Calling all whistleblowers…
Qui tams also set records in 2025. Relators filed 1,297 new actions last year, up from 980 in 2024. The vast majority of FCA recoveries arose from cases that originated as qui tams – of $6.8 billion total, $5.3 billion was tied to qui tams. This is in line with past years: on average, in the ten years we have published this guide, the percentage of total FCA recoveries attributable to qui tams is around 74 percent. The FCA provides powerful financial incentives for whistleblowers to come forward – in 2025, over $330 million went to relators. And the Administration’s shift in FCA enforcement priorities – from relatively bipartisan areas like health care and defense contracting to politically-charged areas like Diversity, Equity, and Inclusion (DEI) and gender-affirming care – may bring a new swath of ideologically-motivated whistleblowers to the arena.
Indeed, in press releases announcing new initiatives, the DOJ has explicitly encouraged qui tams and solicited whistleblowers in priority enforcement areas. In the press release announcing the Civil Rights Fraud Initiative in May 2025, the DOJ “strongly encourage[d] anyone with knowledge of discrimination by federal funding recipients to consider filing a qui tam action under the [FCA]” and highlighted the potential for “monetary recovery.” The announcement of the DOJ’s gender-affirming care efforts contained a similar call-to-arms: “[The DOJ] is eager to work with qui tam whistleblowers… [The] relator may receive a portion of the government's financial recovery. In 2024 alone, qui tam relators received a $344 million share of victories won by the [DOJ].”
The DOJ has also summoned whistleblowers to support the Administration’s economic policies and enforcement initiatives. The announcement of the Trade Fraud Task Force (Task Force), for instance, requested “referrals and cooperation” from American industry. “Domestic industries are often best placed to spot fraud that threatens our markets and the livelihoods of American workers and their families…[T]he Task Force encourages whistleblowers to utilize the qui tam provisions of the [FCA] to alert the government to credible allegations of fraud.”
High-dollar trial victories for qui tam relators in 2025 are also likely to fuel both new filings and significant legal developments in Courts of Appeal in the year ahead. In March 2025, the court in United States ex rel. Penelow v. Janssen Products, LP (Janssen) assessed $360 million in damages and $1.2 billion in civil penalties following a jury trial – one of the largest FCA verdicts in history.[1] Other large qui tam trial verdicts in 2025 included United States ex rel. Behnke v. CVS Caremark Corp. ($285 million in damages and $4.8 million in civil penalties)[2] and United States ex rel. Bassan v. Omnicare (Bassan) ($400 million in damages and $542 million in civil penalties).[3] Notably, in only one of these three cases – Bassan – had the government intervened. While appeals are pending in all three cases – appeals that we will be watching closely in 2026 – these large verdicts show that, for now, trial courts feel constrained by case law to not stray from the statutory formula when verdicts lead to huge penalties in qui tam litigation, regardless of government intervention. In each of these cases, the trial court considered arguments by the defendant under the Excessive Fines clause of the Eighth Amendment to the Constitution and determined that the assessed penalties were appropriate. Notably, in Bassan, a strict application of statutory penalties would have led to $26.9 billion in per claim fines (which the trial judge said would have “shocked the conscience” under Supreme Court precedent); but the government deployed a time worn tactic, exercising its discretion to mitigate the risk of constitutional infirmity and seek far less.[4] The Bassan trial court found that the $542 million in penalties the government sought survived an excessive fines analysis.
For now, these large verdicts are likely to change the risk/reward calculus for whistleblowers and their contingency-fee attorneys. Under the FCA, a relator is entitled to receive 15 to 25 percent of the proceeds of an FCA case in which the government intervenes, as well as attorneys’ fees; where the relator proceeds without government intervention, that figure increases to 25 to 30 percent. 31 U.S. Code § 3730(d). The allure of big payouts could increase the volume of declined FCA qui tams heading to trial in the coming years.
Because qui tams are sealed and FCA investigations often linger for years, it may take some time before we see how these mounting incentives – both ideological and financial – impact the type and volume of qui tams filed. And as we discuss further below, it remains to be seen how courts will react to the Administration’s new applications of the FCA as these cases progress. But the threat of a new variety of whistleblower – and the protracted investigations and litigation they may initiate – may impact industry behavior long before a judge considers the law.
…But for how long?
The Administration’s whistleblower solicitations may come to naught, however, if appellate courts determine that the FCA’s qui tam provision is unconstitutional. In December 2025, the Eleventh Circuit heard oral argument in United States ex rel. Zafirov v. Florida Medical Associates. The district court in that case, which we discussed in last year’s Guide, dismissed a whistleblower suit after finding that the FCA’s qui tam provision is unconstitutional under the Appointments Clause of Article II of the Constitution. The judge found that the provision was an unconstitutional delegation of the Executive Branch’s power to enforce the laws to relators, who are not properly appointed as officers of the U.S.
While the district court’s opinion is an outlier – all circuits that have considered the issue in the past have found the qui tam provision constitutional – it built upon suggestions made by Supreme Court Justices Thomas, Kavanaugh, and Barrett in concurring opinions the year before. To the defense bar, those concurrences suggest that the high court may have an appetite to curtail at least declined qui tam litigation through the Article II analysis.
