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As recently reported by the Department of Justice (“DOJ”), settlements and judgments under the Civil False Claims Act (“FCA”) exceeded $6.8 billion for fiscal year 2025, the highest number in a single year in the history of the law.<a href="#_edn1" id="_ednref1">[1]</a>&nbsp; As is typically the case, the vast majority of recoveries ($5.7 billion) came from the healthcare industry for alleged fraudulent claims submitted for reimbursement from the Medicare, Medicaid, and TRICARE programs.&nbsp; However, the DOJ also highlighted its pursuit of fraud involving the federal government’s purchase of goods and services, as well as the evasion of tariffs and customs duties.&nbsp; As we enter the second year of this presidential administration, it is a good time for a refresher on the government’s enforcement priorities, the intra-governmental changes that may affect FCA enforcement, and some FCA basics that practitioners and those doing work with the federal government should keep in mind.&nbsp;

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In its first year, the administration clearly identified a number of policy priorities, and it has signaled its intent to utilize the FCA as a tool to achieve them.&nbsp; For example, Executive Order No.&nbsp;14173, Ending Illegal Discrimination and Restoring Merit-Based Opportunity, directed the heads of agencies to include a provision in contracts and grants which makes compliance with the administration’s diversity, equity and inclusion (“DEI”) policies “material to the government’s payment decisions” for purposes of the FCA.<a href="#_edn2" id="_ednref2">[2]</a>&nbsp; In May, the DOJ also established a civil rights fraud initiative to “aggressively pursue . . . any recipient of federal funds that knowingly violates federal civil rights laws,” and in August&nbsp;and September&nbsp;it issued civil investigative demands (“CIDs”) to federal contractors related to their DEI practices.<a href="#_edn3" id="_ednref3">[3]</a>

The DOJ also jumpstarted a cross-agency “Trade Fraud Task Force” with the Department of Homeland Security to pursue the evasion of tariffs and the importation of prohibited goods.&nbsp; In its publication of statistics, the DOJ also noted that it had “directed resources to combatting fraud that evades tariffs and customs duties.”<a href="#_edn4" id="_ednref4">[4]</a>&nbsp; And given this focus, it should come as no surprise that last year, the DOJ announced a number of settlements of claims alleging the misrepresentation of goods’ country of origin to avoid tariffs.<a href="#_edn5" id="_ednref5">[5]</a>&nbsp;

The administration has even used the FCA to further its immigration policy.&nbsp; Last fall, it reached an agreement to settle FCA claims against a shipbuilder performing a government contract that was alleged to have employed individuals ineligible to work in the United States.<a href="#_edn6" id="_ednref6">[6]</a>&nbsp; This comes on the heels of a similar settlement in which another shipyard paid over a million dollars to “resolve allegations that it violated the False Claims Act by knowingly billing the U.S. Coast Guard for labor provided by workers who were not eligible to work in the United States.”<a href="#_edn7" id="_ednref7">[7]</a>

Finally, entities doing any work with the federal government should be aware of federal agencies’ attempts to crack down on so-called “pass through” arrangements in the Small Business Administration’s (“SBA”) 8(a) program, where small businesses retain fees for minimal participation while subcontracting nearly all work to larger companies that would not qualify for 8(a) certification.&nbsp; The SBA instituted its own audit last summer, and other agencies have since followed suit including most recently the Department of War.<a href="#_edn8" id="_ednref8">[8]</a>&nbsp; Given the administration’s concern with eliminating waste, fraud and abuse, it would not be surprising if these audits result in FCA investigations.&nbsp;

These areas are not generally associated with fraud enforcement via the FCA, and it is also important to realize that these priorities do not focus on any one industry. &nbsp;As a result, companies that provide any goods or services to or receive any sort of funding from the federal government should continue to keep tabs on the administration’s priorities.&nbsp; Compliance teams should continue to monitor the landscape and correspond with counsel to ensure that they prepare to address any issues that may arise.

