DOJ’s Elevated Deal with Medicaid Fraud Raises False Claims Act Danger

Over the previous six months, the Trump Administration has positioned vital emphasis on combatting “waste, fraud, and abuse” in federally funded, state-administered advantages packages. The Medicaid program occupies middle stage in these efforts. Amongst different issues, the Trump Administration has launched provider-level Medicaid spending knowledge for the primary time, restructured and reformed U.S. Division of Justice (DOJ) processes for fraud enforcement, and positioned strain on state regulators to ramp up their anti-fraud efforts.

Suppliers, Medicaid managed care organizations, and different Medicaid fund recipients now function below heightened scrutiny from federal and state regulators. These developments, as we clarify under, create an elevated threat of False Claims Act (FCA) actions by each the federal government and personal qui tam relators.

The False Claims Act and the Medicaid Program

The FCA is the federal authorities’s major civil fraud statute for recovering losses tied to allegedly false claims submitted to the federal government. In broad phrases, the FCA prohibits knowingly submitting false claims for fee or improperly retaining obligations, together with recognized overpayments, from the federal government. The statute carries substantial penalties, together with treble damages and per-claim civil penalties.

The FCA additionally permits non-public people, generally known as relators, to convey qui tam fits on the federal government’s behalf and share in any restoration. Meaning FCA publicity can come up not solely from a government-initiated investigation, but additionally from insiders, knowledge miners, and others who imagine they’ve detected fraud. Along with the federal FCA, most states have their very own false claims statutes that apply to the Medicaid program. These statutes, just like the federal FCA, are likely to authorize relators to file swimsuit on behalf of the state.

The FCA can apply broadly to any program that receives federal funds, together with state-administered packages like Medicaid. FCA enforcement involving Medicaid will not be new. FCA enforcement has lengthy targeted on federally funded well being care packages, together with Medicaid together with Medicare and TRICARE.[1] Frequent theories for enforcement have included alleged billing for providers not rendered, medically pointless providers, unsupported coding, false certifications of compliance with regulatory necessities, or failure to return overpayments. Usually instances have concerned allegations {that a} supplier submitted false claims to all three of these packages, with Medicaid being simply one of many affected payors.

These conventional well being care fraud instances will proceed, and we count on elevated deal with packages distinctive to states’ Medicaid packages. Medicaid packages are funded collectively by states and the federal authorities, with the federal share various by state and providers provided. The Medicaid statute mandates that states present sure providers and likewise permits states to offer further, optionally available advantages which might be matched with federal funds. Frequent optionally available providers embrace pharmacy, hospice, and bodily remedy. These packages, together with different state-administered federal advantages packages, are coming below specific scrutiny.

Current Developments Place Elevated Scrutiny on Medicaid Program Individuals

During the last six months, the Trump Administration has introduced a number of initiatives that elevate the FCA threat profile of corporations that submit claims to the Medicaid program:

• Launch of Medicaid Supplier Knowledge: In February 2026, for the primary time, the U.S. Division of Well being and Human Providers (HHS) launched “provider-level Medicaid spending knowledge” protecting “fee-for-service, managed care, and Kids’s Well being Insurance coverage Program (CHIP) claims from 2018-2024.”[2] HHS and the Division of Authorities Effectivity (DOGE) launched the info to help public evaluate of Medicaid spending patterns and program integrity efforts. [3]
• Vital Deferrals of Federal Funding Claimed by States: In February 2026, the Facilities for Medicare & Medicaid Providers (CMS) deferred over $250 million of Minnesota’s quarterly federal Medicaid funding associated to considerations about particular providers and people missing passable immigration standing, and threatened to defer greater than $1 billion extra if Minnesota didn’t enhance its program integrity.[4] In Might 2026, CMS deferred greater than $1.1 billion of California’s quarterly federal Medicaid funding primarily based on estimates of questionable claims and program integrity dangers. [5]
• Govt Order and Activity Pressure to Get rid of Fraud: In March 2026, by govt order, the White Home established the Activity Pressure to Get rid of Fraud.[6] This “whole-of-government” activity drive focuses on waste, fraud, and abuse in federal advantages packages, together with Medicaid. The chief order instructs companies to look at whether or not to withhold federal funds from jurisdictions with insufficient anti-fraud necessities. It additionally instructs the Lawyer Normal to advertise meritorious FCA actions involving federal advantages fraud.

