Insights

False Claims Act (FCA) settlements and judgments hit record highs yet again in FY 2025, surpassing the previous record by over $1 billion and setting a new high-water mark for the number of new FCA cases filed.  These records were built both on existing enforcement priorities such as pandemic-related fraud and healthcare enforcement actions and new guidance from the Executive Branch instructing the Department of Justice to enforce its 2025 priorities including Diversity, Equity, and Inclusion (DEI), civil rights, and customs issues.  Procurement fraud, cybersecurity issues, and small business fraud also remained focal points, with significant settlements in each of those areas.  In the courts, an Eleventh Circuit decision expanded relators’ ability to use discovery to avoid dismissal under Rule 9(b), and a Ninth Circuit ruling clarified a number of customs fraud issues while applying the Supreme Court’s Schutte scienter test.  Debate over the qui tam provisions’ constitutionality continued to grow, with arguments made in multiple circuits, including an Eleventh Circuit oral argument in the appeal of the Middle District of Florida’s Zafirov decision that helped to spark the recent wave of challenges.  Crowell FCA attorneys explain these developments, trends, and what’s next for the FCA in a “Feature Comment” published in The Government Contractor.

On the morning of December 12, 2025, the Eleventh Circuit heard argument in United States ex rel. Zafirov v. Florida Medical Associates, LLC, et al., No. 24-13581 (11th Cir. 2025). This case concerns the constitutionality of the False Claims Act (FCA) qui tam provisions and a groundbreaking September 2024 opinion in which the United States District Court for the Middle District of Florida held that the FCA’s qui tam provisions were unconstitutional under Article II. See United States ex rel. Zafirov v. Fla. Med. Assocs., LLC, 751 F. Supp. 3d 1293 (M.D. Fla. 2024). That decision, penned by District Judge Kathryn Kimball Mizelle, was the first success story for a legal theory that has been gaining steam ever since Justices Thomas, Barrett, and Kavanaugh indicated they would be willing to consider arguments about the constitutionality of the qui tam provisions in U.S. ex rel. Polansky v. Exec. Health Res., 599 U.S. 419 (2023). In her opinion, Judge Mizelle held (1) qui tam relators are officers of the U.S. who must be appointed under the Appointments Clause; and (2) historical practice treating qui tam and similar relators as less than “officers” for constitutional purposes was not enough to save the qui tam provisions from the fundamental Article II infirmity the court identified. That ruling was appealed and, after full briefing, including by the government and a bevy of amici, the litigants stepped up to the plate this morning for oral argument.

On November 7, 2025, in Thornton v. National Academy of Sciences, No. 25-cv-2155, 2025 WL 3123732 (D.D.C. Nov. 7, 2025), the District Court for the District of Columbia dismissed a False Claims Act (FCA) retaliation complaint on the basis that the plaintiff’s allegations that he was fired after blowing the whistle on purported illegally discriminatory use of federal funding was not sufficient to support his FCA claim. This case appears to be one of the first filed, and subsequently dismissed, following Deputy Attorney General Todd Blanche’s announcement of the creation of the Civil Rights Fraud Initiative on May 19, 2025, which “strongly encourages” private individuals to file lawsuits under the FCA relating to purportedly discriminatory and illegal use of federal funding for diversity, equity, and inclusion (DEI) initiatives in violation of Executive Order 14173, Ending Illegal Discrimination and Restoring Merit-Based Opportunity (Jan. 21, 2025). In this case, the court dismissed the FCA retaliation claim and rejected the argument that an organization could violate the FCA merely by “engaging in discriminatory conduct while conducting a federally funded study.” The analysis in Thornton could be a sign of how forthcoming arguments of retaliation based on reporting allegedly fraudulent DEI activity will be analyzed in the future.

On July 25, 2025, the Eleventh Circuit Court of Appeals issued its decision in United States ex. rel. Sedona Partners LLC v. Able Moving & Storage Inc. et al., holding that a district court cannot ignore new factual allegations included in an amended complaint filed by a False Claims Act qui tam relator based on the fact that those additional facts were learned in discovery, even while a motion to dismiss for failure to comply with the heightened pleading standard under Federal Rule of Civil Procedure 9(b) is pending.  Under Rule 9(b), allegations of fraud typically must include factual support showing the who, what, where, why, and how of the fraud to survive a defendant’s motion to dismiss.  And while that standard has not changed, Sedona gives room for a relator to file first and seek out discovery in order to amend an otherwise deficient complaint and survive a motion to dismiss, at least in the Eleventh Circuit.  Importantly, however, the Eleventh Circuit clarified that a district court retains the discretion to dismiss a relator’s complaint before or after discovery has begun, meaning that district courts are not required to permit discovery at the pleading stage.  Nevertheless, the Sedona decision is an about-face from precedent in the Eleventh Circuit, and many other circuits, where, historically, facts learned during discovery could not be used to circumvent Rule 9(b) by bolstering a relator’s factual allegations while a motion to dismiss was pending.  While the long-term effects of the decision remain to be seen, in the short term the decision may encourage relators to engage in early discovery in hopes of learning facts that they can use to survive otherwise meritorious motions to dismiss.

