DOJ’s Increased Focus on Medicaid Fraud Raises False Claims Act Risk

Over the past six months, the Trump Administration has placed significant emphasis on combatting “waste, fraud, and abuse” in federally funded, state-administered benefits programs. The Medicaid program occupies center stage in those efforts. Among other things, the Trump Administration has released provider-level Medicaid spending data for the first time, restructured and reformed U.S. Department of Justice (DOJ) processes for fraud enforcement, and placed pressure on state regulators to ramp up their anti-fraud efforts.

Providers, Medicaid managed care organizations, and other Medicaid fund recipients now operate under heightened scrutiny from federal and state regulators. These developments, as we explain below, create an increased risk of False Claims Act (FCA) actions by both the government and private qui tam relators.

The False Claims Act and the Medicaid Program

The FCA is the federal government’s primary civil fraud statute for recovering losses tied to allegedly false claims submitted to the government. In broad terms, the FCA prohibits knowingly submitting false claims for payment or improperly retaining obligations, including identified overpayments, from the government. The statute carries substantial consequences, including treble damages and per-claim civil penalties.

The FCA also allows private individuals, known as relators, to bring qui tam suits on the government’s behalf and share in any recovery. That means FCA exposure can arise not only from a government-initiated investigation, but also from insiders, data miners, and others who believe they have detected fraud. In addition to the federal FCA, most states have their own false claims statutes that apply to the Medicaid program. These statutes, like the federal FCA, tend to authorize relators to file suit on behalf of the state.

The FCA can apply broadly to any program that receives federal funds, including state-administered programs like Medicaid. FCA enforcement involving Medicaid is not new. FCA enforcement has long focused on federally funded health care programs, including Medicaid along with Medicare and TRICARE.[1] Common theories for enforcement have included alleged billing for services not rendered, medically unnecessary services, unsupported coding, false certifications of compliance with regulatory requirements, or failure to return overpayments. Often cases have involved allegations that a provider submitted false claims to all three of those programs, with Medicaid being just one of the affected payors.

Those traditional health care fraud cases will continue, and we expect increased focus on programs unique to states’ Medicaid programs. Medicaid programs are funded jointly by states and the federal government, with the federal share varying by state and services offered. The Medicaid statute mandates that states provide certain services and also allows states to provide additional, optional benefits that are matched with federal funds. Common optional services include pharmacy, hospice, and physical therapy. These programs, along with other state-administered federal benefits programs, are coming under particular scrutiny.

Recent Developments Place Increased Scrutiny on Medicaid Program Participants

Over the last six months, the Trump Administration has announced multiple initiatives that raise the FCA risk profile of companies that submit claims to the Medicaid program:

• Release of Medicaid Provider Data: In February 2026, for the first time, the U.S. Department of Health and Human Services (HHS) released “provider-level Medicaid spending data” covering “fee-for-service, managed care, and Children’s Health Insurance Program (CHIP) claims from 2018-2024.”[2] HHS and the Department of Government Efficiency (DOGE) released the data to support public review of Medicaid spending patterns and program integrity efforts. [3]
• Significant Deferrals of Federal Funding Claimed by States: In February 2026, the Centers for Medicare & Medicaid Services (CMS) deferred over $250 million of Minnesota’s quarterly federal Medicaid funding related to concerns about specific services and individuals lacking satisfactory immigration status, and threatened to defer more than $1 billion more if Minnesota did not improve its program integrity.[4] In May 2026, CMS deferred more than $1.1 billion of California’s quarterly federal Medicaid funding based on estimates of questionable claims and program integrity risks. [5]
• Executive Order and Task Force to Eliminate Fraud: In March 2026, by executive order, the White House established the Task Force to Eliminate Fraud.[6] This “whole-of-government” task force focuses on waste, fraud, and abuse in federal benefits programs, including Medicaid. The executive order instructs agencies to examine whether to withhold federal funds from jurisdictions with inadequate anti-fraud requirements. It also instructs the Attorney General to promote meritorious FCA actions involving federal benefits fraud.

