Over halfway through the first year of President Trump’s second term, the Administration has employed a range of legal and regulatory tools to target waste, fraud, and abuse. Enforcement of the False Claims Act has been particularly active, resulting in the Department of Justice (DOJ) securing numerous significant judgments and settlements. In July alone, the DOJ announced over ten additional settlements with corporations across various industries to resolve alleged False Claims Act violations.
This level of activity underscores the DOJ’s stated commitment to “aggressively enforce” the False Claims Act, particularly in a manner consistent with the Trump Administration’s policy priorities. We provide below a brief overview of the False Claims Act, highlight recent False Claims Act-related enforcement activities by the DOJ, examine the potential for increased federal agency-led enforcement under the Administrative False Claims Act (AFCA), and outline key considerations for companies as they assess their risk exposure in light of these developments.
The False Claims Act: Background
The False Claims Act is one of the federal government’s primary tools to combat fraud in federally funded programs and contracts (e.g., against federal contractors and grant recipients). The Act imposes criminal or civil liability on anyone who: (i) knowingly submits, or causes to submit, a false claim for payment to the federal government, or (ii) knowingly avoids or decreases an obligation to pay money or property to the federal government (reverse false claims). Liability under the False Claims Act can result in significant penalties, including treble damages for the government’s losses and other penalties.
Notably, the False Claims Act also has a qui tam provision that allows private citizens (relators) to file civil lawsuits on behalf of the federal government against entities or individuals who have allegedly submitted false claims to the government. Depending on whether the federal government intervenes in the lawsuit (and whether the suit is subsequently successful), a relator may be entitled to receive 15%-30% of the amount recovered by the government through the qui tam action. In short, the qui tam provision provides a powerful incentive for whistleblowers to come forward and report purported violations of the False Claims Act.
The False Claims Act as an Enforcement Tool in Priority Areas
Earlier this May, the DOJ’s Criminal Division issued a memorandum that identified ten priority areas for white-collar enforcement to, among other things, “ensure that bad actors are brought to justice swiftly and resources are marshalled efficiently.” The listed “high-impact areas” are consistent with priorities announced by the Trump Administration, including for instance: (i) “Waste, fraud, and abuse, including health care fraud and federal program and procurement fraud”; (ii) “Trade and customs fraud, including tariff evasion”; and (iii) “Conduct that threatens the country’s national security[.]” It is prudent for government contractors and federal fund recipients, among other entities, to remain vigilant to potential increases in their risk profile from a “false claims” perspective, particularly where they may intersect with these enforcement priorities.
Indeed, since President Trump assumed his second term, the DOJ and the US Attorneys’ Offices have made over 150 announcements regarding False Claims Act-related resolutions, proceedings, and initiatives, many of which relate to the priority areas described above. Some of these include:
- Health care fraud: On July 2, 2025, the DOJ and the US Department of Health and Human Services (HHS) announced the formation of the DOJ-HHS False Claims Act Working Group with an aim to explore new False Claims Act enforcement priorities along with longstanding areas of focus to combat health care fraud. In its announcement, the Working Group encouraged whistleblowers to come forward and report violations of the False Claims Act. On June 30, 2025, the DOJ announced that its 2025 National Health Care Fraud Takedown, which targeted fraud schemes involving over $14.6 billion in false claims submitted to US health care programs, was the largest ever heath care takedown in the DOJ’s history. This coordinated nationwide law enforcement operation resulted in criminal charges brought against over 300 defendants, along with civil settlements and charges of approximately $48.6 million, many of which involved allegations of False Claims Act violations. Separately on May 1, 2025, the DOJ filed a complaint in partial intervention against three major health insurance companies, alleging that they had engaged in, inter alia, Medicare fraud in violation of the False Claims Act.
- Trade and customs fraud: The DOJ in recent weeks announced that as part of a reorganization, the DOJ’s Market Integrity and Major Frauds Unit would add “significant personnel” from a consumer protection branch, be renamed the Market, Government, and Consumer Fraud Unit, and focus on prosecuting trade fraud among other white-collar crimes. As for civil enforcement actions, on July 24, 2025, the DOJ announced a $4.9 million settlement with a patio furniture company to resolve allegations that the company had committed False Claims Act and other statutory violations by evading antidumping and countervailing duties on aluminum items originating from China. This followed a similar resolution announced on July 23, 2025, where the DOJ reached a $6.8 million settlement with a global plastic resin distributor’s subsidiaries for failing to pay customs duties on certain resin imports from China. And on July 16, 2025, the US Attorney’s Office for the District of South Carolina filed a complaint against an office furniture company and its owner for allegedly violating the False Claims Act from 2019-2023 by scheming with a Chinese manufacturer to knowingly and fraudulently underpay by at least $2 million in customs duties owed on imported office chairs.