The next check-in point involves the DOJ’s resources to actually pursue the administration’s policies and enforce the FCA.&nbsp; While the administration has set forth numerous policy priorities, it will be interesting to see how it allocates resources to pursue them, including in the False Claims Act context.&nbsp; As of late last year, experts have estimated that roughly 5,500 people, including many experienced attorneys, had left the Department of Justice in 2025.<a href="#_edn9" id="_ednref9">[9]</a>&nbsp; Compounding the issue, many experienced FBI agents and investigators at other federal agencies have also left the government in large numbers.<a href="#_edn10" id="_ednref10">[10]</a>&nbsp;

The natural counter to this resource concern is that the qui tam provision of the civil FCA will continue to assist enforcement and drive recoveries for the federal government by allowing private citizens to pursue claims on behalf of the United States.&nbsp; However, in a 2023 dissenting opinion, three justices of the Supreme Court questioned the constitutionality of the provision, openly wondering if it represented a congressional overreach into the executive branch’s authority to represent the United States in civil litigation.<a href="#_edn11" id="_ednref11">[11]</a>&nbsp; Since then, the constitutionality of the FCA’s qui tam provisions has been challenged in numerous federal district court cases around the country, and a handful of circuit courts are primed to address the issue in 2026.<a href="#_edn12" id="_ednref12">[12]</a>

Regardless of DOJ resource allocation and the constitutionality of the qui tam provisions, the FCA is an incredibly broad tool at the federal government’s disposal.&nbsp; While the statute imposes civil liability on any person who “knowingly presents, or causes to be presented, a false or fraudulent claim for payment or approval,”<a href="#_edn13" id="_ednref13">[13]</a> interpretations of the statute over time have broadened its potential reach.

For example, in 2016 the Supreme Court sanctioned the “implied certification” theory of FCA liability, in which a company could face civil damages for submitting a claim while failing to comply with a relevant statute or regulation, even if the company did not expressly certify compliance with said law as a condition of payment.<a href="#_edn14" id="_ednref14">[14]</a>

Additionally, the knowledge requirement is broad and includes actual knowledge and deliberate ignorance or reckless disregard of the truth of the information.<a href="#_edn15" id="_ednref15">[15]</a>&nbsp; Intent to defraud or deceive the government is not a requirement for FCA liability.&nbsp; Furthermore, the Supreme Court recently held that the knowledge requirement is a subjective standard requiring an inquiry into the knowledge of the actual FCA defendant, not an “objectively reasonable” person.<a href="#_edn16" id="_ednref16">[16]</a>&nbsp; This standard potentially opens up companies to increased scrutiny during investigations and broader discovery during litigation.&nbsp; The subjective knowledge standard is also likely to render civil FCA litigation less amenable to early dismissal.&nbsp;

Last but certainly not least, on top of all of this, remember that the government can seek costly penalties per false claim and triple damages for violations of the FCA.<a href="#_edn17" id="_ednref17">[17]</a>

Do Not Forget about the Criminal FCA (and Other Criminal Statutes)

As if the civil FCA was not enough to worry about in navigating this ever-shifting landscape, companies and practitioners must also be aware of the criminal false claims act (18 U.S.C. §&nbsp;287), which authorizes significant fines and potential prison time for similar conduct that makes a company or individual liable under the civil FCA.<a href="#_edn18" id="_ednref18">[18]</a>&nbsp; Like the civil FCA but unlike many other federal criminal statutes, specific intent to defraud is not required for a conviction under Section&nbsp;287.<a href="#_edn19" id="_ednref19">[19]</a>&nbsp; Additionally, federal circuit courts are split as to whether or not the government even needs to establish that the claim must be material to the government’s payment decision (which is a required element for civil FCA liability to attach).<a href="#_edn20" id="_ednref20">[20]</a>&nbsp;

The concern for anyone doing business with the government is that a civil FCA investigation could potentially result in a criminal prosecution.&nbsp; DOJ’s Justice Manual indicates that for potential claims of fraud against the government, criminal and civil divisions liberally share information. Section&nbsp;9-42.010(B) of the DOJ Justice Manual indicates that “the Federal Bureau of Investigation has been directed to furnish both the Fraud Section&nbsp;of the Criminal Division and the Commercial Litigation Branch of the Civil Division with copies of all reports in all matters involving fraud against the government.”<a href="#_edn21" id="_ednref21">[21]</a>&nbsp; Additionally, the Justice Manual requires that the Commercial Litigation Branch “coordinate[] its cases with the appropriate United States Attorney to ensure the pursuit of both civil and criminal redress . . . .&nbsp; This coordination may include the simultaneous initiation of civil and criminal proceedings in cases in which the monetary recovery to the government and the deterrent effect will be enhanced, giving due consideration to the risks to the criminal case and the availability of protective orders and stays.”<a href="#_edn22" id="_ednref22">[22]</a>&nbsp; Even for civil FCA qui tam cases brought by private citizens on behalf of the government, the DOJ Civil Section&nbsp;will work with the DOJ Criminal Division and U.S. Attorneys’ Offices.<a href="#_edn23" id="_ednref23">[23]</a>

