Two recent settlements involving imports from the People’s Republic of China (“PRC”) illustrate the U.S. Department of Justice’s (“DOJ”) commitment to rapidly stepping up enforcement against tariff evasion and customs fraud through the False Claims Act (“FCA”). As we covered here, tariffs have been central to the administration’s trade strategy, and DOJ’s growing use of the FCA as an enforcement tool in this space is expected to drive a significant rise in both whistleblower allegations and recoveries.
Recently, the Southern District of New York issued a decision imposing FCA penalties that provides further guidance on the circumstances under which such penalties may violate the Eighth Amendment.
https://fcablog.sidley.com/wp-content/uploads/sites/5/2022/08/sidleyLogo-e1643922598198.png00Scott D. Steinhttps://fcablog.sidley.com/wp-content/uploads/sites/5/2022/08/sidleyLogo-e1643922598198.pngScott D. Stein2025-07-22 14:56:282025-07-22 15:02:35District Court Recognizes that Even Minimum FCA Civil Penalties Could Be Unconstitutional Under the Excessive Fines Clause
In U.S. ex rel. Flanagan v. Fresenius Med. Care Holdings, Inc., 23-1305 (1st Cir. June 27, 2025), the First Circuit recently affirmed dismissal of an FCA complaint because it failed to adequately plead that alleged kickbacks were the “but for” cause of claims submitted to the government. As we previously reported here, the First Circuit recently joined the growing majority of circuits requiring that for a claim to “result[] from” a kickback under the FCA, the kickback must be the “but-for” cause of the claim. In Flanagan, the First Circuit affirmed dismissal because the relator had not adequately alleged any referrals that would not have been made had the alleged kickback never been paid. (more…)
https://fcablog.sidley.com/wp-content/uploads/sites/5/2022/08/sidleyLogo-e1643922598198.png00Scott D. Steinhttps://fcablog.sidley.com/wp-content/uploads/sites/5/2022/08/sidleyLogo-e1643922598198.pngScott D. Stein2025-07-08 09:04:262025-07-08 09:41:57First Circuit Affirms Dismissal of Qui Tam for Failing But-For Test Linking AKS Violations to FCA Liability
The Department of Justice has published the inflationary adjustments to the civil monetary penalties associated with False Claims Act violations. Under the Balanced Budget Act of 2015, annual inflationary adjustments of the penalties is required. Adjustments are to be based on the Bureau of Labor Statistics’ Consumer Price Index. For any False Claims Act violations that occurred after November 2, 2015, but for which penalties are assessed after July 3, 2025, the adjusted penalties will be applied. The minimum False Claims Act penalty now increases from $13,946 to $14,308 per claim, and the maximum penalty increases from $27,894 to $28,619 per claim.
https://fcablog.sidley.com/wp-content/uploads/sites/5/2022/08/sidleyLogo-e1643922598198.png00Scott D. Steinhttps://fcablog.sidley.com/wp-content/uploads/sites/5/2022/08/sidleyLogo-e1643922598198.pngScott D. Stein2025-07-07 10:09:332025-07-07 10:09:33Department of Justice Announces 2025 Inflationary Adjustments to FCA Penalties
On July 2, 2025, the U.S. Department of Justice (“DOJ”) announced the renewal of the DOJ-HHS False Claims Act Working Group, a partnership with the U.S. Department of Health and Human Services (“HHS”) that aims to strengthen use of the FCA to combat healthcare fraud. This is an initiative that was first announced during the first Trump administration, and follows the announcement of significant personnel changes at DOJ, as discussed here.