The Eleventh Circuit heard argument in Zafirov late in 2025. The argument provided few clues as to how the Eleventh Circuit will decide, or the myriad implications an affirmance could have for qui tam enforcement, but the panel’s questions made clear that they are taking those issues seriously. Defendants in the Janssen case, discussed above, mounted a similar challenge to the constitutionality of qui tams before the Third Circuit. And at least two judges in the Fifth Circuit have clearly stated their view that its precedent upholding the constitutionality of qui tam needs to be revisited.[5] With multiple constituencies seeking to influence these decisions as amicus, the one thing that is clear at this point is that three Justices will be invited to take the issue up in 2026.
New priorities, same law
With the Administration’s FCA enforcement priorities largely established, as we move into 2026, we turn our focus to how the courts will evaluate the DOJ’s novel applications of the law in light of existing FCA jurisprudence. And where questions about the qui tam provision may dictate how FCA cases will be initiated in the years ahead, questions about “materiality” seem poised to dictate how these cases will resolve.
False certifications – whether express or implied – increasingly form the basis for the government’s theory of liability in FCA cases, and that upward trend is set to continue. As consensus grows around the “but-for” standard in FCA actions that rely on the Anti-Kickback Statute, for instance, the DOJ has begun to pivot to a false certification theory in those health care cases. In the cybersecurity context, the roll out of the Cybersecurity Maturity Model Certification (CMMC) will require periodic express certification of compliance with certain cybersecurity standards – which, if false, could occasion an FCA case.
And as the DOJ begins to pursue new enforcement priorities, these cases, too, will rely heavily on false certification allegations to advance the Administration’s policy objectives. Executive Order 14173 instructs government agencies to require contractors to certify that they do not operate DEI programs that violate federal anti-discrimination law. And, most recently, the Department of Health and Human Services released a new proposed rule that would make it a “condition of participation” that hospitals receiving federal funds refuse to provide gender affirming care to minors. In both instances, an express or implied certification of compliance with the government’s conditions could bring the DOJ calling.
But as these cases proceed through the courts, a key question – particularly in cases involving new enforcement priorities – will be whether or not an allegedly false statement was “material” to the government’s decision to play the claim. The Supreme Court set forth a demanding standard for materiality in FCA cases in Universal Health Servs., Inc. v. United States ex rel. Escobar – and case law concerning the application of that standard has been covered in this Guide throughout the last decade.[6] The Escobar court held that the government’s designation of a regulation or contract provision as a “condition of payment” is relevant, but not dispositive, on the question of whether that provision is material. The DOJ must establish, the Court found, that any false statement would impact the government’s decision to pay – and that the defendant knew it would impact the government’s decision.
In 2025, the Supreme Court again spoke to the rigors of the materiality standard in Kousisis, et al. v. United States (Kousisis).[7] Although Kousisis considered materiality under the wire fraud statue, similar principles apply under the FCA. Referring to Escobar, in his concurrence, Justice Thomas emphasized that in order to be material, a false statement must “go to the essence of the parties’ bargain” and that the materiality inquiry “turns on substance rather than labels.”
This demanding standard could make false certification cases – particularly those relying on regulations or provisions of government contracts that have not previously impacted the government’s payment decisions – challenging to prove. In court, the government may struggle to prove that contract provisions dealing with DEI or cybersecurity go to the “essence” of a contract to, for example, provide office supplies to the Department of Agriculture.
In the DEI context, the government took steps to shore up a materiality argument in future contracts by requiring government contractors to affirm the materiality of DEI-related compliance to the government’s decision to pay. But as Justice Thomas averred most recently in Kousisis, the materiality “label” is not dispositive. Courts will look to the actual impact a violation would have on the government’s decision to pay.
As the Administration’s new priorities make their way to court, we will be looking to see how judges assess the materiality in the context of these novel applications of the FCA.
Final thoughts
As we said in our first edition of the Guide, “With every new administration, we face uncertainty,” and that was perhaps never truer than it was in 2025. But as the dust settles on the first year of President Trump’s second term, we begin to see a picture of what FCA enforcement will look like going forward – and can prepare accordingly. The Hogan Lovells FCA team stands ready to help companies understand the FCA landscape and navigate the road ahead.
***This content was published on Tuesday, February 10, 2026, and reflects developments up to that date. As information may change over time, we recommend reaching out to your Hogan Lovells contacts or visiting Our thinking for the latest updates.
References
[1] 2025 WL 937504 (D.N.J. Mar. 28, 2025). Janssen has appealed the judgement. DOJ intervened in the appeal to respond to Janssen’s constitutional challenges. Notably, DOJ also acknowledged as amicus curiae, however, that the District Court erred in instructing the jury on the element of falsity.
[2] 798 F. Supp. 3d 515 (E.D. Pa. 2025).
[3] 2025 WL 2388288 (S.D.N.Y. Aug. 18, 2025).
[4] See e.g., United States v. Mackby, 339 F.3d 1013 (9th Cir. 2003) (government sought penalties on only 111 of 8499 claims jury found defendant submitted to Medicare).
[5] See United States ex rel. Gentry v. Encompass Health Rehabilitation Hosp. of Pearland, LLC, 157 F.4th 758, 766 (5th Cir. 2025) (Ho, J., concurring); United States ex rel. Montcrief v. Peripheral Vascular Associates, P.A., 133 F.4th 395, 410 (5th Cir. 2025) (Duncan, J., concurring).
[6] 136 S. Ct. 1989.
[7] 605 U.S. 114 (2025).