DOJ Announces All-Time High in False Claims Act Recoveries: Healthcare Providers, Government Contractors in the Crosshairs

Takeaways

• The DOJ reported more than $6.8 billion in FCA settlements and judgments in FY 2025, marking a record in annual recovery.
• Healthcare-related matters accounted for a large portion of these recoveries, while enforcement activity also increased in government contracting, cybersecurity compliance, pandemic-related relief programs and trade compliance.
• Whistleblower-initiated qui tam actions continued to drive most FCA activity in FY 2025.

Related link

• False Claims Act Settlements and Judgements Exceed $6.8B in Fiscal Year 2025 (01.16.26 press release)

Article

The Department of Justice (DOJ) has announced that False Claims Act (FCA) settlements and judgments exceeded $6.8 billion in fiscal year 2025, marking the largest annual recovery reported in the statute’s history.

With a record number of whistleblower qui tam actions and hundreds of new government investigations, FY 2025 was a landmark year for FCA enforcement. This surge highlights intensified federal scrutiny in areas like healthcare fraud, government contracting fraud, cybersecurity compliance, trade compliance, and pandemic-related relief fraud.

Unprecedented FCA Enforcement Activity in FY 2025

The DOJ’s FY 2025 statistics underscore the growing momentum in federal fraud enforcement:

• Total recoveries: Over $6.8 billion, surpassing all previous records for FCA recoveries.
   
• New whistleblower lawsuits: 1,297 qui tam actions, the highest number ever recorded.
   
• Government-initiated investigations: 401 new cases, expanding enforcement priorities.
   
• Cumulative recoveries: More than $85 billion since 1986, when Congress enhanced the FCA’s enforcement mechanisms.

In the official DOJ press release, Deputy Attorney General Todd Blanche called the FCA “one of the government’s most powerful weapons against fraud.”

Healthcare Fraud Dominates FY 2025 FCA Recoveries

Healthcare-related FCA matters accounted for the lion’s share of recoveries in FY 2025, emphasizing the importance of providers’ compliance:

• Healthcare recoveries: Over $5.7 billion.
   
• Key enforcement areas:
   
  • Medicare Advantage fraud and managed care issues, including unsupported diagnosis codes and kickback-driven enrollments.
     
  • Prescription drugs fraud in pharmacies, covering pricing manipulation, copay assistance violations, and dispensing without valid prescriptions.
     
  • Allegations involving medically unnecessary services.

These settlements restored funds to programs like Medicare, Medicaid, and TRICARE and aimed to safeguard patients from substandard or potentially harmful care.

Emerging FCA Enforcement Priorities Beyond Healthcare

Although healthcare FCA enforcement led the way, the DOJ highlighted growing recoveries in other sectors, backed by FY 2025 results:

1. Government Contracting and Procurement Fraud

Federal contractors encountered actions related to:

• False cost and pricing data submissions.
   
• Defective pricing and non-compliance with contract specifications.
   
• Improper billing practices.

2. Cybersecurity Compliance and Civil Cyber-Fraud Initiative

Under the Civil Cyber-Fraud Initiative, recoveries topped $52 million, which is more than triple the previous two years. Allegations involved false cybersecurity certifications and products with hidden vulnerabilities. DOJ allegations also referenced failures to meet cybersecurity standards such as NIST and CMMC.

3. Pandemic-Related Fraud Investigations

Ongoing probes into Paycheck Protection Program loan fraud and COVID-19 relief programs yielded hundreds of settlements for false statements, fraudulent applications, and improper loan forgiveness.

4. Trade Fraud and Tariff Evasion

The DOJ’s Trade Fraud Task Force ramped up efforts against:

• Tariff evasion schemes.
   
• Goods misclassification.
   
• False country-of-origin declarations.

The FCA is now a key tool for addressing customs fraud, with cross-agency collaboration driving enforcement.

Role of Whistleblowers in Driving FCA Enforcement

Whistleblower-initiated qui tam cases continue to fuel the majority of FCA activity in FY 2025:

• Qui tam recoveries: Over $5.3 billion.
   
• Filing ratio: Whistleblower cases outnumbered DOJ-initiated ones by more than three to one.
   
• Relator awards: $330 million, influenced by appeals and multi-claim resolutions.

Internal stakeholders like employees, contractors, or vendors pose potential qui tam action risks, making whistleblower protection and reporting systems essential.

Takeaways for Healthcare Providers, Other Government Contractors

Healthcare organizations should focus on compliance strategies, such as:

• Strengthening documentation, coding, and medical necessity controls and billing practices. 
   
• Enhancing pharmacy and prescription drug oversight and compliance safeguards.
   
• Monitoring Medicare Advantage risk-adjustment practices, including vendor relationships, chart reviews, and adherence to CMS rules.

Federal contractors should consider prioritizing:

• Establishing appropriate reporting channels and anti-retaliation policies and documenting investigations and corrective actions.
   
• Maintaining internal controls for pricing, cost data, and contract compliance.
   
• Conducting vulnerability testing and ensuring NIST/CMMC readiness.

Proactive Compliance

The DOJ’s FY 2025 results affirm the FCA as a cornerstone of federal fraud prevention. With record FCA recoveries, surging whistleblower activity, and broadened enforcement in healthcare fraud and government contracting, organizations need proactive compliance frameworks.

For guidance on FCA risk assessments, internal investigations, compliance audits, or qui tam litigation, contact a Jackson Lewis attorney.