https://fcablog.sidley.com/wp-content/uploads/sites/5/2022/08/sidleyLogo-e1643922598198.png00Kristin Graham Koehlerhttps://fcablog.sidley.com/wp-content/uploads/sites/5/2022/08/sidleyLogo-e1643922598198.pngKristin Graham Koehler2025-07-03 09:42:262025-07-03 09:51:07DOJ Announces Reinvigorated False Claims Act Cooperation with the Department of Health and Human Services
As discussed here, there is new leadership at DOJ and last week we got insight into when DOJ is moved to exercise its dismissal authority under 31 U.S.C. § 3730(c)(2)(A). In March, DOJ moved to dismiss the relator’s FCA case in United States ex rel. Vermont National Telephone Co. v. Northstar Wireless LLC. The district court referred the motion to a magistrate judge and the magistrate recommended that the district court grant DOJ’s motion. The magistrate’s recommendation was grounded in the Supreme Court’s decision in United States ex rel. Polansky v. Executive Health Resources (previously covered here), which holds that DOJ is entitled to substantial deference in seeking dismissal of qui tam actions when it offers reasonable arguments that the burdens of continued litigation outweigh its benefits. The relator objected to the magistrate’s decision and, on June 25, DOJ filed its response (the “Response”).
This past week saw a major change of the guard at the U.S. Department of Justice – one that may have significant impacts for the Civil Division’s use of the False Claims Act in the second Trump administration.
https://fcablog.sidley.com/wp-content/uploads/sites/5/2022/08/sidleyLogo-e1643922598198.png00Kristin Graham Koehlerhttps://fcablog.sidley.com/wp-content/uploads/sites/5/2022/08/sidleyLogo-e1643922598198.pngKristin Graham Koehler2025-05-29 10:11:272025-05-29 12:39:06Major Change at the U.S. Department of Justice Civil Division – Consequences for False Claims Act Enforcement in the Second Trump Administration
In a May 19, 2025 memorandum, Deputy Attorney General Todd Blanche announced the Civil Rights Fraud Initiative, which aims to use the False Claims Act (FCA) to investigate and “pursue claims against any recipient of federal funds that knowingly violates federal civil rights laws” via “racist preferences, mandates, . . . and activities”—including diversity, equity, and inclusion (DEI) programs. (more…)
https://fcablog.sidley.com/wp-content/uploads/sites/5/2024/04/MN-18361_Updated-FCA-blog-imagery_social.jpg6351201Kristin Graham Koehlerhttps://fcablog.sidley.com/wp-content/uploads/sites/5/2022/08/sidleyLogo-e1643922598198.pngKristin Graham Koehler2025-05-20 12:43:202025-05-20 12:43:42DOJ Launches Initiative Leveraging the False Claims Act to Target DEI Programs
DOJ’s New FCA Settlements Underscore Trump Administration’s Focus on Tariff and Customs Compliance
Two recent settlements involving imports from the People’s Republic of China (“PRC”) illustrate the U.S. Department of Justice’s (“DOJ”) commitment to rapidly stepping up enforcement against tariff evasion and customs fraud through the False Claims Act (“FCA”). As we covered here, tariffs have been central to the administration’s trade strategy, and DOJ’s growing use of the FCA as an enforcement tool in this space is expected to drive a significant rise in both whistleblower allegations and recoveries.
(more…)
Jaime L.M. Jones
Chicago
jaime.jones@sidley.com
Lisa H. Miller
Washington, D.C.
lisa.miller@sidley.com
Matt Bergs
Chicago
mbergs@sidley.com
Anna Carney
Washington, D.C.
acarney@sidley.com
District Court Recognizes that Even Minimum FCA Civil Penalties Could Be Unconstitutional Under the Excessive Fines Clause
Recently, the Southern District of New York issued a decision imposing FCA penalties that provides further guidance on the circumstances under which such penalties may violate the Eighth Amendment.
(more…)
Scott D. Stein
Chicago
sstein@sidley.com
Meredith Greene Jalali
Chicago
meredith.jalali@sidley.com
Kennedy Cribbs
Summer Associate
kennedy.cribbs@sidley.com
First Circuit Affirms Dismissal of Qui Tam for Failing But-For Test Linking AKS Violations to FCA Liability
In U.S. ex rel. Flanagan v. Fresenius Med. Care Holdings, Inc., 23-1305 (1st Cir. June 27, 2025), the First Circuit recently affirmed dismissal of an FCA complaint because it failed to adequately plead that alleged kickbacks were the “but for” cause of claims submitted to the government. As we previously reported here, the First Circuit recently joined the growing majority of circuits requiring that for a claim to “result[] from” a kickback under the FCA, the kickback must be the “but-for” cause of the claim. In Flanagan, the First Circuit affirmed dismissal because the relator had not adequately alleged any referrals that would not have been made had the alleged kickback never been paid. (more…)
Scott D. Stein
Chicago
sstein@sidley.com
Joseph R. LoCascio
Chicago
joseph.locascio@sidley.com
Joseph S. Katz
Department of Justice Announces 2025 Inflationary Adjustments to FCA Penalties
The Department of Justice has published the inflationary adjustments to the civil monetary penalties associated with False Claims Act violations. Under the Balanced Budget Act of 2015, annual inflationary adjustments of the penalties is required. Adjustments are to be based on the Bureau of Labor Statistics’ Consumer Price Index. For any False Claims Act violations that occurred after November 2, 2015, but for which penalties are assessed after July 3, 2025, the adjusted penalties will be applied. The minimum False Claims Act penalty now increases from $13,946 to $14,308 per claim, and the maximum penalty increases from $27,894 to $28,619 per claim.
