On Wednesday, May 27, 2026, the Department of Justice (“DOJ”) issued the following press release:

Today, the Civil Division announced reforms to accelerate the review of False Claims Act whistleblower complaints alleging fraud against federally funded, state-administered benefits programs. These reforms will empower the Department to move quickly on meritorious qui tam cases, maximize finite enforcement resources, and focus on dismantling sophisticated fraud schemes that exploit taxpayer-funded programs.

The False Claims Act (FCA) is one of the government’s most powerful weapons for fighting fraud and protecting taxpayer dollars. Most FCA cases begin as qui tam actions filed under seal by whistleblowers, known as relators, in federal district court. Successful relators may receive a significant share of the government’s recovery. The Civil Division will now prioritize qui tam complaints alleging fraud against public benefits programs by performing its initial review within 60 to 120 days. At the conclusion of that review, the Department will decide whether to:

1. Permit the relator to proceed with the action and to assume primary responsibility for litigating it, subject to the government’s ongoing supervision and ultimate control of the matter;
2. Conclude the allegations warrant further government investigation; or,
3. Determine the qui tam should be dismissed under 31 U.S.C. §3730(c)(2)(A) because the allegations lack adequate specificity or are legally deficient.

“Bad actors who exploit federal benefits programs count on fragmented information and sheer volume of claims to try and avoid scrutiny,” said Assistant Attorney General Brett A. Shumate of the Justice Department’s Civil Division. “By accelerating review of qui tam complaints alleging benefits fraud, we can more rapidly identify and disrupt emerging schemes, strategically deploy enforcement resources to recover taxpayer money, and strengthen the government’s broader fight against fraud.”

This year, the Administration launched the Task Force to Eliminate Fraud and the National Fraud Enforcement Division to enhance the Administration’s war on fraud, waste, and abuse in federal programs. When unscrupulous actors exploit these programs for their own financial gain, they defraud the government, harm the people these programs are designed to aid and protect, and undermine American businesses that play by the rules. Every dollar lost to fraud in federal benefits programs is a dollar diverted from the Americans those programs are intended to serve.

The Civil Division’s FCA enforcement plays a critical role in combatting such fraudulent schemes, recovering billions of dollars for American taxpayers, and holding wrongdoers accountable. As detailed in the Executive Order entitled “Establishing the Task Force to Eliminate Fraud” (March 16, 2026) (EO on Eliminating Fraud), American taxpayers fund a vast benefits system for citizens in need that includes housing, food, medical care, cash assistance, and more. FCA matters will continue to be on the forefront of the battle against fraud, and the Civil Division’s FCA work will support and advance the mission of the Task Force to Eliminate Fraud and the National Fraud Enforcement Division.

The Department will also leverage a whole-of-government approach to ensure that new benefits fraud matters receive accelerated review and evaluation for all available enforcement options. New matters will be promptly referred to the Criminal Division and/or the National Fraud Enforcement Division for evaluation of potential criminal violations. In addition, new matters will be shared with the affected agency to evaluate potential administrative action, including payment suspension. Throughout its review, the Department also will seek information from the agency about the operation of the impacted program, data analysis, and other information to assist in corroborating the whistleblower’s allegations. The Civil Division will continue to assess how it can enhance processes and procedures to support prompt resolution of benefits fraud qui tams.

The DOJ’s goal of fast tracking its review of whistleblower (qui tam) lawsuits is consistent with other actions taken by the Trump II Administration. As mentioned in the press release, and as discussed in prior Medtrade Monday articles, the administration has created the (i) Task Force to Eliminate Fraud and (ii) National Fraud Enforcement Division. On multiple occasions, the administration has stressed that combating health care fraud is a top priority.

Important takeaways for DME suppliers are:

