The False Claims Act landscape saw significant developments during the first half of 2026. Courts continued to wrestle with challenges to the constitutionality and reach of FCA qui tam actions, while the U.S. Department of Justice (“DOJ”) expanded enforcement efforts through new initiatives and organizational changes. At the same time, major settlements and appellate decisions highlighted increased scrutiny of healthcare fraud, federal contractor compliance, and emerging theories of FCA liability involving civil-rights certifications. These developments underscore the government’s continued commitment to aggressive FCA enforcement and provide insight into key areas of risk moving forward.
We are excited to welcome Paul Perkins to the firm as a partner and chair of the FCA practice. Paul was most recently an Associate Deputy Attorney General at DOJ, where he directed major FCA and other enforcement matters, personally negotiated key settlements, and shaped national FCA enforcement policy and priorities. Paul also served as Deputy Director of the Civil Fraud Section, helping to lead a national office of more than 150 attorneys and supervising major FCA investigations involving healthcare providers, pharmaceutical companies, and federal contractors.
As discussed in prior Newsletters, we have been closely watching challenges to the constitutionality of the FCA’s qui tam provisions. Justice Thomas first raised the issue in his dissent in United States ex rel. Polansky v. Executive Health Resources, Inc., writing, “There are substantial arguments that the qui tam device is inconsistent with Article II and that private relators may not represent the interests of the United States in litigation.” Justice Kavanaugh, joined by Justice Barrett, concurred separately to agree with Justice Thomas on the issue.
Defendants have since frequently raised this issue in dispositive motions. Although most district courts have rejected the argument, Judge Kathryn Kimball Mizelle in the Middle District of Florida did not. In U.S. ex rel. Zafirov v. Florida Medical Associates, LLC, Judge Mizelle granted a motion to dismiss with prejudice, reasoning that qui tam suits are unconstitutional because they violate the Appointments Clause of the Constitution.
The Appointments Clause imposes specific requirements for the appointment of “officers of the United States” and “inferior Offices,” the former of which must be appointed by the president with the advice and consent of the Senate, and the latter of which must be appointed by the president, a court, or a department head. Judge Mizelle relied on Lucia v. SEC, in which the Supreme Court applied a two-part test to determine whether a person is an “officer” and must be appointed in accordance with the Appointments Clause—asking if he (1) occupies a “continuing” position established by law and (2) exercises “significant authority pursuant to the laws of the United States.”
Applying that framework, Judge Mizelle concluded that FCA relators are officers because they prosecute claims on behalf of the United States and exercise substantial federal enforcement authority. Because relators are not appointed by the President, a court, or the head of a federal department, she held that allowing them to initiate qui tam actions in the government’s name violates the Appointments Clause.
The relator appealed the decision to the Eleventh Circuit, and arguments were held in December 2025. On September 1, 2026, the Eleventh Circuit issued its long-awaited decision—reversing the district court and holding that the qui tam provisions do not violate the Appointments Clause. Applying the Lucia frameworks, the Court resolved the case entirely on the first prong—finding that relators do not hold a continuing position. The court expressly declined to address separate challenges that the defendants made under the Take Care Clause and Vesting Clause to the qui tam provisions, remanding those issues to the district court for consideration.
The Eleventh Circuit’s decision is consistent with every other circuit that has considered the issue to date. The Sixth Circuit, for example, in In re TriHealth, Inc., et al. recently reaffirmed the constitutional question in denying the defendants’ petition for permission to pursue an interlocutory appeal from the district court’s denial of their motion to dismiss.
But the issue is not entirely settled. In March 2025, Judge Stuart Kyle Duncan of the Fifth Circuit wrote a concurrence in United States ex rel. Montcrief v. Peripheral Vascular Assocs., “separately to point out the constitutional flaws in the FCA’s qui tam device, which our precedent prevents us from addressing.” Several months later, Judge James C. Ho wrote a concurring opinion in United States ex rel. Gentry v. Encompass Health Rehab., urging the court to “revisit whether there are serious constitutional problems with the qui tam provisions of the False Claims Act.”
The Third Circuit is also considering the issue. On March 18, 2026, the Court heard oral argument in United States ex rel. Penelow v. Janssen Products, which arose from the defendant’s appeal of the largest-ever FCA jury verdict—$1.64 billion. Janssen, a subsidiary of Johnson & Johnson, argued that the qui tam provisions are unconstitutional and that the penalties awarded to the government and the relators violated the Excessive Fines Clause and the Due Process Clause. Following oral argument, the Court appointed a special mediator, and the case remains pending.
Ultimately, the issue is likely headed to the Supreme Court and the outcome is sure to impact FCA enforcement. We will continue to monitor developments.
On March 16, 2026, President Trump issued an executive order (EO) creating the “Task Force to Eliminate Fraud,” to address “fraud, waste, and abuse” of federal public benefits programs. The EO directs agencies to maximize enforcement of eligibility requirements, promote intergovernmental data-sharing, and adopt minimum anti-fraud safeguards.
