FCA Enforcement Monthly

Designed for busy in-house counsel, compliance professionals, and government enforcement lawyers, this newsletter highlights key False Claims Act (FCA) enforcement and litigation developments from the past month. This month we ask: How can a Medicare Advantage organization’s own chart reviews be used against it? Why might a new criminal whistleblower program from the U.S. Department of Justice’s (DOJ) increase, rather than reduce, qui tam filings? What do Texas’s recent settlements with pharmaceutical companies reveal about state FCA exposure when DOJ has declined to pursue similar federal claims or sought their dismissal? We examine these questions and more in this month’s issue.

DOJ Continues to Prioritize Enforcement Against Medicare Advantage Organizations

Two recent FCA settlements underscore DOJ’s continued scrutiny of Medicare Advantage risk-adjustment practices. On September 30, 2026, Independence Blue Cross, a Pennsylvania-based insurance company, agreed to pay $22.5 million to resolve allegations that it used chart reviews to add codes that increased its risk adjustment payments but failed to delete codes those reviews could not substantiate. On October 6, AIDS Healthcare Foundation (AHF), a Los Angeles-based nonprofit that operated Medicare Advantage plans for people with HIV, agreed to pay $1.44 million to resolve allegations that it failed to promptly investigate and delete codes its own coders had flagged as potentially unsupported, removing most only after learning of the government’s investigation. DOJ also alleged that AHF submitted HIV diagnosis codes lacking documentation of the face-to-face visits required by Medicare. The settlements demonstrate that DOJ continues to prioritize FCA enforcement against Medicare Advantage organizations, and that an organization’s own chart reviews can be used against it when identified issues go unaddressed.

DOJ Resolves Longstanding Opioid Matters

A recent FCA and Controlled Substances Act (CSA) settlement adds to a series of resolutions suggesting that DOJ’s opioid enforcement effort against major pharmacy chains may be nearing its end. On October 13, 2026, CVS Pharmacy Inc. agreed to pay $315 million to resolve a lawsuit filed by DOJ in December 2024, alleging that CVS filled invalid prescriptions for opioids and other controlled substances, including those issued by “pill mill prescribers,” in violation of the CSA and then sought reimbursement from federal healthcare programs in violation of the FCA. DOJ also alleged that CVS’s staffing levels, performance metrics, and incentive compensation pressured pharmacists to fill prescriptions without verifying their legitimacy.

The CVS settlement follows similar resolutions involving two other major pharmacy chains. On August 28, 2026, Walmart agreed to pay $50 million to resolve a December 2020 lawsuit alleging that its pharmacies filled invalid prescriptions from prescribers that its compliance team knew were operating pill mills in violation of the CSA. On April 18, 2025, Walgreens agreed to pay up to $350 million to resolve allegations that it knowingly filled millions of unlawful controlled substance prescriptions in violation of the CSA despite clear red flags indicating they were invalid, and then sought reimbursement from federal healthcare programs in violation of the FCA.

Taken together, these settlements suggest DOJ is closing out a set of resource-intensive opioid cases built on relatively novel theories of pharmacy liability. Given the substantial recoveries those theories produced, however, we expect DOJ to continue applying them to other controlled substances and dispensers, as well as in settings where a provider’s systems, staffing, or incentives allegedly prevent it from identifying red flags. In any future inquiry, companies should expect DOJ to examine whether their red-flag systems work in practice, whether compliance concerns actually reach frontline staff, and whether staffing, performance metrics, and incentive compensation allow employees to verify prescriptions before filling them and claims before submitting them.

DOJ’s New Criminal Whistleblower Program Is Likely to Increase Qui Tam Filings

On October 20, 2026, DOJ’s National Fraud Enforcement Division announced the Fraud Whistleblower Incentive Program (“WHIP”), an innovative addition to the government’s fraud-fighting toolkit. WHIP pays whistleblowers $10,000 to $30,000 for information leading to criminal charges for federal healthcare offenses or fraud on programs administered by eight federal agencies. It prioritizes hospice, home healthcare, daycare, and special services fraud, areas already subject to substantial enforcement under the FCA. Unlike other whistleblower programs, which pay only after final resolution, WHIP pays when charges are filed. DOJ describes WHIP as the first program to offer payment upon charging and is promoting it directly to the public.