• DOJ Nationwide Fraud Enforcement Division: In April 2026, DOJ created a brand new Nationwide Fraud Enforcement Division. This new Division consolidates operational management over a number of present models inside DOJ, together with the Well being Care Fraud Unit. DOJ introduced that the Nationwide Fraud Enforcement Division will broaden “into a strong litigating division able to reaching any fraud.”[7] DOJ’s Civil Division stays accountable for FCA enforcement, however the restructuring displays the Administration’s prioritization of fraud involving taxpayer-funded packages.
• Stress on State Medicaid Fraud Management Items: In late April and Might 2026, CMS and the HHS Workplace of Inspector Normal (HHS-OIG) positioned elevated strain on state regulators to scrutinize Medicaid funding recipients. HHS requested that each one 50 states conduct a “swift revalidation of Medicaid suppliers of providers at excessive threat of waste, fraud, abuse, and corruption as a part of [their] program integrity obligations below federal legislation.”[8] In one other set of letters, HHS-OIG introduced its plans to “have interaction in a strong evaluate” of state Medicaid Fraud Management Items (MFCUs).[9] The letters describe MFCUs as “a crucial part of Medicaid fraud prevention” and threaten corrective motion plans, lack of funding, or decertification for MFCUs that don’t meet statutory necessities.[10] On June 4, 2026, HHS-OIG introduced it will decertify Hawaii’s MFCU because of a scarcity of prosecutions.[11]
• DOJ Strike Pressure Deal with Medicaid: In late Might 2026, DOJ introduced the enlargement of the Well being Care Fraud Midwest Strike Pressure and the hiring of 15 further prosecutors devoted to combatting Medicaid fraud nationwide.[12] DOJ has used strike forces to deal with well being care fraud in sure areas for years, however that is the primary time DOJ has deployed a bunch particularly to deal with Medicaid fraud.
• Expedited Evaluate of Public Advantages Fraud Qui Tam Fits: Additionally in late Might 2026, DOJ introduced reforms to its evaluate of FCA complaints by relators to prioritize “qui tam complaints alleging fraud towards public advantages packages.”[13] DOJ will now conduct “its preliminary evaluate inside 60 to 120 days” to find out whether or not to allow the relator to maneuver ahead with the motion, determine to conduct further investigation, or dismiss the relator’s motion as poor.[14]

Key Takeaways

These developments pose heightened threat of FCA enforcement for suppliers, Medicaid managed care organizations, and different corporations that take part in Medicaid packages. These corporations ought to take a number of steps to cut back dangers.

• Know Your Personal Knowledge: DOJ is prioritizing knowledge analytics greater than ever. And since qui tam actions may be profitable, non-public events have a powerful monetary incentive to research the claims knowledge for outlier billing patterns. Suppliers with billing patterns outdoors of the norm or elevating purple flags, reminiscent of speedy billing development, per-claim averages far exceeding norms, and concentrated beneficiary funds, ought to count on elevated scrutiny from regulators and relators alike. An efficient compliance program ought to proactively have interaction in evaluation of 1’s personal knowledge to detect and examine these purple flags.  Public entry to provider-level knowledge (as mentioned above) will facilitate data-driven assessments by suppliers and relators.    

• Handle Inner Complaints Successfully: Even with the rise in data-driven relators, many qui tam fits proceed to be filed by insiders. And in our expertise, most relators first elevate considerations inside their group earlier than contemplating submitting a swimsuit. Greater than ever, corporations that take part in Medicaid packages ought to have efficient instruments to obtain, examine, and remediate inside complaints as a part of their compliance packages. Being conscious of workers who elevate considerations goes a great distance in direction of avoiding a qui tam swimsuit.

• Enhance Responses to Third-Get together Audits and State Enforcement Efforts: The Trump Administration’s initiatives will doubtless result in elevated third-party audits contracted by Medicaid packages and state regulators. As well as, HHS and CMS’s scrutiny of state regulators and MFCUs could immediate them to turn out to be extra aggressive. These efforts, in flip, enhance the dangers of referrals for FCA enforcement. Corporations ought to guarantee they’ve sturdy mechanisms to answer these audits successfully and proactively clarify points that might seem severe sufficient to warrant referral for FCA enforcement. 

• Perceive Your State’s Medicaid Program: Medicaid compliance is state-specific: this system’s guidelines and documentation requirements fluctuate by state and continuously differ from Medicare or different federal well being care packages. Corporations ought to guarantee they know and comply with the Medicaid necessities within the states the place they function. When there’s an FCA motion, it’s crucial to make sure the corporate is being held to the correct customary and never inappropriately penalized primarily based on authorities or steerage relevant solely to different federal well being care packages, reminiscent of Medicare.