• The government does not have the resources to look for much of the fraud that exists in the healthcare space. Therefore, it outsources much of the initial fraud investigations to the private sector…in the form of whistleblower lawsuits.
• The vast majority of civil investigations by the DOJ are triggered by whistleblower lawsuits. And many DOJ criminal investigations arise out of whistleblower lawsuits.
• Most whistleblowers are current/former employees of the health care provider. In many instances, an employee will determine that his/her employer is engaging in fraudulent activities and the employee will bring the matter to his/her supervisor. If the employer ignores the employee’s concern or tells the employee “to mind your own business,” the employee may decide to hire an attorney who specializes in representing whistleblowers.
• If the whistleblower attorney decides to represent the employee, the attorney will tell the employee to continue to gather information.
• If the attorney believes that he/she has sufficient information, the attorney will file a lawsuit in federal court. The plaintiffs will be the employee and the United States.
• The lawsuit will “go under seal,” meaning that only the government is aware of the lawsuit. The lawsuit will be assigned to a civil Assistant U.S. Attorney (“AUSA”) who will oversee an investigation of the allegations set out in the lawsuit. Historically, such investigations will take 6 to 24 months.
• Once the investigation is completed, the DOJ will decide whether to “intervene.” This means that the DOJ will assume responsibility for the lawsuit and the whistleblower attorney will sit on the sidelines. If the DOJ does not intervene, the whistleblower and his/her attorney may be able to proceed with the lawsuit on their own. It is at this approximate time that the whistleblower lawsuit is “unsealed” and served on the employer.
• If during its investigation the civil AUSA feels like the health care provider’s actions are particularly egregious, the civil AUSA will hand its file to a criminal AUSA. If the criminal AUSA believes that a crime has been committed, the DOJ will open up a criminal investigation. This places the health care provider in the unenviable position of having to defend both the whistleblower lawsuit and the criminal investigation.
• Whistleblower lawsuits are based on the False Claims Act (“FCA”). The FCA mandates fines and penalties that are usually far in excess of what a health care provider can pay. For this reason, the vast majority of whistleblower lawsuits are settled. The whistleblower will receive about 20% of the settlement proceeds and the remainder will go to the government. The whistleblower attorney will either be paid (i) from the settlement to the relator or (ii) separately by the provider.
• Over the last 10 years, there has been a proliferation of whistleblower lawsuits that are overwhelming the DOJ. This increase in whistleblower lawsuits is a byproduct of (i) the awareness by employees of the existence of such lawsuits and (ii) the increase in the number of attorneys who specialize in filing whistleblower lawsuits. In order to reduce the number of baseless whistleblower lawsuits, as described in the press release, the DOJ will dismiss lawsuits if “the allegations lack adequate specificity or are legally deficient.”

There are a number of steps a DME supplier can take to reduce the risk of being targeted with a whistleblower lawsuit:

• The supplier should understand that most of its employees did not take the job with the intention of becoming a whistleblower. If an employee sees something he/she believes is wrong, the employee normally wants his/her concerns to be taken seriously. The DME supplier should investigate the employee’s concerns and report back to him/her. It is usually when an employee is ignored (or worse, is the subject of retribution) that the employee consults with a whistleblower attorney.
• The DME supplier needs to have a functioning corporate compliance program in place. This entails consistent training of employees regarding compliance issues. This also entails appointing a compliance officer and setting up a confidential hotline for employees to reach out to the compliance officer with concerns.
• Lastly, when an employee brings a concern to company management, the DME supplier needs to (i) take the employee’s concerns seriously and investigate them, (ii) express appreciation to the employee, and (iii) report back to the employee.

Jeffrey S. Baird, JD, is chairman of the Health Care Group at Brown & Fortunato, PC, a law firm based in Texas with a national healthcare practice. He represents pharmacies, infusion companies, HME companies, manufacturers, and other healthcare providers throughout the United States. Mr. Baird is Board Certified in Health Law by the Texas Board of Legal Specialization and can be reached at (806) 345-6320 or [email protected].

AAHOMECARE’S EDUCATIONAL WEBINAR

Asset vs. Stock Purchase of a DME Supplier 

Presented by: Jeffrey S. Baird, Esq., Brown & Fortunato & Jason M. Temple, Esq., Brown & Fortunato

 Tuesday, June 2, 2026

1:30-2:30 p.m. CENTRAL TIME
It is common in the DME industry for DME suppliers to be purchased…and sold. This program will discuss the steps to be taken to successfully purchase and sell a DME supplier. In particular, the program will discuss the difference between an asset purchase and a stock purchase…including dispelling common misperceptions such as “the purchaser of the stock of a DME supplier assumes the liabilities of the supplier.” Whether a transaction is an asset or stock purchase is particularly relevant in light of (i) the 36-month rule addressing change in majority ownership and (ii) the moratorium against the issuance of new PTANs. In addition, the program will discuss the mechanics of achieving a successful sale or purchase, including (i) execution of a Mutual Nondisclosure Agreement, (ii) transmittal of financials from the seller to the buyer, (iii) execution of a letter of intent, (iv) conduct by the buyer of “due diligence,” (v) negotiation and execution of the Asset Purchase Agreement/Stock Purchase Agreement and related closing documents, and (vi) providing notification to government agencies, third-party payors, and others.

Register for Asset vs. Stock Purchase of a DME Supplier on Tuesday, June 2, 2026, 1:30-2:30 p.m. CT, with Jeffrey S. Baird, Esq. and Jason M. Temple, Esq., of Brown & Fortunato.