False Claims Act Expansion: Is Your Business at Risk in 2026?

The Short Version

The False Claims Act (FCA) is no longer just a healthcare and defense contracting statute. In 2026, the federal government is using it to police cybersecurity certifications, diversity programs, customs fraud, pandemic-era loans, and a growing list of compliance areas that most business owners never expected to land on a Department of Justice priority list. The Department of Justice just posted its largest annual FCA recovery in history, the Small Business Administration expanded its administrative FCA authority, and constitutional challenges to the qui tam mechanism are heading to the U.S. Supreme Court.

If your business touches federal or Florida state dollars in any way, the answer to the question in the title is: yes, your exposure has grown. Here is what changed, why it matters, and where to focus your compliance attention.

Why the FCA Suddenly Reaches Further Than Before

The federal False Claims Act, 31 U.S.C. § 3729 et seq., imposes treble damages and per-claim civil penalties on anyone who knowingly submits a false claim for payment to the federal government, or knowingly avoids an obligation to pay the government back. Florida has its own parallel statute, the Florida False Claims Act, which mirrors federal law and lets whistleblowers sue on behalf of the State.

The statute has always carried significant penalties. What is different in 2026 is the breadth of conduct the government is treating as a “false claim.” Three forces are driving the expansion:

1. Record enforcement budget and political will. The Department of Justice recovered more than $6.8 billion in FCA settlements and judgments in fiscal year 2025, the highest annual total in the statute’s history. Whistleblowers filed 1,297 new qui tam actions, also a record.

2. New enforcement initiatives. DOJ has formally launched a Civil Rights Fraud Initiative and continues to push aggressively under the Civil Cyber-Fraud Initiative.

3. Rulemaking expansions. The SBA’s amended Administrative FCA rule, effective May 4, 2026, broadens jurisdictional thresholds and codifies reverse false claims liability.

Combined, these forces have moved the FCA from a back-of-the-mind concern for compliance officers to a front-of-the-mind concern for any business that interacts with government dollars. Many of those businesses are not what people picture when they hear “government contractor.” We cover the broader landscape on our Government Entities industry page.

Five Expansion Areas Every Business Should Understand

1. Cybersecurity Certifications

If your business has ever signed a federal contract promising compliance with NIST, FedRAMP, CMMC, or any other cybersecurity standard, you are now in the FCA crosshairs. Under the Civil Cyber-Fraud Initiative, DOJ recovered more than $52 million in cybersecurity-related FCA matters in 2025, more than triple the prior two years combined. Settlements have hit health benefits administrators, genomics companies, and IT contractors.

The theory is straightforward. If you certified that your systems met a specific cybersecurity standard and they did not, every invoice you submitted under that contract is potentially a false claim. We help clients navigate this exposure through our cybersecurity compliance practice for government contractors and our data breach compliance and security assessment services.

2. Diversity, Equity, and Inclusion Programs

This is the newest, and arguably the most surprising, FCA frontier. On April 10, 2026, IBM became the first company to settle an FCA case under the Civil Rights Fraud Initiative, agreeing to pay $17 million to resolve allegations that its DEI programs amounted to illegal discrimination in violation of certifications made under its federal contracts.

The legal hook is Executive Order 14173, which requires federal contractors to certify they do not operate DEI programs that violate antidiscrimination laws. A subsequent March 2026 Executive Order ties noncompliance to FCA liability explicitly.

For Florida businesses, this means HR practices, supplier diversity programs, hiring goals, and training content can become FCA evidence. Companies with federal contracts or grants should be reviewing program language with both employment counsel and litigation counsel, an area where our business litigation team regularly collaborates with our employment law group.

3. PPP, EIDL, and Pandemic-Era Lending

DOJ has signaled that PPP and EIDL enforcement continues to be a 2026 priority. With the SBA’s expanded administrative FCA authority taking effect in May 2026, smaller pandemic-loan recoveries that previously fell below the litigation threshold can now be pursued administratively, faster and with less procedural friction. Borrowers who certified employee counts, payroll figures, or affiliation rules incorrectly are at heightened risk.

4. Customs and Trade Fraud

Reverse false claims cover situations where a company avoids paying money it owes the government, such as underpaid customs duties. With tariff levels shifting and country-of-origin and anti-dumping enforcement intensifying, importers face new exposure when shipping documents misstate origin, classification, or value.

