How does the recent DOJ and HHS announcement of the formation of a joint False Claims Act Working Group impact healthcare providers, contractors, and other federally funded entities?
The new working group is focused on the healthcare sector, continuing a broader push to enhance enforcement around fraud, waste, and abuse. This follows the DOJ’s recent memorandum expanding the False Claims Act's (FCA) reach to include violations of federal civil rights laws by recipients of federal funding as part of its Civil Rights Fraud Initiative.
Healthcare providers, contractors, and other federally funded entities should be proactive in reviewing their policies to ensure compliance. Bochner PLLC is closely monitoring this development to assist clients through this evolving regulatory landscape.
1. The Civil Rights Fraud Initiative: A New Enforcement Frontier
On May 19, 2025, the Department of Justice (DOJ) established the Civil Rights Fraud Initiative, directing attorneys to utilize the FCA to investigate and pursue claims against any recipient of federal funds that knowingly violates federal civil rights laws.
Why DEI is Now an FCA Compliance Risk
Under this initiative, the FCA is implicated if a federal contractor or recipient of federal funding (including Medicare/Medicaid providers) certifies compliance with civil rights laws while knowingly engaging in "racist preferences, mandates, or policies." This includes:
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DEI Programs: Policies and programs that assign benefits or burdens based on race, ethnicity, or national origin.
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Discriminatory Activities: Programs the administration deems "inherently divisive" or in violation of the Civil Rights Act of 1964.
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Institutional Obligations: Failure to protect specific groups (e.g., failing to address antisemitism at federally funded universities).
2. The DOJ-HHS FCA Working Group: Structure and Focus
Formally announced on July 2, 2025, this joint working group formalizes interagency efforts to combat waste and abuse in the healthcare sector. Beginning in July, leadership from the DOJ’s Civil Division and HHS—including the Office of Inspector General (HHS-OIG)—will meet monthly to coordinate data-sharing and enforcement.
6 Priority Enforcement Areas
The Working Group is leveraging enhanced data mining to identify new leads in the following areas:
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Medicare Advantage Fraud: Specifically, upcoding, kickbacks, and improper billing.
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Drug and Device Pricing: Discounts, rebates, and price reporting.
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Patient Access Barriers: Violations of network adequacy requirements.
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Healthcare Kickbacks: Arrangements involving medical devices and products paid for by federal programs.
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Defective Medical Devices: Safety issues impacting patients.
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EHR Manipulation: Electronic Health Record systems used to drive inappropriate Medicare utilization.
3. Emerging Risks: Payment Suspensions and Qui Tam Actions
The Working Group's formation signals a move toward more aggressive administrative enforcement:
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Medicare Payment Suspensions: Under 42 C.F.R. § 405.370, HHS has the authority to suspend payments based on a "credible allegation of fraud." This group may increase the volume of these suspensions before any formal litigation begins.
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Qui Tam Whistleblowers: The DOJ continues to "strongly encourage" private citizens to report violations. Successful whistleblowers can receive a significant portion of the recovery.
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Strategic Dismissals: The DOJ may utilize its authority to dismiss qui tam complaints that do not align with its specific enforcement priorities, such as the Civil Rights Fraud Initiative.
Final Thoughts: Navigating the New Era of Coordinated Enforcement
The establishment of this working group reflects a shift toward a data-driven, coordinated approach to healthcare oversight. To minimize exposure, entities receiving federal funding must ensure compliance with both traditional fraud regulations (billing and kickbacks) and newly emerging civil rights standards.
Bochner PLLC remains at the forefront of these developments. We recommend that healthcare organizations immediately review their internal policies, DEI programs, and operational workflows to ensure they meet the rigorous standards set by the DOJ and HHS.
Is your organization compliant with the Civil Rights Fraud Initiative?
Contact Bochner PLLC for a comprehensive risk assessment and policy review.