On May 19, 2025, Deputy Attorney General Todd Blanche issued a Memorandum creating the Civil Rights Fraud Initiative that will “utilize the False Claims Act to investigate and . . . pursue claims against any recipient of federal funds that knowingly violates federal civil rights laws.” According to the Memorandum, though racial discrimination has “always been illegal,” the Administration posits that “many corporations and schools continue to adhere to racist policies and preferences—albeit camouflaged with cosmetic changes that disguise their discriminatory nature.” In an effort to prevent federal funds from being used in connection with or support of these purportedly racist policies and preferences, the Initiative will wield the power of the False Claims Act, the government’s most powerful tool to fight fraud, waste, and abuse.

FY 2024 saw continued growth in False Claims Act enforcement, with a record year for new qui tam and government-initiated actions, and the highest total recovery in three years. Enforcement of pandemic-related fraud and cybersecurity noncompliance increased, and health care, procurement, and small business fraud violations were again priority areas. A groundbreaking opinion from the District Court for the Middle District of Florida may have teed up a potentially landscape-shifting decision about the viability of the qui tam mechanism in the not too distant future. And a landmark administrative law decision at the U.S. Supreme Court may impact many FCA cases to come. Significant decisions regarding retaliation, excessive fines, the first-to-file rule, and the public disclosure bar were also handed down by courts of appeals. Crowell attorneys discuss these highlights and others in a “Feature Comment” published in The Government Contractor.

Yesterday, less than an hour into the first day of confirmation hearings for attorney general nominee Pam Bondi, Senator Chuck Grassley (R-IA) questioned Bondi on her commitment to defending the constitutionality of the False Claims Act (FCA) if she is confirmed.  Bondi responded that she would “of course” defend the constitutionality of the FCA and that she understands the importance of whistleblowers, the FCA’s protections, and “the money it brings back to our country.”  Senator Grassley’s questioning indicated he was focused on the FCA’s qui tam provisions, as it comes on the heels of U.S. ex rel. Zafirov v. Florida Medical Associates, Inc., -- F.Supp.3d --, 2024 WL 4349242 (M.D. Fla. Sept. 30, 2024), a first-of-its-kind decision from Judge Kathryn Kimball Mizelle, who held that the FCA’s qui tam provisions improperly appoint a relator “an officer of the United States” in violation of the Appointments Clause in Article II of the Constitution, and are therefore unconstitutional.  Senator Grassley appeared to be seeking assurances about Bondi’s willingness to ensure the Department of Justice continues to defend the FCA’s qui tam provisions and commit the resources necessary to do so.

Judge Kathryn Kimball Mizelle of the District Court for the Middle District of Florida recently declared the False Claims Act qui tam provisions unconstitutional in U.S. ex rel. Zafirov v. Fla. Med. Assocs., LLC, -- F.Supp.3d --, 2024 WL 4349242 (M.D. Fla. Sept. 30, 2024), turning up the heat on a simmering constitutional fight that is increasingly likely to reach the Supreme Court in the next few years. Judge Mizelle's decision was the first to strike down the FCA qui tam provisions, but not the first to consider the issue. Arguments challenging the constitutionality of the qui tam provisions proliferated after Justice Thomas indicated some doubt about the qui tam device in his dissent in U.S. ex rel. Polansky v. Exec. Health Res., 599 U.S. 419 (2023). But every other judge to consider the issue has upheld the constitutionality of the qui tam provisions.

In a novel False Claims Act (FCA) ruling, on September 30, 2024, Judge Kathryn Kimball Mizelle of the District Court for the Middle District of Florida upended decades of FCA jurisprudence in declaring the qui tam provisions of the FCA unconstitutional in U.S. ex rel. Zafirov v. Florida Medical Associates, LLC, 2024 WL 4349242 (M.D. Fla. Sept. 30, 2024). This decision follows Justice Thomas’ dissent in the recent Supreme Court decision, U.S. ex rel. Polansky v. Executive Health Resources, Inc., 599 U.S. 419 (2023), where he posited, “[t]here are substantial arguments that the qui tam device is inconsistent with Article II and that private relators may not represent the interests of the United States in litigation.” While Justice Thomas’ implicit constitutional challenge was not entirely new to FCA practitioners, including it in his Polansky dissent, with Justices Kavanaugh and Barrett in a concurring opinion noting their agreement that the Court should consider the constitutional questions in an appropriate case, swung wide open a door of opportunity for defendants and their counsel to attempt to dismiss FCA qui tam suits on constitutional grounds. Judge Mizelle’s decision in Zafirov is the first of its kind to actually dismiss a qui tam suit on constitutional grounds, and will likely lead to an avalanche of similar motions in nearly every non-intervened lawsuit brought by a relator.

A recently-announced False Claims Act (FCA) settlement illustrates how government contractors and other FCA defendants can take advantage of a Department of Justice (DOJ) policy that rewards voluntary self-disclosure to, and subsequent cooperation with, the government.

