex, sexual preference, religion, or national origin in ways that violate the Nation's civil rights laws" in their employment practices.
- A requirement that all contractors or grant recipients affirmatively "certify that it does not operate any programs promoting DEI that violate any applicable Federal anti-discrimination laws."
As detailed in another Foley Hoag post, government contractors or grant recipients who maintain DEI policies contrary to new terms and restrictions read into the law by the new Administration will risk liability under the FCA. In practice, this will likely result in private individuals bringing cases challenging companies' DEI activities and/or policies, which the government has indicated may constitute illegal discrimination. Based on the newly required certification language and the materiality designation of those certifications by the government, the FCA can now be used by those on either side of this issue. What have historically been largely individualized employment-law-based claims of workplace discrimination can now potentially also be pursued as FCA matters.
Qui tam relators and President Trump's DOJ are highly likely to capitalize on this expansion of FCA liability. Of special interest here is the impact this EO will have on private companies with federal contracts, which comprise some of the nation's largest employers. In addition, a recent Supreme Court decision may also further embolden qui tam relators and the DOJ. On February 21, 2025, the United States Supreme Court decided Wisconsin Bell, Inc. v. United States ex. rel. Heath, No. 23-1127, 604 U.S. ___ (2025). There, the Supreme Court confirmed an expansive reading of "claims" under the FCA. Wisconsin Bell moved to dismiss the qui tam FCA action and argued, in part, that because the money it received was largely money private carriers paid to a non-profit to administer based on government regulations, it did not submit any "claim" for government funds. The district court and U.S. Court of Appeals for the Seventh Circuit rejected this argument, as did the Supreme Court. The Supreme Court held that because the government provided at least some of the money in the fund, claims to the fund fell under the FCA. The Court stated: "And all the statute requires is that [federal money] provide 'any portion'—not the whole—of the sums requested." While not groundbreaking, this decision is a reminder that the FCA has a broad reach and provides an expansive definition of federal funding.
Finally, the DEI EO states that contractors may continue to comply with the existing regulatory scheme until April 21, 2025, which suggests that the relevant government offices, including the Office of Management and Budget, as well as the Federal Acquisition Regulatory Council, will be issuing guidance to procuring agencies in the coming months. Accordingly, there will be much uncertainty in the coming months, so government and defense contractors should be vigilant to ensure that they are complying with all government regulations and rules. See our prior post for a list of initial action items that should help government contractors and grant recipients begin to adapt to this changing environment.
Cybersecurity
Using the FCA as a tool for cybersecurity enforcement was an innovation of former President Biden's DOJ, which in 2021 launched its Civil Cyber-Fraud Initiative to use the FCA to pursue cybersecurity-related fraud by government contractors and grant recipients. Since its inception, the initiative has settled seven cybersecurity-related FCA matters, including four in 2024:
- In May 2024, the DOJ announced a $2.7M settlement with the staffing company Insight Global LLC to resolve a qui tam lawsuit alleging that the company, which was hired by the Pennsylvania Department of Health using funds from the U.S. Centers for Disease Control and Prevention, failed to implement adequate cybersecurity measures to protect health information obtained during COVID-19 contact tracing.
- In June 2024, the DOJ announced settlements totaling $11.3M with consulting companies Guidehouse Inc. and Nan McKay and Associates to resolve a qui tam lawsuit alleging that the companies failed to meet cybersecurity requirements in a federally-funded state contract to facilitate online applications for federal rental assistance during the COVID-19 pandemic.
- In October 2024, the DOJ announced a settlement of approximately $1.18M total value with Virginia-based contractor ASRC Federal Data Solutions LLC resolving FCA allegations related to storage of unsecured personally identifiable information of Medicare beneficiaries.
- Also in October 2024, the DOJ announced a $1.25M settlement with Pennsylvania State University to resolve a qui tam lawsuit alleging non-compliance with cybersecurity requirements in defense and aerospace contracts.
In addition, in August 2024, the United States intervened in a qui tam lawsuit against the Georgia Institute of Technology and Georgia Tech Research Corp. alleging that the defendants failed to follow cybersecurity rules purportedly incorporated in two Department of Defense contracts when performing on-campus research. United States ex rel. Craig v. Ga. Tech Rsch. Corp., et al., No. 1:22-cv-02698 (N.D. Ga.). The defendants have moved to dismiss the United States' complaint-in-intervention, and the motion is currently pending. This is the first cybersecurity-related FCA case in which a defendant has elected to defend the claims in court rather than pursue pre-litigation settlement. As such, it will be the first time that the government's theory that one can violate the FCA by failing to comply with cybersecurity regulations will be tested.
Looking ahead, we do not expect the second Trump administration to embrace a cybersecurity strategy that entails more regulation of the American private sector, including through FCA enforcement. Rather, we expect this administration to focus its cyber efforts on computer intrusions and attacks from abroad, as was the case during President Trump's first administration. Nevertheless, compliance with federal cybersecurity regulations should remain a priority for government contractors, particularly academic institutions that handle sensitive government data.
