The U.S. Department of Justice (“DOJ”) announced last week that settlements and judgments under the False Claims Act (“FCA”) exceeded $6.8 billion in fiscal year 2025—a record-breaking figure and the highest in a single year in the history of the FCA. DOJ’s announcement underscores the government’s continued commitment to FCA enforcement, particularly in health care, while expanding enforcement resources to address tariff and customs avoidance, military procurement fraud, and cybersecurity compliance.
Below is a summary of the key takeaways from DOJ’s press release and accompanying fact sheet and statistics table, along with our key insights for companies trying to anticipate what lies ahead.
Record-Breaking Qui Tam Actions
Highest Number of Qui Tam Lawsuits: Fiscal year 2025 was record-breaking for qui tam actions. Whistleblowers filed 1,297 such lawsuits—the highest number in a single year—breaking the prior record of 980 set in fiscal year 2024. Although the government also opened 401 investigations of its own, including in areas announced as Administration policy objectives, qui tam lawsuits (not DOJ-initiated investigations) continue to generate more than three-quarters of new FCA matters.
Qui Tam-Based Recoveries: Over $5.3 billion of the total recoveries arose from qui tam actions and earlier-filed qui tam suits. This represents nearly 78% of the total $6.8 billion recovered, underscoring the outsized role whistleblowers play in FCA enforcement. Indeed, of the $5.3 billion in recoveries attributable to qui tam actions, approximately $1.8 billion resulted from just two non-intervened cases that the relator has continued to litigate (both are on appeal), and still more resulted from smaller non-intervened cases. As discussed further below, some or all of these relator-generated recoveries could be at risk if the qui tam mechanism is declared unconstitutional, a question several circuits have answered in the negative but which the Eleventh Circuit currently is contemplating after a Florida district court found the mechanism to violate Article II of the Constitution.
Enforcement Priorities
DOJ identified the following as top targets of its enforcement efforts in FY 2025. We expect FCA activity in these same areas to remain high in FY 2026 as DOJ and the relator bar continue to bring and pursue cases in line with stated government priorities.
Health Care Fraud
Over $5.7 billion was recovered in settlements and judgments from the health care industry—accounting for approximately 84% of the total recoveries and signaling that the health care sector remains a key enforcement area under the FCA. As in years past, the FCA was used to pursue matters involving a wide array of health care providers, goods, and services, with DOJ highlighting its continued and expanded success in three major areas: Managed Care, Prescription Drugs, and Medically Unnecessary Care.
- Managed Care: DOJ continued to pursue cases alleging false claims in managed care, particularly the Medicare Advantage (or Medicare Part C) program, which is now Medicare’s largest component, both in terms of federal dollars spent and the number of beneficiaries impacted. Notable matters include a health plan and its affiliate agreeing to pay up to $98 million to resolve allegations of unsupported and invalid diagnosis codes; the Department’s intervention in a qui tam action against national insurers and insurance brokers alleging illegal kickbacks for steering beneficiaries to enroll in certain Medicare Advantage plans; and ongoing litigation against major health insurance companies alleging improper diagnoses to increase Medicare Advantage reimbursement.
- Prescription Drugs: DOJ continued to focus its enforcement efforts on entities that engaged in alleged misconduct related to drug pricing, drug dispensing, and illegal kickbacks, including matters addressing the opioid crisis. A unanimous jury found the country’s largest long-term care pharmacy and its parent company liable for fraudulently dispensing drugs without valid prescriptions, resulting in a $948.8 million judgment. In a first-of-its-kind case, a major consulting firm agreed to pay $323 million to resolve allegations that its advice to a drug company caused false claims for medically unnecessary opioid prescriptions. Other notable matters include a pharmaceutical manufacturer agreeing to pay $450 million to resolve allegations related to copay assistance and price-fixing, and relator verdicts totaling nearly $1.9 billion against pharmaceutical companies for false claims stemming from allegations of off-label promotion ($1.6 billion of this total) and dispensing of drugs without valid prescriptions.
- Unnecessary Services: DOJ also pursued matters in which providers allegedly billed federal health care programs for medically unnecessary services and substandard care. Key examples include a wound care company and its founder agreeing to pay $45 million to settle allegations of overbilling Medicare for wound care services, and claims against a health system alleging its nursing homes provided grossly substandard skilled nursing facility care.
Procurement, Loan, and Grant Fraud
The government continued its pursuit of fraud matters involving the purchase of goods and services by the government.
- Military Procurement Fraud: DOJ continued to address fraud in military procurement, highlighting that it not only wastes government funds but also risks depriving servicemembers of essential resources and creates potential national security risks. In the second-largest procurement fraud case in history, a major defense contractor agreed to pay $428 million to resolve allegations of false cost and pricing data and double billing on a weapons maintenance contract. Other notable settlements with defense contractors included $62 million and $29.74 million resolutions for defective pricing on military contracts; a $21 million settlement with a government services contractor for inflating subcontractor charges; a $15.875 million settlement with a government consulting firm; and a $15.7 million settlement with a military parts supplier for parts that did not meet specifications.
- Cybersecurity Compliance: DOJ recovered over $52 million in nine cybersecurity fraud settlements in fiscal year 2025, with civil cybersecurity settlements more than tripling in each of the past two years, likely in response to the Civil Cyber-Fraud Initiative announced in 2021. Notable settlements include a health benefits administrator and its parent company agreeing to pay $11.2 million for falsely certifying compliance with cybersecurity requirements; a medical device company agreeing to pay $9.8 million for selling genomic sequencing systems with cybersecurity vulnerabilities; and settlements with two major universities totaling over $2 million for failing to comply with cybersecurity requirements in government contracts. See here for more on the intersection of cybersecurity and FCA risk.