The EO instructs DOJ to maximize “pursuit of fraud involving taxpayer dollars” by promoting meritorious FCA qui tam cases involving federal benefit programs and ensuring prompt review of such actions. This signals a potential increase in FCA litigation and whistleblower activity and emphasizes the need for companies to implement robust internal reporting infrastructures and effective remediation processes. Companies should also shore up their internal whistleblower reporting mechanisms and anti-retaliation policies and ensure that any complaints are investigated promptly and thoroughly documented.
In May 2025, DOJ announced the launch of the Civil Rights Fraud Initiative, which seeks to use the FCA to pursue entities that allegedly engage in unlawful discrimination while receiving federal funds or performing federal contracts. According to the announcement, DOJ intends to scrutinize certain diversity, equity, and inclusion (DEI) programs and initiatives for potential violations of federal civil rights laws.
On April 10, 2026, the DOJ announced the Initiative’s first major resolution, with IBM denying liability and no admission of wrong doing. IBM agreed to pay approximately $17 million based on allegations that it falsely certified compliance with federal anti-discrimination requirements while maintaining employment practices that the government contended improperly considered race or sex. DOJ acknowledged IBM’s cooperation with the investigation by making early disclosure of relevant facts and undertaking voluntary remedial measures.
Notably, the settlement covered conduct stretching back to 2019—years before the Trump Administration issued its executive order or launched the Initiative. DOJ officials characterized the settlement as a landmark enforcement action and emphasized that it was just the beginning of its enforcement efforts.
Since that time, two additional federal contractors have settled with DOJ—Deloitte for $21.5 million and Accenture for $25 million. Although the settlement agreements contain similar terms, the descriptions of the alleged conduct are significantly more detailed than is typical in an FCA settlement agreement. Recipients of federal funds are likely to face increased FCA scrutiny of employment, hiring, promotion, and related policies in the coming years.
Building on these initiatives, on March 26, 2026, President Trump issued an EO entitled, “Addressing DEI Discrimination by Federal Contractors.” The EO directs federal agencies to include a new clause in covered federal contracts and subcontracts prohibiting federal contractors and their subcontractors from engaging in “racially discriminatory DEI activities.” Those who have been found to violate this requirement will risk contract termination or suspension and being declared ineligible for future government contracts. DOJ is directed to pursue FCA actions against violators who engage in racially discriminatory DEI activities and to ensure prompt review of qui tam actions.
Federal contractors and subcontractors should consider reviewing existing programs, policies, and practices, including those related to DEI, against the backdrop of the new requirements to ensure continued compliance with applicable federal antidiscrimination laws.
On April 7, 2026, Attorney General Todd Blanche issued a memorandum establishing the National Fraud Enforcement Division (NFED) as a new DOJ litigating division focused on fraudulent misuse of taxpayer dollars. Blanche said the division is the country’s first “comprehensive and coordinated approach” to combating fraud, and its “core mission” is to “zealously investigate and prosecute those who steal or fraudulently misuse taxpayer dollars.”
Although the new division does not affect the Civil Division’s Fraud Section, which handles all FCA matters, its creation represents a significant increase in resources devoted to—and priority placed on—DOJ’s broader anti-fraud efforts. The new division consolidates the Criminal Division’s Tax Section, Health Care Fraud Unit, and the Market, Government, and Consumer Fraud Unit, and reorganizes that work into a number of specialized sections, including the Health Care Fraud Section, the Global Trade & Commerce Enforcement Section, and the Corporate Enforcement Section. The division also will house the National Fraud Detection Center, which will serve as a specialized unit focused on identifying major fraud schemes through data analytics.
In addition to the investigative and prosecutorial work, NFED also will develop and set national enforcement priorities and propose legislative and regulatory reforms to close systemic fraud vulnerabilities. Every U.S. Attorney’s Office in the country must designate a prosecutor to NFED, and local and state prosecutors may participate as Special Attorneys, highlighting the interagency nature of the program. The FBI must also coordinate with the Division to “ensure sufficient resources” are allocated to investigating fraud and increase the number of agents, analysts, and forensic accountants dedicated to such investigations.
On September 16, 2026, the House of Representatives passed H.R. 9576, the National Fraud Enforcement Division Act of 2026, to codify the National Fraud Enforcement Division. Representative Brad Finstad, a Congressman from Minnesota—where in recent months the DOJ has actively pursued a number of benefits fraud investigations—said the legislation would “centralize fraud prevention efforts within federal law enforcement and give the DOJ greater ability to fully investigate and prosecute the fraudsters responsible for stealing Americans’ hard-earned taxpayer dollars.”
While these developments most directly reshape DOJ’s white-collar criminal enforcement landscape, there is every reason to expect significant spillover into DOJ’s FCA enforcement efforts, which very often proceed in parallel with criminal investigations.
