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Federal Government Reaffirms Focus on Healthcare Fraud Through False Claims Act Enforcement

CLIENT ALERT


By Attorney Amy Crafts

 

The Trump Administration recently reaffirmed the federal government’s longstanding focus on healthcare fraud by establishing a working group comprised of leaders from the U.S. Department of Justice (“DOJ”) and the U.S. Department of Health and Human Services (“HHS”). A July 2, 2025 DOJ press release announcing the working group noted the Administration is “fully committed” to combating healthcare fraud, noting it “depletes taxpayer funds, corrodes public health and safety, and undermines the integrity of the federal healthcare system.”

The new working group, referred to as the “DOJ-HHS False Claims Act Working Group” (the “Working Group”) will strengthen collaboration between the two agencies to focus on priority enforcement areas, including Medicare Advantage; pricing of drugs, devices and biologics; barriers to patient care; kickbacks; defective medical devices and manipulation of electronic records. The Working Group is instructed to expedite ongoing investigations, identify new leads through enhanced data mining, and implement payment suspensions for “credible allegations of fraud.”

Of particular note, the federal government continues to encourage whistleblowers to come forward by filing qui tam complaints, a key mechanism to notify the government of alleged fraud and possible violations of the False Claims Act. Qui tam complaints are filed under seal for a period of time, allowing the government to investigate and decide whether to negotiate a settlement or pursue litigation before the defendant is notified of or served with the complaint.

At the same time the government is encouraging increased qui tam filings, the Working Group is instructed to consider whether DOJ should move to dismiss qui tam complaints pursuant to 31 U.S.C. § 3730(c)(2)(A). While the federal government has infrequently invoked its dismissal authority in the past, it could be an effective way to ferret out complaints that are not meritorious or that do not advance the Administration’s priorities. This is particularly true following the U.S. Supeme Court’s decision U.S. ex rel. Polansky v. Exec. Health Res., 599 U.S. 419 (June 16, 2023) which articulated the government’s broad dismissal authority under the False Claims Act. While too soon to tell how these competing priorities will play out, it is safe to expect significant qui tam activity during this Administration.

Reaffirming its focus on healthcare fraud resolves some ambiguity in terms of False Claims Act enforcement under this Administration. On June 11, 2025, DOJ announced a Civil Rights Fraud Initiative, identifying a variety of new areas of False Claims Act enforcement to advance the Administration’s priorities, including pursuing “entities that receive federal funds but knowingly violate civil rights laws.” These alleged civil rights violations could include programs related to diversity, equity and inclusion; participating in or allowing antisemitism; and billing federal healthcare programs for non-covered services related to gender affirming care. The Working Group will prioritize these matters in addition to its continued efforts to address healthcare fraud.

In light of these developments, clients should be cautious whenever receiving requests for information from the federal government, even if those requests appear to be routine audit-related questions from HHS or other federal agencies. With increased collaboration between HHS and DOJ, including instructions that “HHS make referrals to DOJ of potential violations of the [False Claims Act] that reflect Working Group priorities,” information produced to federal agencies could be transmitted to DOJ in connection with a False Claims Act referral.

Sheehan Phinney will continue to monitor these developments and is prepared to assist clients in audits, investigations and enforcement actions brought against them. If you have questions about the Working Group or how these developments may affect your organization, please contact Amy Crafts or another member of the firm’s Government Investigations or Healthcare Practice Groups.


Amy Crafts is a member of Sheehan Phinney’s Government Investigations and Healthcare Practice Groups and previously served as Chief of the False Claims Division at the Massachusetts Attorney General’s Office.

This article is intended to serve as a summary of the issues outlined herein. While it may include some general guidance, it is not intended as, nor is it a substitute for, legal advice.