The submission of false claims to the government can also be prosecuted under other statutes, such as 18 U.S.C. §&nbsp;1001 (false statement or representation to the government), 18 U.S.C. §&nbsp;371 (conspiracy to defraud the United States), and 18 U.S.C. §§&nbsp;1341, 1343 (mail and wire fraud).&nbsp; As a result, companies must be able to swiftly identify, investigate, and resolve any issues involving the submission of claims to the federal government.&nbsp; Given the complexity of the legal landscape, companies should work with counsel as early as possible to manage any internal and/or government investigations, as well as any potential litigation.&nbsp;&nbsp;

The purpose of this alert is to remind those doing business with the federal government of the administration’s priorities and its intent to use the broad reach of the false claims statutes to enforce those priorities regardless of industry.&nbsp; Given the government’s broad investigatory power and the broad scope of the civil FCA and its criminal counterpart, where does one begin to develop a plan for compliance?

Companies should work with counsel to proactively develop robust compliance programs, including a comprehensive protocol for employees to internally report concerns of alleged misconduct

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Consult with counsel regarding certification language in contracts or grants

Review policies and programs to ensure compliance with relevant laws and maintain strong internal reporting policies and procedures

Immediately conduct internal investigations with counsel whenever potential issues arise

Ensure compliance personnel have appropriate training and are able to conduct risk assessments

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Please reach out to one of the professionals in Vedder’s full-service Government Contracts or Government Investigations &amp; White Collar Defense groups for any assistance in navigating these or any other issues faced by those doing business with the federal government.  If you have any questions about this article specifically, please contact Kelly E. Buroker at <a href="mailto:kburoker@vedder.com">kburoker@vedder.com</a>, Steve Dollear at <a href="mailto:sdollear@vedder.com">sdollear@vedder.com</a>, or any other Vedder attorney with whom you have worked.

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<a href="#_ednref1" id="_edn1">[1]</a> False Claims Act Settlements and Judgments Exceed $6.8B in Fiscal Year 2025, U.S. Dep’t of Just. (Jan. 16, 2026), <a href="https://www.justice.gov/opa/pr/false-claims-act-settlements-and-judgments-exceed-68b-fiscal-year-2025" target="_blank" rel="noreferrer noopener">https://www.justice.gov/opa/pr/false-claims-act-settlements-and-judgments-exceed-68b-fiscal-year-2025</a>.

<a href="#_ednref2" id="_edn2">[2]</a> Exec. Order No. 14173, 90 Fed. Reg. 8633 (Jan. 21, 2025).

<a href="#_ednref3" id="_edn3">[3]</a> See 31 U.S.C. § 3733 (allowing issuance of civil investigative demands for FCA investigations); see also Lydia Wheeler, Justice Department Using Fraud Law To Target Companies On DEI, The Wall Street Journal (Dec. 28, 2025), <a href="https://www.wsj.com/politics/policy/trump-doj-dei-fraud-investigations-93213d52?gaa_at=eafs&amp;gaa_n=AWEtsqeiFpuL2sp6euPDqRNYz6h6g5PcYIL-8-3zuCH2it2GTWQt2nvb-0WmrEH47FQ%3D&amp;gaa_ts=697fbc01&amp;gaa_sig=V-CucO8WPeFsb4OsZcc8l98YGQlynqNXpVGpw72z2U5l5Y5JAOTuFE7tNW5H3-xrcjQWcnYwAArevcYSQBTR2w%3D%3D287" target="_blank" rel="noreferrer noopener">https://www.wsj.com/politics/policy/trump-doj-dei-fraud-investigations-93213d52?gaa_at=eafs&amp;gaa_n=AWEtsqeiFpuL2sp6euPDqRNYz6h6g5PcYIL-8-3zuCH2it2GTWQt2nvb-0WmrEH47FQ%3D&amp;gaa_ts=697fbc01&amp;gaa_sig=V-CucO8WPeFsb4OsZcc8l98YGQlynqNXpVGpw72z2U5l5Y5JAOTuFE7tNW5H3-xrcjQWcnYwAArevcYSQBTR2w%3D%3D287</a>.

