False Claims Act

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The Department of Justice (“DOJ”) recently released its 2025 statistics for federal False Claims Act cases. With settlements and judgments exceeding $6.8 billion last year, DOJ’s report shows that the False Claims Act (“FCA”) remains one of DOJ’s most potent and frequently-used investigation tools. The annual report also suggests that, after a year of change and turnover that touched virtually every corner and level of DOJ, the coming year will likely see a historically high volume of FCA cases. Contractors and grant recipients, therefore, should pay careful attention to every claim for payment or compliance certification submitted to any federal authority.

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On May 19, 2025, the Department of Justice (“DOJ”) announced its Civil Rights Fraud Initiative (the “CRFI”). As discussed in our post related to that announcement, the CRFI mobilizes federal, state, and local law enforcement to investigate whether recipients of federal funds have DEI programs that violate federal civil rights laws. Multiple federal and state agencies are reportedly conducting investigations into DEI programs within corporations and institutions of higher education.

In a recent legal update, Husch Blackwell explores new guidance from the Department of Justice on how federal antidiscrimination laws—including Title VI and Title VII of the Civil Rights Act of 1964 and Title IX of the Education Amendments of 1972—will be interpreted to apply to recipients of federal funding, in conjunction with Executive Order 14173 (“Ending Illegal Discrimination and Restoring Merit-Based Opportunity”). While the guidance lacks the force of law, it captures the administration’s enforcement posture on what it considers to constitute “illegal DEI.”

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The qui tam provisions of the False Claims Act allow individuals to file suit on behalf of the United States and to receive a share of the resulting financial settlement or judgment. Filing a qui tam case is not just a formal means of advising the Government of presenting a whistleblower complaint. Even when the Government chooses not to participate in a qui tam case, the False Claims Act itself gives the individual plaintiff authority to pursue it on their own.

Since 2021, the Department of Justice (DOJ) has been increasingly focused on adjudicating False Claims Act (FCA) matters for deficient cybersecurity practices. As the government increases scrutiny of data privacy and cybersecurity, it is increasingly important to develop and maintain robust cybersecurity systems, educate employees, and ensure adequate risk management. Taking time now to shore up your data privacy and cybersecurity will help to avoid FCA challenges in the future.

On April 18, 2023, the United States Supreme Court heard oral argument in two consolidated cases that have the potential to upend False Claims Act (FCA) litigation. Oral argument on both sides and questioning from the Justices indicated tensions and sincere disagreement over the complexities of applying the False Claims Act’s scienter element in areas of ambiguity.

Cybersecurity-related FCA cases poised to increase as FCA enforcement ramps up

On February 7, 2023, the Department of Justice (DOJ) announced that settlements and judgments under the False Claims Act exceeded $2.2 billion during the 2022 fiscal year and that the government posted its second-highest number of settlements and judgments in a single year.

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On March 31, 2021, in United States ex rel. Felten v. William Beaumont Hospital, No. 20-1002, 2021 WL 1204981 (6th Cir. Mar. 31, 2021), the U.S. Court of Appeals for the Sixth Circuit held that the False Claims Act’s (FCA) anti-retaliation provision protects former employees alleging post-termination retaliation. The decision creates a split with the Tenth Circuit, which held in 2018 in Potts v. Center for Excellence in Higher Education, Inc., 908 F.3d 610 (10th Cir. 2018), that former employees are excluded from the scope of the FCA’s anti-retaliation provision. While current employees are undoubtedly protected under the provision, Felten ultimately leaves the question of whether former employees may recover for post-termination retaliation under the FCA unsettled across all circuits.

Paying workers as independent contractors instead of as employees may land a former executive in jail for criminal wire fraud. On June 12, 2019, the former operations manager and vice president of a Florida-based mail transportation contractor pled guilty to two counts of wire fraud related to such treatment. The Government’s case was based on pricing estimates for employee-related costs that the contractor later did not incur because it instead used independent contractors.

In the June 1, 2018 indictment of Alexei Rivero, the Government contended that Rivero purposely misclassified the drivers it hired as independent contractors. According to the indictment, this allowed the contractor to “misappropriate” $1.5 million in USPS contract payments “designated” for fringe benefits and $1.2 million designated for payroll taxes.