On April 30, 2026, NFED launched the West Coast Health Care Fraud Strike Force, a multidistrict initiative uniting the newly formed Health Care Fraud Section with U.S. Attorney’s Offices for the District of Arizona, District of Nevada, and Northern District of California. The Strike Force was formed in response to data showing a “significant and accelerating increase in health care fraud across all three districts.” The Strike Force will expand the government’s fraud enforcement footprint on the West Coast, a region DOJ has specifically identified as a hotbed for technology-driven fraud schemes targeting Medicare and Medicaid. Although NFED is focused on identifying and prosecuting criminal fraud, this increased focus may signal heightened FCA risk for health care companies, digital health platforms, and specialty providers operating in Arizona, Nevada, and California.
This expansion also builds on recent healthcare fraud prosecutions in northern California and Arizona, including those following prior qui tam actions. In November 2025, the president of a Silicon Valley-based medical technology company was sentenced to eight years in prison and $24 million in restitution for a fraud scheme in which he submitted over $77 million in fraudulent claims to Medicare and private insurers and falsely marketed an unproven COVID-19 test to investors while manipulating the company’s stock price. In December 2025, two owners of several Arizona-based wound graft companies pled guilty and were sentenced to up to 15 years in prison for orchestrating a $1.2 billion Medicare fraud scheme. In addition to restitution and forfeiture orders, one of the owners, along with one of the wound-graft companies they owned, agreed to pay $279,912,916, with the other owner agreeing to an additional $30 million, to settle allegations that they knowingly submitted false claims to Medicare and other federal healthcare programs in violation of the FCA. The FCA allegations at the heart of the criminal charges were originally brought by whistleblowers in qui tam litigation.
In April 2026, DOJ launched the FOCUS Initiative to strengthen its relationship with data miners filing qui tam complaints under the FCA. Since 2024, data miners who analyze publicly available government data to identify potential fraud have been responsible for nearly half of all qui tam actions. In response to this increase, the Civil Division will begin meeting with data miners to discuss their capabilities and outline why and how their data signals reliably correlate to fraudulent and false claims. The initiative will prioritize those data miners who have invested in pre-filing diligence, demonstrated a commitment to analytical rigor, have familiarity with program rules, and have previously demonstrated legally sufficient allegations. In its announcement, the Civil Division also observed that the best data miners will “take advantage of the most frontier artificial intelligence models and capabilities to further isolate and discover signals of fraud from large public datasets.” This preference for working with sophisticated technological actors demonstrates DOJ’s openness to innovation in this area and its willingness to leverage advanced AI tools to combat fraud.
On May 27, 2026, the Civil Division announced procedural reforms to accelerate its review of FCA whistleblower complaints alleging fraud against federally funded, state-administered benefits programs. These reforms are intended to “empower the Department to move quickly on meritorious qui tam cases, maximize finite enforcement resources, and focus on dismantling sophisticated fraud schemes that exploit taxpayer-funded programs.” The Civil Division issued an internal memo the same day, directing Fraud Section attorneys and AUSAs handling FCA matters to compress pre-litigation timelines and adopt a more structured and efficient triage process for qui tam cases. The Civil Division must now complete its initial review of new benefits fraud qui tam actions within 60 to 120 days, a major shift from historically open-ended timelines that could last years. Under the new guidance, AUSAs will be expected to reach quicker conclusions on whether to intervene in cases filed by relators, conduct additional investigations, or seek dismissal. Because more cases may be unsealed before DOJ has finished a merits review, relators may end up litigating a larger share of declined benefits fraud matters on their own, without the benefit of additional investigation and intervention by DOJ.
These changes flow directly from President Trump’s March 16, 2026, EO establishing the Task Force to Eliminate Fraud. As DOJ noted in its press release, “FCA matters will continue to be on the forefront of the battle against fraud, and the Civil Division’s FCA work will support and advance the mission of the Task Force to Eliminate Fraud and the National Fraud Enforcement Division.”
On September 18, 2026, DOJ announced revisions to the Justice Manual “to strengthen its fight against fraud under the False Claims Act through clearer standards that promote fair and effective enforcement.” Those revisions fall into two buckets. The first bucket readopts and further expands DOJ’s 2017 policy that “sub-regulatory guidance cannot impose legal obligations beyond those established by statute or regulation.” FCA cases, therefore, must be premised upon an alleged violation of a binding legal obligation set by statute, regulation, or contract, rather than guidance provided by an agency. The second bucket invigorates DOJ’s authority under the FCA to dismiss qui tam actions. In the wake of the Supreme Court’s 2023 decision in United States ex rel. Polansky v. Executive Health Resources, which held that DOJ need only establish “good cause” before it intervenes in a qui tam action and seeks dismissal under 31 U.S.C. § 3730(c)(2)(A), DOJ has seemed reticent to use its expanded authority. These revisions appear to reflect an increased willingness to seek dismissal—including in cases DOJ has declined and are in litigation.