5. Healthcare Coding and Billing

Healthcare remains the largest category by dollars. Of the $6.8 billion in FY 2025 recoveries, over $5.7 billion involved healthcare, and DOJ logged a record 183 new government-initiated healthcare matters. Medicare Advantage diagnosis coding, telehealth billing, and kickback theories continue to dominate. Our healthcare industry team tracks these enforcement trends closely.

The Constitutional Wildcard

While the government is expanding enforcement, the FCA itself is under attack in the appellate courts. In September 2024, a federal district court in the Middle District of Florida held in United States ex rel. Zafirov v. Florida Medical Associates, LLC that the qui tam provisions are unconstitutional under Article II. The Eleventh Circuit heard oral argument on December 12, 2025. The Third Circuit heard a similar argument on March 18, 2026. Three Supreme Court Justices have already signaled interest in the question.

If the Supreme Court ultimately invalidates qui tam, the volume of FCA litigation could drop substantially because relator-driven cases account for the majority of new filings. But that is a wildcard, not a plan. Until the issue is resolved, every defendant facing a qui tam suit should be preserving the constitutional defense, and every potential defendant should assume current enforcement levels continue.

Florida-Specific Considerations

The Florida False Claims Act authorizes treble damages and per-claim penalties of $5,500 to $11,000, matching the federal structure. Florida cases must be filed under seal in the Second Judicial Circuit in Leon County. For Florida companies that contract with state agencies, school districts, water management districts, or any entity that disburses state funds, the FCA exposure runs in parallel with federal exposure.

State and local subcontractors that receive federal pass-through funds should also remember that the federal FCA reaches them too. Our team regularly advises clients across the construction industry, banking and financial services, and other sectors where state and federal dollars commingle.

A Practical Compliance Checklist for 2026

If your business has any government contract, grant, loan, or reimbursement exposure, prioritize these six steps:

✅ 1. Audit Your Certifications

Pull every active contract and identify every representation you have made about compliance with a specific regulation, standard, or law. Cybersecurity, civil rights, small business status, country of origin, and labor classifications are the most common pressure points. Our federal, state, and local government contracts team can help.

✅ 2. Update Your Internal Reporting Channels

Whistleblowers who report internally before going to the government often do not file qui tam complaints. A real, trusted internal reporting channel is your single best tool for catching problems before they become FCA matters. Our whistleblower claims and retaliation prevention practice helps clients build and maintain these systems.

✅ 3. Tighten Your Records Retention

When a subpoena or civil investigative demand lands, the first thing the government asks for is documents. Spoliation in an FCA matter can escalate exposure quickly. Review your records retention policies and training and confirm your team knows how to issue a litigation hold.

✅ 4. Train Your Billing and Compliance Staff

Most false claims do not start with executives. They start with a coder, a billing clerk, or a project manager who is trying to meet a deadline. Annual training, refreshed for new enforcement priorities, is essential. Our best practices in government contracting resource outlines the core elements.

✅ 5. Know Your Debarment Risk

An FCA judgment or settlement can trigger suspension or debarment proceedings, which can put a contractor out of business even if the underlying penalty is manageable. Build debarment exposure into your decision matrix anytime you are weighing settlement versus litigation.

✅ 6. Engage Counsel Early

The moment you learn of a potential FCA issue, whether through an internal report, a subpoena, or a civil investigative demand, the next moves matter. Disclosure timing, voluntary cooperation credit, and parallel proceeding management all shape the ultimate outcome. The procurement fraud and investigation team at Jimerson Birr handles these matters routinely.

What to Watch in the Second Half of 2026

A few signals will tell you where enforcement is heading next:

The September 1, 2026 effective date of the SBA’s expanded administrative FCA rule, which will accelerate smaller-dollar enforcement. Eleventh Circuit and Third Circuit rulings on qui tam constitutionality, which could narrow the field of plaintiffs. Continued movement on the Civil Rights Fraud Initiative, particularly as more contractors are pressed to certify the absence of “illegal” DEI programs. Customs and trade-related FCA cases tied to evolving tariff policy.

The Bottom Line

The FCA in 2026 is broader, better funded, and more procedurally nimble than it has been at any point since Congress modernized the statute in 1986. The categories of conduct that can give rise to a false claim now reach well beyond the traditional defense and healthcare lanes. For Florida businesses that contract with, receive grants from, or borrow funds backed by federal or state government, the right posture is to assume exposure exists and to confirm through audit that you are protected.
For more on related risks, see our coverage on the governmental entities industry legal blog and the Florida business litigation blog. If you have questions about a specific contract, certification, or compliance program, contact Jimerson Birr today to assess your exposure and build a defense plan before a problem arrives.