(more…)
Scott D. Stein
Chicago
sstein@sidley.com
Catherine Stewart
Chicago
catherine.stewart@sidley.com
DOJ Announces Reinvigorated False Claims Act Cooperation with the Department of Health and Human Services
On July 2, 2025, the U.S. Department of Justice (“DOJ”) announced the renewal of the DOJ-HHS False Claims Act Working Group, a partnership with the U.S. Department of Health and Human Services (“HHS”) that aims to strengthen use of the FCA to combat healthcare fraud. This is an initiative that was first announced during the first Trump administration, and follows the announcement of significant personnel changes at DOJ, as discussed here.
(more…)
Kristin Graham Koehler
Washington, D.C.
kkoehler@sidley.com
Jaime L.M. Jones
Chicago
jaime.jones@sidley.com
Matt Bergs
Chicago
mbergs@sidley.com
Joseph R. LoCascio
Chicago
joseph.locascio@sidley.com
DOJ Continues to Leverage Polansky in Seeking (c)(2)(A) Dismissals
As discussed here, there is new leadership at DOJ and last week we got insight into when DOJ is moved to exercise its dismissal authority under 31 U.S.C. § 3730(c)(2)(A). In March, DOJ moved to dismiss the relator’s FCA case in United States ex rel. Vermont National Telephone Co. v. Northstar Wireless LLC. The district court referred the motion to a magistrate judge and the magistrate recommended that the district court grant DOJ’s motion. The magistrate’s recommendation was grounded in the Supreme Court’s decision in United States ex rel. Polansky v. Executive Health Resources (previously covered here), which holds that DOJ is entitled to substantial deference in seeking dismissal of qui tam actions when it offers reasonable arguments that the burdens of continued litigation outweigh its benefits. The relator objected to the magistrate’s decision and, on June 25, DOJ filed its response (the “Response”).
(more…)
Jaime L.M. Jones
Chicago
jaime.jones@sidley.com
Matt Bergs
Chicago
mbergs@sidley.com
Major Change at the U.S. Department of Justice Civil Division – Consequences for False Claims Act Enforcement in the Second Trump Administration
This past week saw a major change of the guard at the U.S. Department of Justice – one that may have significant impacts for the Civil Division’s use of the False Claims Act in the second Trump administration.
(more…)
Kristin Graham Koehler
Washington, D.C.
kkoehler@sidley.com
Jaime L.M. Jones
Chicago
jaime.jones@sidley.com
Thomas G. Ward
Washington, D.C.
tgward@sidley.com
DOJ Launches Initiative Leveraging the False Claims Act to Target DEI Programs
In a May 19, 2025 memorandum, Deputy Attorney General Todd Blanche announced the Civil Rights Fraud Initiative, which aims to use the False Claims Act (FCA) to investigate and “pursue claims against any recipient of federal funds that knowingly violates federal civil rights laws” via “racist preferences, mandates, . . . and activities”—including diversity, equity, and inclusion (DEI) programs. (more…)
Kristin Graham Koehler
Washington, D.C.
kkoehler@sidley.com
Jaime L.M. Jones
Chicago
jaime.jones@sidley.com
Lisa H. Miller
Washington, D.C.
lisa.miller@sidley.com
Joseph R. LoCascio
Chicago
joseph.locascio@sidley.com
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