On July 9, 2025, the U.S. Division of Justice (“DOJ”) introduced it despatched greater than 20 subpoenas to physicians and clinics concerned in offering gender-affirming care to minors, and that the subpoenas associated to investigations into healthcare fraud, false statements and different misconduct.[i] DOJ’s latest announcement, mixed with the opposite actions described under, sign the federal government’s curiosity in pursuing motion towards suppliers that invoice federal healthcare applications for gender-affirming look after minors, together with puberty blockers, hormone remedy and surgical procedures. Particularly, these actions strongly recommend that the federal government will examine not solely legal claims but additionally civil claims underneath the False Claims Act[ii] (“FCA”) towards gender-affirming care suppliers that invoice federal healthcare applications for companies supplied to minors, counting on bases associated to miscoding/misbilling, lack of knowledgeable consent and lack of medical necessity. The FCA gives for treble damages and penalties of as much as $28,619 per declare. We focus on every of those theories under and what suppliers can do to scale back potential publicity underneath these theories.
On January 28, 2025, the White Home issued Govt Order 14187[iii] (the “EO”) entitled “Defending Kids from Chemical and Surgical Mutilation.” The EO directed the federal authorities to take steps to make sure that the federal authorities doesn’t “sponsor, promote, help, or help” the “‘transition’ of a kid from one intercourse to a different,” together with the availability of gender-affirming care to people underneath the age of 19. The EO directed federal companies to make sure that establishments receiving federal analysis or training funding terminate their provision of gender-affirming look after minors and that reimbursement underneath sure federal healthcare applications for gender-affirming look after minors be discontinued. The EO additionally acknowledged that federal companies ought to rescind or amend insurance policies counting on steering issued by the World Skilled Affiliation for Transgender Well being (“WPATH”), which had been the authoritative steering relied upon by suppliers in performing gender-affirming look after minors. Though the EO didn’t point out the FCA, the EO directed the U.S. Lawyer Normal to implement an present federal regulation towards “feminine genital mutilation”[iv] which is outlined as “any process carried out for non-medical causes that includes partial or complete elimination of, or different harm to, the exterior feminine genitalia” and excludes surgical operations essential for the well being of the affected person.
On April 22, 2025, Lawyer Normal Bondi issued the “Stopping the Mutilation of American Kids” Memorandum,[v] directing the Division of Justice (“DOJ”) to research suppliers of gender-affirming care to minors (the “AG Memo”). The AG Memo directed the DOJ to pursue claims of civil and legal legal responsibility towards these suppliers underneath three present legal guidelines: (1) the federal regulation banning feminine genital mutilation referenced within the EO; (2) the Meals Drug & Cosmetics Act towards producers and distributors of puberty blockers, hormones and different medication on account of off-label promotion which might represent misbranding;[vi] and (3) the FCA. The AG Memo, specifically, directed the DOJ to pursue investigations underneath the FCA for “miscoding” or “misbilling” by suppliers of gender-affirming look after minors, i.e. prescribing therapy for an illegitimate cause however reporting a professional goal, or performing gender-affirming procedures however billing for a completely totally different process.[vii]
On Might 1, 2025, HHS issued a 400-page publication on “Therapy for Pediatric Gender Dysphoria,”[viii] questioning the advantages of gender-affirming look after minors, asserting numerous dangers together with infertility and sterility, and criticizing the WPATH steering.
On Might 28 2025, Dr. Mehmet Oz, the Administrator of the Facilities for Medicare and Medicaid Providers (“CMS”), despatched letters[ix] to pick hospitals expressing that “the US Authorities has severe issues with medical interventions for gender dysphoria in kids” and requesting insurance policies and procedures and monetary knowledge associated to federal reimbursement for gender-affirming look after minors. In these CMS Letters, CMS reiterated the positions outlined in HHS’ Might 1 publication, describing gender-affirming look after minors as involving doubtlessly severe dangers and questioned its advantages. CMS additionally requested info on the recipient-hospitals’ high quality normal adherence insurance policies and procedures referring to the next:
- the adequacy of knowledgeable consent protocols for kids, together with how kids may present knowledgeable consent and when parental consent was required;
- modifications to pointers and protocols in response to HHS’ Might 1 publication; and
- any opposed occasions associated to those procedures. CMS additionally requested full monetary knowledge for all pediatric gender-affirming procedures carried out on the hospitals which have been paid in entire or partly by federal healthcare applications —attaching a non-exhaustive checklist of doubtless related prognosis and process codes—together with:
- all billing codes utilized for the procedures;
- facility- and provider-level income—or utilization knowledge—generated, straight or not directly, from these procedures (from 2020 to current);
- facility- and provider-level working and revenue margins for every process sort; and
- projected income forecasts for these service traces.