Conclusion

The Trump Administration’s latest initiatives to fight waste, fraud, and abuse have elevated scrutiny of the Medicaid program and created a heightened threat setting for members.  Suppliers, Medicaid managed care organizations, and different Medicaid fund recipients ought to count on higher consideration from federal and state regulators, in addition to from relators pursuing FCA claims. Taking proactive steps now—together with the measures recognized above—may also help organizations put together to keep away from and meet these challenges.

We’ll proceed to observe developments on this space. Please don’t hesitate to succeed in out to your Foley relationship companion or to our Authorities Enforcement Protection & Investigations and Well being Care groups with any questions on how these enforcement traits could have an effect on your group.

[1] Off. of Pub. Affs., U.S. Dep’t of Simply., Reality Sheet – False Claims Act Settlements and Judgments FY 2025 (2026), https://www.justice.gov/opa/media/1424126/dl.
[2] U.S. Dep’t of Well being & Hum. Servs., Medicaid Supplier Spending by HCPCS, HHS Open Knowledge (Feb. 9, 2026), https://opendata.hhs.gov/datasets/medicaid-provider-spending/.
[3] DOGE HHS (@DOGE_HHS), X (Feb. 13, 2026 at 18:02 CT), https://x.com/DOGE_HHS/standing/2022370909211021376.
[4] Ctrs. for Medicare & Medicaid Servs., Trump Administration Prioritizes Affordability by Saying Main Crackdown on Well being Care Fraud, CMS Newsroom (Feb. 25, 2026), https://www.cms.gov/newsroom/press-releases/trump-administration-prioritizes-affordability-announcing-major-crackdown-health-care-fraud.
[5] Letter from [redacted], Ctrs. for Medicare & Medicaid Servs., to Tyler Sadwith, State Medicaid Dir., (Might 13, 2026), https://www.cms.gov/recordsdata/doc/deferral-letter-ca-q1-2026.pdf.
[6] Exec. Order No. 14396, 91 Fed. Reg. 13485 (Mar. 16, 2026). https://www.whitehouse.gov/presidential-actions/2026/03/establishing-the-task-force-to-eliminate-fraud/.
[7] Memorandum from Todd Blanche, Appearing Att’y Gen., Creation of the Nationwide Fraud Enforcement Division (Apr. 7, 2026), https://www.justice.gov/ag/media/1435311/dl?inline.
[8] Letter from Dr. Mehmet Oz, Ctrs. for Medicare & Medicaid Servs., to the Honorable Kay Ivey, Governor of the State of Ala. (Apr. 23, 2026), https://shorturl.at/G0P2F.
[9] Letter from T. March Bell, Inspector Gen., Off. of Inspector Gen., to Rob Bonta, Att’y Gen., Cal. Dep’t of Simply. Off. of the Att’y Gen., (Apr. 23, 2026), https://ccf.georgetown.edu/wp-content/uploads/2026/05/HHS-OIG-letter-to-Lawyer-Normal-of-California-re-MFCU-Oversight-1.pdf.
[10] Id. at 2.
[11] Letter from T. March Bell, Inspector Gen., Off. of Inspector Gen., to Anne Lopez, Att’y Gen., Haw. Dep’t of the Att’y Gen., and Landon Murata, Dir. of Medicare Fraud Management Unit, Haw. Dep’t of the Att’y Gen., (Jun. 4, 2026), https://oig.hhs.gov/paperwork/medicaid-fraud-control-units/11679/Hawaii_Denial_of_Recertification_Letter.pdf.
[12] Press Launch, Off. of Pub. Affs., U.S. Dep’t of Simply., This Week in Fraud: The Fraud Division Introduced Growth of Midwest Activity Pressure and Authorization to Rent 15 New Medicaid Prosecutors, an Unprecedented Minnesota Well being Care Fraud Takedown, and a $2 Billion Telemedicine Well being Care Fraud Scheme (Might 22, 2026), https://www.justice.gov/opa/pr/week-fraud-fraud-division-announced-expansion-midwest-task-force-and-authorization-hire-15.
[13] Press Launch, Off. of Pub. Affs., U.S. Dep’t of Simply., Civil Division Strikes to Quick-Observe Advantages Fraud Enforcement (Might 27, 2026), https://www.justice.gov/opa/pr/civil-division-moves-fast-track-benefits-fraud-enforcement.
[14] Id.