• DOJ National Fraud Enforcement Division: In April 2026, DOJ created a new National Fraud Enforcement Division. This new Division consolidates operational control over several existing units within DOJ, including the Health Care Fraud Unit. DOJ announced that the National Fraud Enforcement Division will expand “into a robust litigating division capable of reaching any fraud.”[7] DOJ’s Civil Division remains responsible for FCA enforcement, but the restructuring reflects the Administration’s prioritization of fraud involving taxpayer-funded programs.
• Pressure on State Medicaid Fraud Control Units: In late April and May 2026, CMS and the HHS Office of Inspector General (HHS-OIG) placed increased pressure on state regulators to scrutinize Medicaid funding recipients. HHS requested that all 50 states conduct a “swift revalidation of Medicaid providers of services at high risk of waste, fraud, abuse, and corruption as part of [their] program integrity obligations under federal law.”[8] In another set of letters, HHS-OIG announced its plans to “engage in a robust review” of state Medicaid Fraud Control Units (MFCUs).[9] The letters describe MFCUs as “a critical component of Medicaid fraud prevention” and threaten corrective action plans, loss of funding, or decertification for MFCUs that do not meet statutory requirements.[10] On June 4, 2026, HHS-OIG announced it would decertify Hawaii’s MFCU due to a lack of prosecutions.[11]
• DOJ Strike Force Focus on Medicaid: In late May 2026, DOJ announced the expansion of the Health Care Fraud Midwest Strike Force and the hiring of 15 additional prosecutors dedicated to combatting Medicaid fraud nationwide.[12] DOJ has used strike forces to focus on health care fraud in certain regions for years, but this is the first time DOJ has deployed a group specifically to focus on Medicaid fraud.
• Expedited Review of Public Benefits Fraud Qui Tam Suits: Also in late May 2026, DOJ announced reforms to its review of FCA complaints by relators to prioritize “qui tam complaints alleging fraud against public benefits programs.”[13] DOJ will now conduct “its initial review within 60 to 120 days” to determine whether to permit the relator to move forward with the action, decide to conduct additional investigation, or dismiss the relator’s action as deficient.[14]

Key Takeaways

These developments pose heightened risk of FCA enforcement for providers, Medicaid managed care organizations, and other companies that participate in Medicaid programs. These companies should take several steps to reduce risks.

• Know Your Own Data: DOJ is prioritizing data analytics more than ever. And because qui tam actions can be lucrative, private parties have a strong financial incentive to analyze the claims data for outlier billing patterns. Providers with billing patterns outside of the norm or raising red flags, such as rapid billing growth, per-claim averages far exceeding norms, and concentrated beneficiary payments, should expect increased scrutiny from regulators and relators alike. An effective compliance program should proactively engage in analysis of one’s own data to detect and investigate those red flags.  Public access to provider-level data (as discussed above) will facilitate data-driven assessments by providers and relators.    

• Address Internal Complaints Effectively: Even with the increase in data-driven relators, many qui tam suits continue to be filed by insiders. And in our experience, most relators first raise concerns within their organization before considering filing a suit. More than ever, companies that participate in Medicaid programs should have effective tools to receive, investigate, and remediate internal complaints as part of their compliance programs. Being responsive to employees who raise concerns goes a long way towards avoiding a qui tam suit.

• Improve Responses to Third-Party Audits and State Enforcement Efforts: The Trump Administration’s initiatives will likely lead to increased third-party audits contracted by Medicaid programs and state regulators. In addition, HHS and CMS’s scrutiny of state regulators and MFCUs may prompt them to become more aggressive. These efforts, in turn, increase the risks of referrals for FCA enforcement. Companies should ensure they have robust mechanisms to respond to these audits effectively and proactively explain issues that could appear serious enough to warrant referral for FCA enforcement. 

• Understand Your State’s Medicaid Program: Medicaid compliance is state-specific: the program’s rules and documentation standards vary by state and frequently differ from Medicare or other federal health care programs. Companies should ensure they know and follow the Medicaid requirements in the states where they operate. When there is an FCA action, it is critical to ensure the company is being held to the right standard and not inappropriately penalized based on authorities or guidance applicable only to other federal health care programs, such as Medicare.