- Pandemic-Related Fraud: DOJ obtained more than 200 FCA settlements and judgments exceeding $230 million in fiscal year 2025 for pandemic-related fraud, bringing total civil recoveries related to pandemic relief programs to over $820 million. Examples include a $20 million consent judgment against an individual and 10 companies he operated for false PPP loan applications; an $8.1 million settlement with a major airline for exceeding Payroll Support Program limits; and a complaint against three former fintech company executives alleging false PPP loan claims.
Tariff and Customs Avoidance
In a notable expansion of FCA enforcement, the Department launched a cross-agency Trade Fraud Task Force to combat fraud that evades tariffs and customs duties. These matters focus on those who misrepresent the type of goods imported, an item’s country of origin, or disguise items to evade duties. Notable settlements include a $54.4 million resolution with an industrial tools manufacturer for failing to pay duties on tungsten carbide products imported from China—the largest customs fraud resolution ever under the FCA—as well as settlements with a stone importer ($12.4 million), a flooring company ($8.1 million), a plastics company ($6.8 million), and a furniture manufacturer ($4.9 million) for misrepresenting the type or origin of imported goods. See our alerts here, here, and here for more on this burgeoning FCA enforcement area.
Key Insights
- Qui Tam Actions Account for Over Three-Quarters of FCA Recoveries, Highlighting the High Stakes of the Ongoing Debate Over Their Constitutionality. As noted above, qui tam actions generated over $5.3 billion of the total $6.8 billion recovered in fiscal year 2025, representing nearly 78% of all FCA recoveries. The significance of these figures cannot be overstated as courts continue to grapple with the constitutionality of qui tam enforcement. A federal judge in Florida ruled in U.S. ex rel. Zafirov v. Florida Medical Associates, LLC, that the FCA’s qui tam mechanism is unconstitutional because a relator is an improperly appointed “Officer” of the executive branch under Article II’s Appointments Clause. The Eleventh Circuit recently heard argument in an appeal of that ruling that also featured discussion of Article II’s Take Care and Vesting Clauses, and with three Supreme Court justices already having expressed openness to considering whether the FCA’s qui tam provisions are “inconsistent” with Article II, this debate remains one of the most consequential issues for FCA enforcement. The record-breaking number of 1,297 qui tam filings in fiscal year 2025 demonstrates that whistleblowers remain undeterred by the constitutional challenges, but the outcome of this litigation could have a significant impact on the FCA enforcement landscape.
- Health Care Remains Squarely in DOJ’s Crosshairs. Despite public discourse over the Administration’s increased focusing on novel FCA theories—such as allegations that companies’ DEI programs violate the conditions of government contracts and grants—the health care industry continues to account for the vast majority of FCA cases and recoveries. Approximately 84% of FCA recoveries in fiscal year 2025 came from the health care industry, a proportion that is notably higher than in fiscal year 2024, when health care accounted for only approximately 58% of such recoveries. Companies operating in the health care space—particularly in the Medicare Advantage, pharmaceutical, and long-term care sectors—and those with investments in such companies should continue to prioritize compliance efforts and assess FCA risk exposure as the government shows no signs of reducing its focus on this industry.
- Record-Breaking Year Reflects Significant Complaints and Judgments, Not Just Settlements. Fiscal year 2025 was marked not only by large settlements but also by significant trial verdicts—including a $1.6 billion verdict against a pharmaceutical company and a $948.8 million judgment against a long-term care pharmacy—as well as by a government-filed complaint alleging that three larger insurers agreed to pay hundreds of millions of dollars in illegal kickbacks to the brokers in exchange for steering Medicare beneficiaries to enroll in the insurers’ Medicare Advantage plans, regardless of the suitability of those plans for the beneficiaries. These verdicts and complaints demonstrate that the government and relators are willing to litigate cases (and take them to trial, when needed) and that juries are prepared to find liability and award substantial damages, with courts then required under the FCA to award treble damages plus statutory per-violation penalties. Companies facing FCA investigations should therefore carefully weigh litigation risk when evaluating settlement opportunities. Such large-dollar cases also call for creative legal arguments, such as trying to cabin the Anti-Kickback Statute’s reach to truly corrupt “kickbacks,” rather than allowing it to reach all payments that merely “influence” health care decisions, as DOJ and HHS-OIG have argued.
- Settlement with Consulting Firm Signals Expanded Use of the FCA’s Causes-To-Be-Submitted Theory of Liability. DOJ’s $323 million settlement with a large consulting firm for its role advising a large pharmaceutical company in connection with its opioid product was described by DOJ as a “first of its kind” case. This resolution is a reminder that FCA liability can extend beyond government contractors and traditional health care providers that directly bill federal health care programs to include consultants and advisors whose advice causes the submission of false claims—a theory of liability that can extend to anyone whose actions are a substantial factor in bringing about such claims. It is also consistent with the trend we are seeing among relators who are seeking to hold private equity sponsors liable for the actions of their portfolio companies. Companies providing advisory services to entities operating in regulated industries—as well as private equity firms and others who invest in the health care sector—should be mindful of potential FCA exposure arising from counsel and recommendations provided to companies who bill federal health care programs.
Conclusion
As the government continues to tout the significance of its FCA judgments and settlements—now setting an all-time record of $6.8 billion in fiscal year 2025—it is important for clients to ensure their compliance programs are designed to mitigate FCA risk and to proactively involve counsel in any area where FCA enforcement is prevalent, particularly in the areas DOJ highlighted in its fiscal year 2025 press release and fact sheet.