We also do not expect the second Trump Administration to abandon ongoing FCA investigations and litigations. As one example, on February 18, 2025, the Department of Justice settled FCA allegations against Health Net Federal Services Inc. (HNFS) and its corporate parent, Centene Corporation for $11,253,400. According to the DOJ press release, the settlement resolves allegations that HNFS falsely certified compliance with cybersecurity requirements in a contract with the U.S. Department of Defense to Administer the Defense Health Agency's TRICARE health benefits program.
State Attorneys General
Nearly every state has its own version of the FCA and state Attorneys General will likely remain, or become increasingly, active in the FCA space across a broad spectrum of industries. State legislatures are also increasingly active in enacting legislation directed at strengthening or expanding the breadth of FCA statutes.
For example, Massachusetts recently enacted a new law requiring private equity companies, real estate investment trusts (REITS), and management services organizations (MSOs) doing business with Massachusetts healthcare providers to timely disclose their portfolio companies' FCA violations or face FCA liability themselves. The law exempts "venture capital firms exclusively funding startups or other early-stage businesses" from the new requirements. Foley Hoag recently discussed these new changes in a post on our White Collar Law and Investigations Blog found here.
House Bill 5159, which was signed into law on January 8, 2025, amended the Massachusetts False Claims Act to impose liability on owners and investors that "know[] about" and fail to disclose FCA violations to the Commonwealth within 60 days of identifying the violation. The law also codifies the Attorney General's authority to issue civil investigative demands to health care investors.
The law applies to those with an "ownership or investment interest" in a covered entity, with "ownership or investment interest" broadly defined as "(1) direct or indirect possession of equity in the capital, stock or profits totaling more than 10 per cent of an entity; (2) interest held by an investor or group of investors who engages in the raising or returning of capital and who invests, develops or disposes of specified assets; or (3) interest held by a pool of funds by investors, including a pool of funds managed or controlled by private limited partnerships, if those investors or the management of that pool or private limited partnership employ investment strategies of any kind to earn a return on that pool of funds."
When exactly a health care investor "knows about" an FCA violation such that it must disclose that violation to the Commonwealth is not defined in the new law, creating uncertainty for companies seeking to comply with the 60-day reporting deadline. We recommend that investors proactively consult with FCA counsel regarding oversight of their health care portfolio companies and seek guidance from counsel about potentially reportable incidents as soon as possible.
III. Developments in the Courts
Zafirov (holding: the qui tam provisions of the FCA are unconstitutional)
One 2024 case out of the U.S. District Court for the Middle District of Florida – U.S. ex. rel. Zafirov v. Florida Medical Associates LLC – raises the question of whether there will even be a qui tam vehicle to enforce the topics discussed above going forward. In September 2024, the Middle District of Florida held that the FCA's qui tam provision – which has allowed individuals to sue on behalf of the government since the law was enacted in 1863 – is unconstitutional under the Appointments Clause of the Constitution. More about the decision can be found here.
Zafirov was appealed in late October 2024 and the government, which had initially declined to intervene, but subsequently intervened for the limited purpose of defending the constitutionality of the FCA qui tam provisions, filed its appellant brief on January 6, 2025. The government's leading argument is that relators are "private litigants pursuing private interests" and so do not exercise executive power under the FCA. ECF 39 at 7. According to the government, qui tam suits "are distinct from the government's enforcement efforts[;]" they "supplement" rather than supplant them. Relators, they say, are therefore not enforcing federal law in a manner inconsistent with the Vesting and Take Care Clauses and need not be appointed in the manner required by the Appointments Clause. Id.
While the government's argument is not new – indeed, it quotes Supreme Court and circuit precedent for this point – the collection and emphasis of these cases in the government's brief may have unintended, defendant-friendly implications, even if the qui tam provisions ultimately survive constitutional challenge. It has long been argued that a relator steps into the government's shoes in a qui tam action and that the government is the real party in interest. This principle yields many policy-based holdings that now may be ripe for challenge. Just to mention a few examples, on the theory that it would harm the real party in interest, i.e., the government, courts have found that a defendant may not rely on an unclean hands defense against a relator. As another example, courts have held that res judicata is improper as to a relator because the relator is not the "party" to the case. And joint prosecutorial privilege has been found to exist in qui tam actions on the grounds that the government and relator are essentially the same party. But in Zafirov, the government moves away from this line of thinking and instead uses the relator's distinct identity to its advantage. With such a spotlight on Zafirov, it may be challenging for the government to continue to have it both ways going forward. To be fair, however, the government's Zafirov brief seemingly recognizes this contradiction. It walks a fine line, including the arguments noted above along with acknowledging that "relator's suit may also vindicate a federal interest in remedying and deterring fraud on the United States." ECF 39 at 7. This may be enough to avoid the government's positioning in Zafirov being used against it in different contexts.
