The mention of health care and procurement fraud as chief among the DOJ’s priorities suggests not only that this space will be an area of focus for the criminal Pilot Program, but also that it will continue to remain among the top enforcement priorities on the civil False Claims Act (FCA) side as well. Of course, health care regularly accounts for a disproportionate share of annual FCA recoveries, totaling $1.67 billion in federal government recoveries (58% of the $2.9 billion total recovered) in FY 2024, as Reed Smith covered in an earlier alert this year. Moreover, the DOJ under the new administration has continued to emphasize that health care remains a priority for FCA enforcement (see Reed Smith’s prior coverage of this development). And given that nearly 1,000 new qui tam and over 400 new government-initiated FCA cases were filed in FY 2024, there is no question we can expect a continued emphasis on health care fraud investigations in 2025 and beyond. The announcement of the Pilot Program only further underscores that the government is focusing on not only civil but also criminal enforcement of alleged health care fraud.

We also note that while health care remains the Pilot Program’s #1 focus, the May 12 revisions do include some changes to the Criminal Division’s position on health care fraud. Previous guidance included a “Subject Area” of “any other federal violations involving conduct related to health care not covered by the [FCA].” This has now been removed, perhaps in anticipation of potential constitutional issues with the FCA. In a first-of-its-kind decision on September 30, 2024, in United States ex rel. Zafirov v. Florida Medical Associates, Judge Kathryn Kimball Mizelle of the Middle District of Florida dismissed with prejudice an FCA qui tam case, ruling that the qui tam provisions of the FCA are unconstitutional under Article II. That case is currently on appeal, fully briefed in the Eleventh Circuit, and being closely watched by everyone in the FCA bar. Notably, on May 29, 2025, in United States ex rel. Gose v. Native American Services Corp., Judge Mizelle again ruled that the FCA’s qui tam provisions were unconstitutional.

Further, language limiting the scope to health care fraud involving private or non-public health care benefit programs was removed, likely a nod to the Federal Employee Health Benefit Program (FEHBP), which is a federal program but generally not subject to the federal (and criminally enforceable) Anti-Kickback Statute (AKS). Thus, the DOJ may have made this change to clarify that fraud on the FEHBP may be pursued criminally through the Pilot Program, if not the AKS.

Whistleblower awards

Companies should take heed of the substantial windfall a prospective whistleblower may be eligible for under the Pilot Program – offering a serious incentive for members of an organization to alert the government to perceived corporate misconduct, notwithstanding the risks of coming forward. To the extent a whistleblower qualifies under the Pilot Program, rewards are discretionary and are dependent on successful forfeiture. A successful whistleblower under the Pilot Program stands to potentially recover a bounty within the following ranges:

• No reward for forfeiture of less than $1 million
• Between $1 million – $100 million: up to 30% of the total net proceeds forfeited
• Between $100 million – $500 million: up to 5% of the total net proceeds forfeited
• No additional reward for forfeiture exceeding $500 million

How will these changes impact health care fraud enforcement?

First, it is worth level-setting that the Pilot Program is available only for criminal offenses. However, if a whistleblower is in doubt as to whether they qualify for the Pilot Program as well as some similar incentive program (like the FCA), the DOJ explicitly invites such would-be whistleblowers to submit tips to multiple whistleblower incentive programs and let the government make the appropriate determination. Thus, while parallel civil and criminal investigations of the same conduct have always been possible, companies in this space may expect to see an increase in the number of parallel proceedings because of whistleblowers submitting to multiple avenues simultaneously.

The Pilot Program includes fraud not subject to the FCA and/or AKS, such as fraud against private or commercial health insurance programs and fraud against the FEHBP (which is excluded from the AKS). It is also worth noting that the Pilot Program would cover violations of the Eliminating Kickbacks in Recovery Act of 2018, which apply not only to government programs like Medicare or Medicaid but also to private insurance.

However, certain types of cases are not likely to be good candidates for the Pilot Program. For example, because the standard of proving knowledge required under a civil FCA case is much lower than that in a criminal case, this will serve as a natural limitation on parallel civil and criminal cases. Thus, we may see more submissions to the Pilot Program of cases that are ultimately more suitable for a civil FCA case; the Criminal Division may end up referring cases to Civil Fraud that come in this way. These could also be filed under seal as an FCA complaint by the same whistleblower. Likewise, cases that run afoul of the FCA’s first-to-file or public disclosure bars are probably not good candidates for the Pilot Program, even if they meet the mens rea requirements: The Pilot Program requires that eligible whistleblowers submit information that is original (meaning, the DOJ does not already independently know it) and non-public. While it is theoretically possible that a whistleblower could still provide information that materially adds to the information the DOJ already possesses, this would be a rare situation in practice.

Companies should also be advised that if a whistleblower is faced with choosing between submitting their tip through the Pilot Program versus filing a civil FCA case under seal, the total available award may also be a persuasive factor. There are several scenarios in which the whistleblower’s recovery could be greater under the FCA than under the Pilot Program, possibly driving them to pursue the FCA case – especially since it requires a lower level of proof to prevail. Pilot Program rewards derive from total forfeiture, whereas FCA recoveries are not so limited. Moreover, FCA damages are notoriously punitive – three times the actual damages, plus penalties ranging roughly from $13,000 to $28,000 per claim (as of 2025). If a whistleblower has a case that could be eligible for both the Pilot Program and the FCA and could choose only one, they would generally be better off with the FCA. There, the reward is guaranteed within a discretionary range: up to 30% if the government declines and the whistleblower proceeds to recovery on their own. On the other hand, it bears noting that an FCA case will most likely take longer, requires the whistleblower to retain private counsel (which is permissible but not required under the Pilot Program), and may necessitate more personal effort and sacrifice on the whistleblower’s behalf.

The Pilot Program also reflects an incentive for companies to self-disclose potential criminal violations. Once a potential whistleblower brings their complaint to the company’s attention, a 120-day timer begins running for the target company to self-disclose. By doing so, they may avoid significant liability. Companies should be aware of this 120-day period, considering it begins running on the day the whistleblower makes their internal report. Since it may take some time for this information to be routed to the actors within a company with the power to order a proper investigation, it is critical for internal counsel to be closely involved with and alerted immediately to such complaints, in order to allow them to evaluate the best and most expedient path forward, including potential self-disclosure, to minimize liability for the organization.

Updates to general corporate enforcement and voluntary self-disclosure policy

Alongside the Pilot Program, the DOJ has introduced broader updates to its corporate enforcement and voluntary self-disclosure policies, including:

• Enhanced transparency regarding the benefits available to companies that self-disclose and cooperate
• Clarification of the factors influencing the length and terms of corporate resolutions, with a general expectation that such agreements should not exceed three years except in rare cases
• Ongoing review of existing agreements for potential early termination based on remediation efforts and risk reduction

Conclusion

The DOJ’s new white-collar crime enforcement framework purports to protect U.S. interests while fostering a fair and efficient regulatory environment. By prioritizing high-impact threats, promoting transparency with an emphasis on incentives for whistleblowers, and streamlining enforcement processes, the DOJ seeks to balance the need for robust prosecution with the realities of business innovation and economic growth. It also provides opportunities for companies to take advantage of early self-disclosure opportunities to mitigate exposure. Businesses, particularly those in the health care and life sciences space, should take note of these developments and assess their compliance strategies accordingly, especially regarding their procedures for (1) self-disclosure of corporate misconduct and (2) addressing potential whistleblowers.

In-depth 2025-156