<a href="#_ednref4" id="_edn4">[4]</a> DOJ FY 2025 Statistics, supra note 1.

<a href="#_ednref5" id="_edn5">[5]</a> See, e.g., Importers Agree to Pay $6.8M to Resolve False Claims Act Liability Relating to Voluntary Self-Disclosure of Unpaid Customs Duties, Dep’t. of Justice (July 23, 2025), <a href="https://www.justice.gov/opa/pr/importers-agree-pay-68m-resolve-false-claims-act-liability-relating-voluntary-self" target="_blank" rel="noreferrer noopener">https://www.justice.gov/opa/pr/importers-agree-pay-68m-resolve-false-claims-act-liability-relating-voluntary-self</a> (self-disclosure of failure to declare the correct country of origin resulting in $6.8 million settlement); see also Allied Stone Inc. and Company Official Agree to Pay $12.4M to Settle False Claims Act Allegations Relating to Evaded Customs Duties, U.S. Dep’t. of Justice (Aug. 19, 2025), <a href="https://www.justice.gov/opa/pr/allied-stone-inc-and-company-official-agree-pay-124m-settle-false-claims-act-allegations" target="_blank" rel="noreferrer noopener">https://www.justice.gov/opa/pr/allied-stone-inc-and-company-official-agree-pay-124m-settle-false-claims-act-allegations</a> (settlement of FCA claims that company attempted to avoid tariffs and antidumping duties).

<a href="#_ednref6" id="_edn6">[6]</a> Government Contractor to Pay Over $4 Million to Settle False Claims Act Allegations, U.S. Attorney’s Office, District of New Jersey (Sept. 18, 2025), <a href="https://www.justice.gov/usao-nj/pr/government-contractor-pay-over-4-million-settle-false-claims-act-allegations" target="_blank" rel="noreferrer noopener">https://www.justice.gov/usao-nj/pr/government-contractor-pay-over-4-million-settle-false-claims-act-allegations</a>.

<a href="#_ednref7" id="_edn7">[7]</a> Bollinger Shipyard LLC Agrees to Pay $1,025,000 to Settle False Claims Act Allegations Involving Billing the Coast Guard for Employees Ineligible to Work in the United States, U.S. Attorney’s Office, Eastern District of Louisiana (Jan. 16, 2025), <a href="https://www.justice.gov/usao-edla/pr/bollinger-shipyard-llc-agrees-pay-1025000-settle-false-claims-act-allegations-0" target="_blank" rel="noreferrer noopener">https://www.justice.gov/usao-edla/pr/bollinger-shipyard-llc-agrees-pay-1025000-settle-false-claims-act-allegations-0</a>.

<a href="#_ednref8" id="_edn8">[8]</a> Nick Wakeman, Pentagon Launches Wide 8(a) Review, Targeting Billions in Awards, Wash. Tech. (Jan. 20, 2026), <a href="https://www.washingtontechnology.com/contracts/2026/01/pentagon-launches-wide-8-review-targeting-billions-awards/410797/" target="_blank" rel="noreferrer noopener">https://www.washingtontechnology.com/contracts/2026/01/pentagon-launches-wide-8-review-targeting-billions-awards/410797/</a>.

<a href="#_ednref9" id="_edn9">[9]</a> Justice Department Struggles as Thousands Exit — and Few Are Replaced, American Bar Association (Nov. 19, 2025), <a href="https://www.americanbar.org/advocacy/governmental_legislative_work/publications/washingtonletter/november-25-wl/outside-the-gao-1125wl/" target="_blank" rel="noreferrer noopener">https://www.americanbar.org/advocacy/governmental_legislative_work/publications/washingtonletter/november-25-wl/outside-the-gao-1125wl/</a>.

<a href="#_ednref10" id="_edn10">[10]</a> Michael S. Schmidt, Devlin Barrett &amp; Jonah E. Bromwich, Depleted and Distracted, Justice Dept. Staff Fear Losing Focus on Potential Threats, N.Y. Times (Jan. 7, 2026), <a href="https://www.nytimes.com/2026/01/07/us/justice-department-threats-cyberattacks-terrorism.html" target="_blank" rel="noreferrer noopener">https://www.nytimes.com/2026/01/07/us/justice-department-threats-cyberattacks-terrorism.html</a>.