Conclusion

The Trump Administration’s recent initiatives to combat waste, fraud, and abuse have increased scrutiny of the Medicaid program and created a heightened risk environment for participants.  Providers, Medicaid managed care organizations, and other Medicaid fund recipients should expect greater attention from federal and state regulators, as well as from relators pursuing FCA claims. Taking proactive steps now—including the measures identified above—can help organizations prepare to avoid and meet these challenges.

We will continue to monitor developments in this area. Please do not hesitate to reach out to your Foley relationship partner or to our Government Enforcement Defense & Investigations and Health Care teams with any questions about how these enforcement trends may affect your organization.

[1] Off. of Pub. Affs., U.S. Dep’t of Just., Fact Sheet – False Claims Act Settlements and Judgments FY 2025 (2026), https://www.justice.gov/opa/media/1424126/dl.
[2] U.S. Dep’t of Health & Hum. Servs., Medicaid Provider Spending by HCPCS, HHS Open Data (Feb. 9, 2026), https://opendata.hhs.gov/datasets/medicaid-provider-spending/.
[3] DOGE HHS (@DOGE_HHS), X (Feb. 13, 2026 at 18:02 CT), https://x.com/DOGE_HHS/status/2022370909211021376.
[4] Ctrs. for Medicare & Medicaid Servs., Trump Administration Prioritizes Affordability by Announcing Major Crackdown on Health Care Fraud, CMS Newsroom (Feb. 25, 2026), https://www.cms.gov/newsroom/press-releases/trump-administration-prioritizes-affordability-announcing-major-crackdown-health-care-fraud.
[5] Letter from [redacted], Ctrs. for Medicare & Medicaid Servs., to Tyler Sadwith, State Medicaid Dir., (May 13, 2026), https://www.cms.gov/files/document/deferral-letter-ca-q1-2026.pdf.
[6] Exec. Order No. 14396, 91 Fed. Reg. 13485 (Mar. 16, 2026). https://www.whitehouse.gov/presidential-actions/2026/03/establishing-the-task-force-to-eliminate-fraud/.
[7] Memorandum from Todd Blanche, Acting Att’y Gen., Creation of the National Fraud Enforcement Division (Apr. 7, 2026), https://www.justice.gov/ag/media/1435311/dl?inline.
[8] Letter from Dr. Mehmet Oz, Ctrs. for Medicare & Medicaid Servs., to the Honorable Kay Ivey, Governor of the State of Ala. (Apr. 23, 2026), https://shorturl.at/G0P2F.
[9] Letter from T. March Bell, Inspector Gen., Off. of Inspector Gen., to Rob Bonta, Att’y Gen., Cal. Dep’t of Just. Off. of the Att’y Gen., (Apr. 23, 2026), https://ccf.georgetown.edu/wp-content/uploads/2026/05/HHS-OIG-letter-to-Attorney-General-of-California-re-MFCU-Oversight-1.pdf.
[10] Id. at 2.
[11] Letter from T. March Bell, Inspector Gen., Off. of Inspector Gen., to Anne Lopez, Att’y Gen., Haw. Dep’t of the Att’y Gen., and Landon Murata, Dir. of Medicare Fraud Control Unit, Haw. Dep’t of the Att’y Gen., (Jun. 4, 2026), https://oig.hhs.gov/documents/medicaid-fraud-control-units/11679/Hawaii_Denial_of_Recertification_Letter.pdf.
[12] Press Release, Off. of Pub. Affs., U.S. Dep’t of Just., This Week in Fraud: The Fraud Division Announced Expansion of Midwest Task Force and Authorization to Hire 15 New Medicaid Prosecutors, an Unprecedented Minnesota Health Care Fraud Takedown, and a $2 Billion Telemedicine Health Care Fraud Scheme (May 22, 2026), https://www.justice.gov/opa/pr/week-fraud-fraud-division-announced-expansion-midwest-task-force-and-authorization-hire-15.
[13] Press Release, Off. of Pub. Affs., U.S. Dep’t of Just., Civil Division Moves to Fast-Track Benefits Fraud Enforcement (May 27, 2026), https://www.justice.gov/opa/pr/civil-division-moves-fast-track-benefits-fraud-enforcement.
[14] Id.