2023 brought many important False Claims Act developments for companies with business involving government funds.  While overall recoveries remained down compared to pre-2022 levels, the total number of settlements and judgments exceeded any prior year.  Those settlements and judgments also highlight areas of particular focus for the Government, including cybersecurity compliance, pandemic fraud, and small business fraud, among others.  Of particular note, 2023 saw the U.S. Supreme Court issue decisions concerning the Government’s authority to dismiss qui tam actions and the critical element of scienter/knowledge that will have wide-reaching impact.  The courts of appeals also issued significant decisions on damages, materiality, and more.  Crowell attorneys discuss these highlights and others in a "Feature Comment" published in The Government Contractor.

A recent decision in a non-intervened qui tam suit in the Northern District of Georgia provides an example of a defendant threading the needle to avoid dismissal of its counterclaims despite those counterclaims arguably implicating the conduct that the relator alleged violated the False Claims Act (FCA). It also stands as a rare instance where a company’s counterclaims against an FCA relator have survived early court scrutiny and, as such, provides FCA defendants with a potential strategy to combat opportunistic relators.

On June 16, 2023, the U.S. Supreme Court, in United States ex rel. Polansky v. Executive Health Resources Inc., held that the Government may seek dismissal of a False Claims Act (“FCA”) qui tam suit over a relator’s objection so long as it intervenes in the litigation, either during the initial seal period or afterward.  The Court also held that, when handling such a motion, district courts should apply Federal Rule of Civil Procedure (“FRCP”) 41(a), the rule generally governing voluntary dismissal of suits.  And in a dissent that—in the long run—may end up being more impactful than the Court’s holding, Justice Thomas (joined in a concurring opinion by Justices Kavanaugh and Barrett) questioned the constitutionality of the qui tam provisions themselves.  

Next Tuesday, April 18, 2023, the highest court in the land will hear arguments in what is poised to be the most influential False Claims Act (FCA) case since the landmark decision in Universal Health Servs. v. United States ex rel. Escobar, 136 S. Ct. 1989 (2016).  On January 13, 2023, the U.S. Supreme Court granted certiorari to hear two consolidated appeals from the U.S. Court of Appeals for the Seventh Circuit in United States ex rel. Schutte v. SuperValu Inc., 9 F.4th 455 (7th Cir. 2021) and United States ex rel. Proctor v. Safeway, Inc., 30 F.4th 649 (7th Cir. 2022).  The Court’s decision will likely have far-reaching ramifications for FCA cases involving ambiguous contractual or regulatory requirements and may also provide benchmarks for assessing the key element of scienter across all FCA cases.  

2022 was a busy year for the False Claims Act.  While recoveries were down, new cases reached a record mark, and settlements addressed multiple important and developing enforcement areas, from cybersecurity to small business fraud, bid rigging, Trade Agreements Act compliance, pandemic fraud, and more.  Of particular note, the U.S. Supreme Court held argument concerning the Government’s authority to dismiss qui tam actions, and it will soon hear consolidated cases as to the critical element of scienter.  And circuit courts issued key decisions involving pleading standards and merits issues.  These highlights and more are discussed by C&M attorneys in a “Feature Comment” published in The Government Contractor. 

In a prime example of the significant interplay between the Anti-Kickback Statute (“AKS”) and the False Claims Act (“FCA”), a federal jury has returned a verdict of more than $43 million in damages against Cameron-Ehlen Group, Inc., which does business as “Precision Lens,” and its owner.  The verdict in this long-running and closely watched fraud case out of the U.S. District Court for the District of Minnesota comes after a six-week trial, with the jury ultimately finding that the defendants paid kickbacks to ophthalmic surgeons to induce their use of defendants’ products in cataract surgeries reimbursed by Medicare, resulting in the submission of 64,575 false claims between 2006 and 2015.  While the jury calculated damages at the massive sum of $43 million, that number may grow exponentially after the court applies the FCA’s treble-damages calculation (increasing the liability to $129 million) and statutory penalties of between $5,500 and $11,000 for each of the 64,575 claims (resulting in additional penalties of $355 million to $710 million).  All told, the total FCA liability is expected to range between $485 million and $839 million.

The National Defense Authorization Act (NDAA) for Fiscal Year (FY) 2023, signed into law on December 23, 2022, makes numerous changes to acquisition policy. Crowell & Moring’s Government Contracts Group discusses the most consequential changes for government contractors here. These include changes that provide new opportunities for contractors to recover inflation-related costs, authorize new programs for small businesses, impose new clauses or reporting requirements on government contractors, require government reporting to Congress on acquisition authorities and programs, and alter other processes and procedures to which government contractors are subject. The FY 2023 NDAA also includes the Advancing American AI Act, the Intelligence Authorization Act for FY 2023, and the Water Resources Development Act of 2022, all of which include provisions relevant for government contractors.

On Friday September 9, 2022, the Principal Director for DoD Defense Pricing and Contracting (DPC) issued a Memorandum titled “Managing the Effects of Inflation with Existing Contracts.”  The Memorandum provides guidance to Contracting Officers about the range of approaches available to address the effects of inflation on the Defense Industrial Base.  Of note, it highlights two paths contractors may pursue to recover for inflation under fixed-price contracts.