<a href="#_ednref11" id="_edn11">[11]</a> United States ex rel. Polansky v. Executive Health Resources, Inc., 599 U.S. 419, 442 (2023) (Kavanaugh, J., concurring); id. at 449–452 (Thomas, J., dissenting).

<a href="#_ednref12" id="_edn12">[12]</a> See, e.g., United States ex rel. Zafirov v. Florida Medical Associates, LLC, No. 24-13581 (11th Cir. 2025), Penelow v. Janssen Prods. LP, No. 25-01818 (3d Cir. 2025); In re Trihealth, Inc., No. 25-0307 (6th Cir.); see also United States of Am. ex rel. Gentry v. Encompass Health Rehab. Hosp. of Pearland, L.L.C., No. 25-20093, 2025 WL 3063921, at *5 (5th Cir. Nov. 3, 2025) (Ho, J., concurring) (urging Fifth Circuit to reconsider old decision upholding constitutionality of FCA qui tam provision).

<a href="#_ednref13" id="_edn13">[13]</a> 31 U.S.C. § 3729(a)(1)(A)-(B).

<a href="#_ednref14" id="_edn14">[14]</a> Universal Health Servs., Inc. v. United States ex rel. Escobar, 579 U.S. 176 (2016).

<a href="#_ednref15" id="_edn15">[15]</a> 31 U.S.C. § 3729(b)(1)(A).

<a href="#_ednref16" id="_edn16">[16]</a> United States ex rel. Schutte v. SuperValu Inc., 598 U.S. 739 (2023).

<a href="#_ednref17" id="_edn17">[17]</a> 31 U.S.C. § 3729(a)(1)(G).

<a href="#_ednref18" id="_edn18">[18]</a> See 18 U.S.C. § 287; see also United States v. Slocum, 708 F.2d 587, 596 (11th Cir. 1983) (explaining that the criminal FCA requires a (1) a false, fictitious or fraudulent claim; (2) knowledge of falsity; and (3) specific intent to violate the law or with a consciousness that the submission of the claim was wrong).

<a href="#_ednref19" id="_edn19">[19]</a> For example, the Sixth Circuit’s federal jury instructions only require that the government establish that “a defendant acts knowingly and willfully if the defendant knows that his statement is false and knows that his conduct is unlawful.”  See Sixth Circuit Pattern Criminal Jury Instructions, No. 13.02 (2025); see also William J. Bauer Pattern Criminal Jury Instructions of the Seventh Circuit, Title 18 U.S.C. § 1001(a)(2) at 445 (2023) (providing that a defendant acts “knowingly” for purposes of 18 U.S.C. § 287 “if he realizes what he is doing and is aware of the nature of his conduct, and does not act through ignorance, mistake, or accident.”).

<a href="#_ednref20" id="_edn20">[20]</a> U.S. Dep’t of Just., Crim. Resource Manual § 922: Elements of 18 U.S.C. § 287, available at <a href="https://www.justice.gov/archives/jm/criminal-resource-manual-922-elements-18-usc-287" target="_blank" rel="noreferrer noopener">https://www.justice.gov/archives/jm/criminal-resource-manual-922-elements-18-usc-287</a> (“Although it is clear from the case law that specific intent to defraud is not required for a conviction under 18 U.S.C. § 287, the United States Courts of Appeals are divided on the issue of whether willfulness is an essential element of the crime.”); see also United States v. Nash, 175 F.3d 429, 434 (6th Cir. 1999) (noting that the Second, Fifth, Sixth, Ninth, and Tenth Circuits have held “that materiality is not an element of 18 U.S.C. § 287.”).

<a href="#_ednref21" id="_edn21">[21]</a> U.S. Dep’t of Just., Just. Manual § 9-42.010(B) (2018).

<a href="#_ednref22" id="_edn22">[22]</a> U.S. Dep’t of Just., Just. Manual § 9-42.010(D) (2018).

<a href="#_ednref23" id="_edn23">[23]</a> U.S. Dep’t of Just., Just. Manual § 9-42.440 (2018).

2026 False Claims Act Refresh

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