False Claims Act Working Group: Compliance Risks Ahead

By Katy Herman

On July 2, 2025, the U.S. Department of Justice (DOJ) and the Department of Health and Human Services (HHS) announced the formation of a new False Claims Act (FCA) Working Group. The initiative is designed to strengthen interagency collaboration and intensify enforcement against fraud, abuse, and improper billing practices in the healthcare system.

The Working Group will be jointly led by senior DOJ and HHS officials, with participation from CMS, HHS–OIG, and U.S. Attorneys’ Offices. Enforcement priorities include Medicare Advantage fraud, improper pricing and discount practices, kickbacks tied to drugs and devices, and manipulation of electronic health records.

Why It Matters

The FCA (31 U.S.C. § § 3729-3733) imposes liability when an individual or company knowingly submits, or causes others to submit, false or fraudulent claims for payment to the federal government. Each violation can result in treble damages and substantial per-claim penalties, making the FCA one of the government’s most powerful enforcement tools.

The federal Anti-Kickback Statute (AKS), 42 U.S.C. § 1320a-7b(b), prohibits offering, paying, soliciting, or receiving any remuneration, directly or indirectly, to induce or reward the referral of items or services reimbursable by a federal healthcare program. Even well-intentioned arrangements involving discounts, rebates, or consulting fees can violate the AKS if any purpose is to generate business paid for by Medicare or Medicaid.

Importantly, violations of the AKS can serve as a predicate for FCA liability, because claims for payment tainted by kickbacks are deemed “false” under the FCA. Together, the AKS and FCA enable the DOJ and HHS to pursue both the underlying remuneration arrangement and the resulting claims for payment, dramatically increasing the potential financial exposure for manufacturers and reinforcing the need to structure all financial relationships in accordance with applicable safe harbors and fair market value principles.

For pharmaceutical, medical device, and biotechnology manufacturers, this initiative underscores increased scrutiny of pricing, discounting, and contracting strategies. Rebates, risk-share programs, bundled discounts, and other value-based arrangements remain common, but if structured improperly, they may be construed as unlawful inducements or lead to inaccurate government price reporting.

Key Enforcement Priorities

The DOJ–HHS Working Group is expected to focus on:

• Improper Pricing and Discounts: Rebates, risk-share arrangements, and bundled pricing models will be evaluated for compliance with federal reporting obligations.
• Kickback Risks: Consulting fees, grants, discounts or other financial arrangements with healthcare providers or institutions will be scrutinized for potential inducements.
• Data Transparency: Incomplete or inaccurate disclosures of pricing concessions to CMS, state Medicaid programs, or commercial payors may trigger FCA exposure.

The Working Group will leverage HHS data analytics and OIG report findings to identify potential fraud or abuse. The group will also evaluate whether to recommend HHS payment suspensions under 42 C.F.R. § 405.370 et seq. or DOJ dismissals of qui tam cases under 31 U.S.C. § 3730(c)(2)(A), consistent with the Justice Manual § 4-4.111.

Compliance Considerations

To mitigate FCA and Anti-Kickback Statute (AKS) risk, companies should:

• Document discount terms and methodologies in writing and disclose them appropriately to payors.
• Avoid tying financial arrangements to the volume or value of referrals.
• Assess whether rebates, credits, or bundled discounts fall within AKS safe harbors.
• Implement robust compliance review of pricing, contracting, and healthcare provider engagement strategies.

How Gardner Law Can Help

The DOJ–HHS announcement is a clear signal for manufacturers to reassess their existing pricing, discount, and contracting practices. Proactive compliance reviews, supported by legal and economic analysis, will be critical to demonstrate good faith and reduce enforcement exposure.

“FCA enforcement is no longer focused only on obvious fraud. Sophisticated contracting and pricing strategies, if not backed by strong documentation and safe harbor alignment, are exactly the types of arrangements the DOJ–HHS Working Group will be evaluating.”
Katy Herman, Associate Attorney, Gardner Law

Gardner Law supports clients in FCA, AKS, and government pricing compliance, from structuring rebate programs to developing defensible documentation and compliance frameworks. With DOJ and HHS intensifying their partnership, now is the time to ensure your pricing and contracting practices withstand scrutiny. Contact Gardner Law to get started.