On the other hand, this ruling could have negative implications for defendants, too. It may mean the DOJ increasing resources dedicated to FCA cases in order to timely investigate and intervene to avoid dismissal under Zafirov's holdings. Attorney General Pam Bondi has signaled as much. During her confirmation hearings, she testified that under her leadership, the DOJ will devote sufficient resources to FCA enforcement and will defend the constitutionality of the FCA's qui tam provisions.
In the meantime, qui tam litigants may be wondering what this means for their litigation strategy. Few cases have weighed in on the constitutionality of the qui tam provisions since Zafirov. Those that have do not credit the argument. Despite this, defendants are raising the constitutionality defense in just about every procedural vehicle they can, so we may soon have a fuller picture of how other courts approach this argument. To preserve their rights, defendants should amend their affirmative defenses to add that the qui tam provisions of the FCA are unconstitutional, and, if the timing is appropriate, raise such an argument in any motion to dismiss or similar briefing.
Loper Bright (holding: courts may not defer to an agency's own interpretation of an ambiguous law)
In Loper Bright Enterprises v. Raimondo, 603 U.S. 369 (2024), the Supreme Court abrogated the longstanding Chevron deference to agency interpretation of silent or ambiguous statutes, making clear that "[c]ourts must exercise their independent judgment in deciding whether an agency has acted within its statutory authority" and "may not defer to an agency interpretation of the law simply because a statute is ambiguous." Id. at 412-13.
In the FCA enforcement context, in which falsity often turns on questions of statutory interpretation, Loper Bright may prove a boon to defendants. Loper Bright offers defendants facing an enforcement action an avenue to advance their own interpretations of ambiguous statutes and requires the courts to consider such arguments without deference to the relevant agency's interpretation. For example, where a defendant is charged with falsely certifying that it complied with a regulation interpreting a silent or ambiguous statute, that defendant can now argue the regulation is invalid per the statute's plain text or otherwise exceeds an agency's statutory authority.
A handful of cases have considered the impact of Loper Bright in the FCA enforcement context. In United States ex rel. Sheldon v. Forest Laboratories, LLC, No. ELH-14-2535, 2024 U.S. Dist. LEXIS 129331 (D. Md. July 23, 2024), for example, the U.S. District Court for the District of Maryland addressed a motion to dismiss FCA claims arising from alleged violations of the Medicaid Drug Rebate Statute. After supplemental briefing from the parties addressing the impact of Loper Bright on their positions, the court granted the defendant's motion to dismiss, finding that the relator had failed to adequately plead falsity or scienter as required under the FCA. In doing so, as instructed by Loper Bright, the court independently interpreted the Medicaid Drug Rebate Statute and declined to rely on the CMS' interpretation.
Loper Bright provides no guarantee for defendants in FCA cases – in fact, it may yield greater unpredictability for those defendants because courts have more flexibility (variability) when interpreting an ambiguous statute. Loper Bright does not preclude courts from considering agency guidance to help them decide FCA cases. Still, Loper Bright is likely to increase the chances of success for a defendant in an FCA enforcement action predicated on violation of an ambiguous statute because Courts are no longer permitted to simply defer to the agency interpretation in that instance. Sheldon previews the new opportunities Loper Bright may create for such defendants.
Regeneron (holding: plaintiff must prove an anti-kickback statute violation was the but-for cause of a false claim when relying on the "resulting from" language in the statute)
A key case to watch in 2024 was U.S. v. Regeneron Pharmaceuticals, and on February 18, 2025, the U.S. Court of Appeals for the First Circuit Court held that the AKS requires the government to prove that an AKS violation was the but-for cause of any false claims submitted to federal healthcare programs to give rise to FCA liability. The Third, Sixth, and Eighth Circuits have already weighed in on this question, reaching varying conclusions and setting up a split ripe for resolution by the Supreme Court. Members of Foley Hoag's White Collar Crime and Government Investigations practice group shared their analysis of the decision here.
Under the Third Circuit's view, the government must merely show that a patient is "exposed to an illegal recommendation or referral and a provider submits a claim for reimbursement pertaining to that patient." U.S. ex rel. Greenfield v. Medco Health Sols., Inc., 880 F.3d 89, 100 (3d Cir. 2018). That is, the government need not prove that the alleged false claims would not have been submitted but for the alleged unlawful kickback. The government favored this less demanding causation standard, and it advanced this position before the First Circuit in Regeneron.
The standard adopted by the Sixth and Eighth Circuits is the more stringent but-for causation standard, which requires the government to prove that but for the unlawful kickback in violation of the AKS, the false claims would not have been submitted. See U.S. ex rel. Cairns v. D.S. Med. LLC, 42 F.4th 828, 834 (8th Cir. 2022); U.S. ex rel. Martin v. Hathaway, 63 F.4th 1043, 1052 (6th Cir. 2023). This was the position adopted by the district court in Regeneron and ultimately accepted by the First Circuit on appeal.
Originally published 28 February 2025
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