The letters gave recipient-hospitals 30 days to reply.
Collectively, the July 9, 2025 DOJ announcement, the CMS Letters, the EO, the AG Memo and the Might 1 HHS publication strongly recommend that the DOJ will pursue civil FCA claims towards suppliers that invoice federal healthcare applications for gender-affirming look after minors. Though the id and contents of the twenty subpoenas issued by DOJ usually are not publicly recognized, the CMS Letters and different federal steering proof three doubtless civil FCA theories together with: (1) miscoding or misbilling; (2) lack of knowledgeable consent; and (3) lack of medical necessity.
Principle 1: Miscoding or Misbilling.
The AG Memo posits a miscoding or misbilling principle of FCA legal responsibility for suppliers of pediatric gender-affirming care that invoice federal healthcare applications. Below this principle, suppliers violate the FCA when the suppliers invoice federal healthcare applications for a coated service however in reality present a unique service. Alternatively, suppliers may violate the FCA by offering for a service for an illegitimate goal, reminiscent of gender-affirming care, whereas billing for a professional goal, reminiscent of early onset puberty. Whereas no FCA instances have been introduced underneath this principle but, states reminiscent of Texas have sued[x] suppliers for violations of state regulation on these bases. The Texas Lawyer Normal has introduced misleading commerce practices and Texas Medical Apply Act complaints towards suppliers of gender-affirming look after minors, alleging amongst different issues that the suppliers misrepresented the aim of the testosterone and puberty blockers they have been prescribing. Particularly, the complaints allege the suppliers falsely billed testosterone prescriptions and puberty blockers utilizing the diagnostic codes for endocrine dysfunction or precocious puberty when the therapy was truly for the aim of treating gender dysphoria. Likewise, the Tennessee Lawyer Normal commenced an investigation[xi] towards Vanderbilt College Medical Middle on account of alleged public statements by one in all its physicians to invoice gender-affirming look after minors as endocrine dysfunction to scale back value sharing obligations by sufferers whose insurance coverage wouldn’t cowl gender-affirming care.
The DOJ or state attorneys normal might deliver instances underneath the FCA or comparable state legal guidelines alleging comparable miscoding/misbilling. It’s noteworthy that CMS, within the CMS Letters, supplied “a non-exhaustive checklist of doubtless related prognosis and process codes,” directed suppliers to incorporate “all billing codes utilized for pediatric intercourse trait modification procedures,” and requested income info from these procedures from 2020 to current. The language of the request means that CMS believes that some suppliers might have submitted inaccurate prognosis codes unrelated to gender-affirming care (reminiscent of for endocrine dysfunction or precocious puberty) to federal healthcare applications over a five-year lookback interval.
Principle 2: Knowledgeable Consent.
CMS imposes on hospitals necessities to acquire knowledgeable consents for surgical procedures and different procedures underneath numerous situations of participation (“CoP”) together with the Sufferers’ Rights COP, the Medical Data CoP and the Surgical Providers CoP. Hospitals are required[xii] to incorporate an announcement within the knowledgeable consent that the affected person has been suggested as to anticipated advantages, materials dangers and various therapies.
The CMS Letters pointedly request insurance policies and procedures from recipient-hospitals addressing “[t]he adequacy of knowledgeable consent protocols for kids with gender dysphoria, together with how kids are deemed able to making these doubtlessly life-changing choices and when parental consent is required.” As a result of CMS Letters’ concentrate on knowledgeable consent protocols, it’s doubtless that one other foundation of FCA legal responsibility forwarded by the federal government might be primarily based on purported poor knowledgeable consent, together with allegations that minor sufferers couldn’t really consent to participation, the dad and mom of the youngsters didn’t present permission, advantages have been exaggerated, or materials dangers, reminiscent of infertility, elevated threat of most cancers, decreased bone density or despair, weren’t adequately disclosed. The federal government may contend that knowledgeable consents for gender-affirming look after minors should embody the advantages, dangers and various remedies described within the HHS Might 1 publication in addition to its criticism of the WPATH steering.