WHIP is unlikely to diminish qui tam activity. FCA relators receive 15 to 30 percent of recoveries that routinely reach eight or nine figures, along with party status and anti-retaliation protection. Because participation in WHIP does not preclude other recoveries, relators’ counsel may treat WHIP as a supplement and advise clients to file a qui tam first or at the same time to preserve their FCA rights. If anything, WHIP’s public outreach will raise awareness that reporting fraud pays, steering new whistleblowers toward qui tam counsel. For companies in the priority sectors, WHIP creates another path for allegations to reach the government—and another reason to maintain effective, responsive internal reporting channels.

Texas AG Pharmaceutical Settlements Highlight State FCA Exposure

Recent settlements between major pharmaceutical companies and the Texas Office of the Attorney General demonstrate the risk of state FCA enforcement, even in cases in which DOJ declines to pursue parallel federal claims. On October 22, 2026, the Texas Attorney General announced a $45 million settlement with Gilead Sciences, Inc. The settlement resolves claims under the Texas Health Care Program Fraud Prevention Act (THFPA) that Gilead provided free nurse services and reimbursement support to induce prescriptions paid for by Texas Medicaid. In June, AstraZeneca paid nearly $34 million to resolve similar THFPA claims. In both cases, Texas litigated alongside relators affiliated with the National Health Care Analysis Group (NHCA), an investor-backed entity formed to bring qui tam suits.

Both companies had already faced the same theory from the same relator network under the federal FCA. In 2016 and 2017, NHCA affiliates filed 11 federal qui tam actions against 38 defendants, including Gilead and AstraZeneca. DOJ declined to intervene and later sought dismissal under § 3730(c)(2)(A) in cases that were still pending. DOJ argued that the allegations lacked merit and that the challenged nurse and support services were lawful and benefited federal healthcare programs. The federal Gilead case was voluntarily dismissed with DOJ’s consent, while the AstraZeneca case was dismissed on DOJ’s motion. Texas nonetheless pursued the same theory under its own statute and recovered nearly $80 million. It is now pursuing similar claims against Eli Lilly, whose federal NHCA case was also dismissed at DOJ’s request. The lesson is that neither a DOJ declination nor a DOJ-sought dismissal binds the states. Relators can reassert the same allegations under state FCAs, and an intervening state brings its own enforcement leverage. Companies should assess their state exposure independently and, where possible, resolve federal and state claims together.

Relator’s Commission-Based Kickback Theory Survives Summary Judgment Without DOJ Intervention

A recent District of Massachusetts decision demonstrates the FCA risk posed by commissions paid to independent contractor sales representatives, even without DOJ intervention. The relator alleges that Zimmer Biomet Holdings Inc.’s commissions to independent contractor sales representatives were kickbacks that tainted claims for its orthopedic devices. On October 21, 2026, the court dismissed his false certification theory, under which providers allegedly submitted false claims by certifying compliance with the Anti-Kickback Statute (AKS) as a condition of payment. The relator offered no evidence of what any provider actually certified. The court allowed his theory that the claims “resulted from” kickbacks to proceed. In the First Circuit, that theory requires proof that surgeons would not have used Zimmer’s products but for the kickbacks. The court held that commissions violate the AKS only when paid with the intent to improperly influence physicians’ referral decisions, not merely to increase sales. It found that a jury could infer that intent from evidence that representatives were paid almost entirely through commissions, attended surgeries, upsold premium products, and provided meals and private jet travel to surgeons.

Volume-based commissions paid to sales representatives have featured in numerous DOJ settlements. Many involved clinical laboratories that used independent contractors, who do not qualify for the AKS safe harbor for bona fide employees. The ruling also highlights a circuit split. The court sided with the Fifth, Seventh, and Ninth Circuits in requiring evidence of improper influence over physicians and rejected the broader Fourth Circuit standard that DOJ urged. Given DOJ’s position and the divided case law, companies should closely scrutinize independent contractor commission arrangements, particularly where compensation depends largely or entirely on the volume or value of federally reimbursable sales.