- National security threats: On May 1, 2025, the DOJ announced that it had reached a $8.4 million settlement with a major defense contractor to resolve allegations that the contractor had violated the False Claims Act by failing to comply with cybersecurity requirements in certain contracts with the Department of Defense (DOD). In the announcement Yaakov Roth—the then-Acting and current Principal Deputy Assistant Attorney General (AAG) of the DOJ’s Civil Division—stressed that, “[I]t is critical that defense contractors take the required steps to protect sensitive government information from bad actors.” And on March 26, 2025, the DOJ similarly announced that another defense contractor had agreed to pay $4.6 million to settle allegations that the contractor had violated the False Claims Act by failing to implement cybersecurity controls required in its contracts with the Army and the Air Force. This announcement similarly emphasized the Administration’s expectation that “[f]ederal contractors [] fulfill their obligations to protect sensitive government information from cyber threats.” Additionally, in a February 18, 2025 announcement of an $11 million settlement with a health care services provider regarding allegedly false certifications of compliance with cybersecurity requirements in a DOD contract, Brett Shumate—the then-Acting and current AAG of the DOJ’s Civil Division—emphasized that the DOJ would “continue to pursue knowing violations of cybersecurity requirements by federal contractors and grantees to protect Americans’ privacy and [] national security.”
And in line with the Administration’s focus on eliminating “illegal” Diversity, Equity, and Inclusion (DEI) practices, the DOJ in recent months launched a new Civil Rights Fraud Initiative that aims to use the False Claims Act “to investigate and, as appropriate, pursue claims against any recipient of federal funds that knowingly violates federal civil rights laws.” DOJ leadership has directed the DOJ’s Civil Division and Civil Rights Division to “aggressively pursue this work” and has strongly encouraged whistleblowers to come forward and pursue qui tam actions regarding DEI practices. And more recently on July 29, 2025 Attorney General Pam Bondi issued a memorandum directed at federal funds recipients that: (i) clarified types of policies and practices the DOJ considered to constitute “illegal” DEI; and (ii) offered non-binding best practices to help entities comply with federal antidiscrimination laws and mitigate legal risk.
The AFCA: Potential Enforcement from Another Angle
At the federal level, investigations into alleged false claims have traditionally been initiated and led by individual relators and the DOJ. The AFCA, however, was signed into law in the waning months of President Biden’s term and invites federal agencies to join the enforcement landscape by authorizing them to pursue administrative actions for false claims up to $1 million. The AFCA replaces the sparingly used Program Fraud Civil Remedies Act of 1986 (the PFCRA), which had permitted federal agencies to commence administrative proceedings against parties for small-dollar false claims (i.e., up to $150,000) made to the federal government.
Under the AFCA, federal agencies may have more tools and incentives to pursue false claims administratively. Compared to the PFCRA, the AFCA provides, among other things:
- A broader scope of liability: Like the PFCRA, the AFCA prohibits not only false claims but also various types of false, misleading, or fraudulent statements in the absence of the submission of a formal claim for payment. The AFCA expands on the definition of false “claims” to also include “reverse false claims.”
- An increased recovery ceiling and penalties: As noted above, the claim ceiling under the AFCA has been raised from $150,000 to $1 million. In addition to civil penalties adjustable for inflation, the AFCA also permits agencies to recover double damages.
- More presiding officials: Appearing to address resource constraints previously reported by federal agencies when surveyed by the Government Accountability Office in 2011, the AFCA expands on the categories of officials authorized to adjudicate false claims cases to include members of the Board of Contract Appeals.
- A mechanism for agency cost recuperation: Under this new mechanism, a federal agency can recover costs associated with its AFCA investigations and proceedings by having costs reimbursed before the remainder of the recovery is deposited with the US Treasury.
- An extension of the statute of limitations: The statute of limitations has been extended to match that under the False Claims Act, allowing proceedings within six years of the alleged violation or three years after the material facts are known or should have been known, but no more than ten years after the violation.
Although this is a relatively recent development and was enacted during the prior presidential administration, companies should keep apprised of this potential additional avenue for the government to pursue lower-dollar false claims on an expedited basis, particularly as it aligns with this Administration’s policy to resolve investigations “swiftly and [for] resources [to be] marshalled efficiently.” The added incentives under the AFCA may also spur agencies to act and conduct investigations that they may not have previously undertaken. Indeed, in recent weeks, at least four federal agencies have published proposed or final rules in the Federal Register amending their existing regulations to comply with requirements set forth in the AFCA, suggesting that increased agency activity on this front may be forthcoming.
Key Takeaways
These developments underscore the federal government’s likely continued and expanded use of the False Claims Act, and potentially the AFCA, to combat fraud and abuse involving federal funds and are expected to drive increased whistleblower activity and investigative scrutiny in the false claims space. Indeed, a senior DOJ official during a recent keynote address highlighted that since May, the DOJ has already received new whistleblower tips across many of the priority areas flagged in the memorandum, including procurement and health care fraud.
This places additional pressure on companies, particularly government contractors, to identify and manage proactively potential false claims risks arising from their operations. For example, exposure may result from the submission of false documents, inaccurate statements, or false certifications (including misrepresentations of compliance) to obtain government payments or benefits, or from underpaid royalties, or the failure to return overpayments owed to the federal government. To mitigate these risks, increased coordination among internal teams and functions will be essential, especially in light of the anticipated rise in whistleblower activity.