It’s also attainable that DOJ may increase this knowledgeable consent principle of FCA legal responsibility past scientific care to the context of federal analysis grants that have been funded previously. HHS laws impose necessities for knowledgeable consent[xiii] of human analysis topics. As with the CoPs mentioned above, HHS requires human topic researchers to supply topics with details about dangers, advantages and alternate options of gender-affirming care. The laws impose heightened knowledgeable consent necessities for kids taking part in analysis and usually require soliciting the mum or dad or guardian’s permission.
Principle 3: Lack Of Medical Necessity.
The CMS Letters and the AG Memo repeatedly cite to the HHS Might 1 Publication which criticizes the WPATH steering, questions the advantages of gender-affirming look after minors and states that dangers of such therapy have been underreported. A 3rd potential principle of FCA legal responsibility would doubtless be that gender-affirming look after minors lacked medical necessity and thus couldn’t be billed to federal healthcare applications. Federal regulation requires that an merchandise or service have to be “affordable and essential” to be reimbursed by a federal healthcare program. CMS defines a “affordable and essential” merchandise or service as one which “meets, however doesn’t exceed, the affected person’s medical want,” and is furnished “in accordance with accepted requirements of medical apply …”[xiv] Thus, it’s attainable that DOJ would take the place that the HHS Might 1 Publication undermined the medical necessity for gender-affirming care, thus rendering any declare for gadgets or companies for gender-affirming look after minors false underneath the FCA.[xv]
Motion Gadgets
Given the subpoenas issued by DOJ this month and the chance that the federal government might pursue FCA legal responsibility on these grounds, suppliers might think about the next actions to scale back FCA threat:
- Analyze previous billing and coding to find out if suspect prognosis codes reminiscent of endocrine dysfunction and/or precocious puberty have been billed along with process codes related to gender-affirming look after minors. Interview income cycle management to find out if any such billing and coding for such prognosis codes has occurred, together with inner discussions and discussions with payors and/or pharmaceutical producers.
- Evaluation insurance policies and procedures and practices concerning knowledgeable consents associated to gender-affirming look after minors, together with descriptions of dangers, advantages and various remedies and whether or not parental or guardian permission is obtained. Think about increasing this evaluate to incorporate knowledgeable consents associated to federally funded analysis involving gender-affirming look after minors.
- Protect all historic insurance policies and procedures and different paperwork associated to knowledgeable consents associated to scientific gender-affirming look after minors or analysis associated to gender-affirming look after minors. These may very well be necessary to point out that the supplier fastidiously thought of the dangers, advantages and alternate options recognized on the time and thus didn’t act knowingly, recklessly or with wanton disregard, which have to be proven to show an FCA violation.
- Evaluation opposed incident studies concerning gender-affirming look after minors and decide whether or not the studies have been correctly dealt with and whether or not such studies needs to be integrated into knowledgeable consents.
- Fastidiously seek the advice of with outdoors or in-house counsel when responding to the CMS Letters or comparable informational requests as info produced may very well be used to generate further doc requests or take further enforcement motion.
FOOTNOTES
[i] Division of Justice Subpoenas Docs and Clinics Concerned in Performing Transgender Medical Procedures on Kids
[ii] 31 U.S.C. § 3729.
[iii] Defending Kids from Chemical and Surgical Mutilation
[iv] 18 U.S.C. § 116.
[v] “Stopping the Mutilation of American Kids” Memorandum
[vi] In April 2025, Endo USA, Inc. acquired subpoenas from the DOJ’s Client Safety Department associated to advertising and promotion of Supprelin LA, one of many predominant implantable puberty blocking drugs.
[vii] A June 11, 2025 memorandum from DOJ Assistant Lawyer Normal Brett A. Shumate to civil division staff acknowledged that DOJ’s civil division would use “all out there sources” to prioritize these investigations and pursue, amongst different issues, misbranding and miscoding theories.
[viii] Therapy for Pediatric Gender Dysphoria
[x] On October 17, 2024, the state of Texas introduced a lawsuit requesting an injunction towards a doctor titled Texas v. Might C. Lau in Collin County, Texas.
[xi] Tennessee Lawyer Normal’s Workplace Supplies Assertion Relating to VUMC Investigation
[xii] Revisions to the Hospital Interpretive Tips for Knowledgeable Consent and Knowledgeable Choice Making
[xiii] 45 C.F.R. § 46.101.
[xiv] CMS Medicare Integrity Handbook § 13.5.4.
[xv] See, e.g., Winter ex rel. United States v. Gardens Reg’l Hosp. & Med. Ctr., Inc., 953 F.3d 1108 (ninth Cir. 2020).