By Peter Skinner and Jacqueline Kelly
While some white collar enforcement trends have cooled during the Trump administration, False Claims Act (FCA) enforcement continues to heat up. The U.S. Department of Justice is wielding the FCA broadly and across numerous business sectors to pursue administration priorities ranging from reigning in DEI policies to combating trade fraud.
New DOJ FCA Initiatives
In May, Deputy Attorney General Todd Blanche issued a memo entitled “Civil Rights Fraud Initiative,” announcing DOJ’s intent to use the FCA to enforce federal civil rights laws. The memo states that any federal contractor or recipient of federal funds may run afoul of the FCA if it knowingly violates civil rights laws and falsely certifies compliance with them—a novel application of the FCA with potentially extensive impact. The initiative is being led by the unlikely pairing of the Civil Fraud Section and the Civil Rights Division. And in June, Assistant Attorney General Brett Shumate expanded on the initial memo, issuing a new memo to the Civil Division of the DOJ, outlining plans to employ the FCA as a tool to carry out wide-ranging administration priorities, including “illegal private-sector DEI preferences,” gender transition medical care, international trade, and immigration.
It appears that the DOJ is swiftly making good on these plans. In recent months, the DOJ has sent subpoenas to medical providers of gender transition care, initiated an FCA investigation into Harvard related to its admissions policies, and sent civil investigative demands to federal contractors and grant recipients for information about their DEI practices. And in July, the DOJ filed one of the administration’s first FCA actions focused on tariff evasion in U.S. ex rel. Joyce v. Global Office Furniture, LLC, et al., which claims that a furniture company and its owner executed a multi-year scheme to evade the payment of over $2 million in customs duties on merchandise imported from China.
Further underscoring its focus on trade violations, the DOJ on August 29 announced a cross-agency Trade Fraud Task Force with DHS that will pursue “those who violate the customs laws” through actions “under the False Claims Act,” among other statutes. The announcement also seeks to incentivize qui tam relators in the trade sector, a pitch that will likely land on receptive ears because, unlike some DEI or discrimination-related FCA claims, the customs duties provide a clear basis to assess damages.
Traditional FCA Enforcement
Other traditional FCA priorities also continue to receive DOJ attention. In July, the DOJ and HHS announced an interagency working group to facilitate HHS referrals to combat healthcare fraud, where most FCA enforcement has historically been focused. Just last week, the DOJ intervened in United States, et al., ex. rel. Compton v. HCR ManorCare, Inc., et al., a whistleblower suit against entities operating nursing homes alleging failure to meet required standards of care under the Nursing Home Reform Act. The intervention, which comes almost a decade after the case was initiated by two qui tam suits in 2016 and 2017, highlights that the DOJ will be aggressive in using the FCA to combat perceived harms to the elderly and disabled—an area where fraud may be on the uptick as anticipated changes to Medicaid from the One Big Beautiful Bill Act are expected to cause more seniors to move from state-supported, in-home services to residential nursing homes. And in May, the DOJ announced an $8.4 million settlement with Raytheon in another traditional area of FCA enforcement — compliance with cybersecurity requirements.
Summary
In sum, while many have predicted a decline in white collar enforcement in the new administration, that clearly is not the case with the FCA, which the DOJ is utilizing both to address new enforcement priorities and to combat traditional areas of government fraud.
For questions about FCA compliance and preventative measures, contact the authors and the Boies Schiller Flexner LLP Global Investigations and White Collar team.