The Trump Administration’s Department of Justice (DOJ) is intensifying its enforcement efforts under the False Claims Act (FCA), signaling a broader focus beyond traditional healthcare fraud. While health-care fraud remains a primary source of FCA recoveries, the DOJ is expanding its reach into areas like procurement and pandemic-relief program fraud. According to DOJ Deputy Assistant Attorney General Michael Granston, these developments were highlighted at a Federal Bar Association FCA conference.
The DOJ’s focus is extending to novel enforcement areas such as Diversity, Equity, and Inclusion (DEI) programs. An executive order mandates federal contractors to disavow DEI practices that violate federal anti-discrimination laws. The significance of compliance with anti-discrimination laws is emphasized as being material to government contracts under the FCA’s provisions, thereby potentially increasing contractors’ liability.
The Educational Rate (E-Rate) Program managed by the Federal Communications Commission is another focal point. Following a Supreme Court decision in February, telecommunications carriers are now liable under the FCA for false reimbursement claims due to government contribution to the E-Rate fund. This ruling is expected to generate more litigation from the DOJ and whistleblowers.
Customs and duties present an additional enforcement avenue, as the DOJ increases its resources to tackle evasion using the FCA. Occasionally called reverse FCA violations, these cases address importers falsifying invoices to skirt tariffs, especially those from countries like China, which now face higher duties under new tariff policies.
Private equity firms could also be targets for FCA actions if they ignore misconduct at portfolio companies. Previous DOJ actions have involved settlement with firms aware of illegal actions, such as kickback schemes by their portfolio companies. The firms are liable even without direct knowledge of the specific misconduct, provided they act with reckless disregard or deliberate ignorance.
Organizations are advised to protect themselves from FCA liability by conducting thorough reviews of government contracts to identify potential exposure, ensuring compliance with material conditions, and fostering an internal environment conducive to reporting potential violations. Securing legal counsel expert in FCA matters early can help navigate this complex and ever-evolving area of law.
The DOJ’s broadened enforcement strategy illustrates its commitment to wider FCA applicability, ensuring companies across various sectors are vigilant in maintaining compliance to avoid substantial penalties and legal challenges. More details on these legal dynamics can be found in the full article on Bloomberg Law.