The False Claims Act has become a key enforcement tool for the federal government. If you work in healthcare, government contracting, or any industry involving federal funds, understanding the changes in 2026 is crucial. The Shumate Memo isn't just another policy update; it's a signal that qui tam cases will move faster, whistleblowers will have more freedom, and your compliance gaps will be exposed sooner.
Scope: What This Guide Covers
This guide is for organizations receiving federal funding, submitting claims to government programs, or operating under federal contracts. It's aimed at compliance and training professionals who need to turn enforcement trends into actionable program improvements.
You'll find:
- Core FCA concepts for compliance program design
- How the Shumate Memo changes investigation timelines and whistleblower roles
- Steps to strengthen internal controls and reporting systems
- Common program weaknesses that create FCA exposure
This guide is not legal advice. It's a resource for building training content, designing audit protocols, and identifying areas where your program may need reinforcement.
Key Concepts and Definitions
False Claims Act (31 U.S.C. §§ 3729-3733)
A civil statute imposing treble damages and penalties on parties that knowingly submit false claims to the government or improperly avoid obligations owed to the U.S. It covers healthcare billing, grant applications, customs declarations, defense contracting, and any transaction involving federal funds.
Qui Tam Action
A lawsuit filed by a private party (the relator or whistleblower) on behalf of the government. The relator may receive 15-30% of any recovery. Cases remain under seal while the DOJ decides whether to intervene.
Knowingly
The FCA's standard for intent. You don't need intent to defraud. "Knowingly" includes actual knowledge, deliberate ignorance, or reckless disregard of the truth. This is why compliance training matters: it establishes what your workforce should have known.
Intervention
The government's decision to take over a qui tam case. Historically, DOJ intervened in roughly 20-25% of cases. The Shumate Memo changes this by allowing more relators to proceed on their own in smaller cases.
Shumate Memo
May 2026 guidance from DOJ's Civil Division mandating 120-day review timelines for benefits-fraud qui tam complaints, expanding relator litigation roles, and requiring cross-agency coordination for civil, criminal, and administrative enforcement.
Requirements Breakdown: What the Shumate Memo Changes
Accelerated Review Timelines
The FCA gives DOJ 60 days to decide whether to intervene, but courts routinely granted multi-year extensions. Cases sat under seal while investigators worked through backlogs.
Under the Shumate Memo:
- Initial review must conclude within 60 days (or 120 days maximum in most cases)
- If DOJ needs more time, extensions require escalating approvals: first from the Deputy Assistant Attorney General of the Commercial Litigation Branch, then from the Assistant Attorney General for the Civil Division
- DOJ must either allow the relator to proceed, continue investigating with a defined timeline, or seek dismissal
What this means for you: The window between a whistleblower filing and your company learning about it has shrunk. If an employee reports suspected fraud externally, you may face investigation or litigation within months, not years.
Expanded Relator Role
The Shumate Memo encourages DOJ attorneys to let relators litigate straightforward benefits-fraud cases with potential damages under $10 million, strong factual support, and aggravating factors like beneficiary harm or ongoing misuse of funds.
This shifts risk. Relators and their counsel have financial incentives to pursue cases the government might have declined. They may lack the investigative resources DOJ brings, but they also face fewer bureaucratic constraints.
What this means for you: More cases will proceed without DOJ intervention. Your organization may face litigation from a relator's counsel before federal prosecutors weigh in. Internal reporting channels and investigation protocols need to surface issues before employees take them to outside attorneys.
Whole-of-Government Coordination
A single qui tam complaint can now trigger:
- FCA civil litigation
- Criminal referral to DOJ's Criminal Division or the National Fraud Enforcement Division
- Payment suspension by the funding agency
- Administrative exclusion from federal programs
The Shumate Memo formalizes coordination across enforcement channels. If you're under FCA investigation, assume parallel criminal and administrative reviews are underway.
Implementation Guidance: Strengthening Your Program
1. Audit Claims Submission Processes
Conduct quarterly audits of billing, grant reporting, and contract deliverables. Focus on:
- Coding accuracy (healthcare providers: diagnosis codes, procedure codes)
- Time and materials reporting (government contractors)
- Grant expenditure alignment with approved budgets
- Certification accuracy (small business status, country of origin, labor standards)
Don't wait for external audits to find errors. Build internal review checkpoints before claims go out the door.
2. Train on Specific Risk Scenarios
Generic "don't commit fraud" training won't prevent FCA violations. Employees need to recognize situations where claims could be inaccurate:
- A billing specialist notices a diagnosis code doesn't match the treatment documented
- A project manager is asked to report hours on the wrong contract line item
- A grant administrator sees expenses charged to federal funds that don't fit the approved scope
- A quality assurance technician is pressured to sign off on incomplete work
Your training should walk through these moments and clarify what the employee should do. Make it clear that raising the issue internally is safer and faster than filing a qui tam complaint.
3. Strengthen Internal Reporting Channels
Employees file qui tam suits when they don't trust internal reporting or when they've reported internally and nothing changed. Your Speak-Up Program needs to:
- Accept reports through multiple channels (hotline, email, in-person, web form)
- Guarantee whistleblower confidentiality and anti-retaliation safeguards
- Provide status updates to reporters
- Document investigation outcome tracking so you can show issues were addressed
If an employee reports a billing error and hears nothing for six months, they may conclude the company doesn't care. That's when they call a qui tam attorney.
4. Implement Segregation of Duties
Many FCA cases arise from a single employee with too much control over claims submission and approval. Separate:
- Claim preparation from claim review
- Service delivery from billing
- Contract performance from invoice approval
If the same person who delivers a service also codes and submits the bill without oversight, you've created an environment where errors (or fraud) can persist undetected.
5. Document Remediation When You Find Issues
If your audit uncovers inaccurate claims, document how you:
- Stopped the practice
- Corrected submitted claims
- Repaid any overpayments
- Retrained staff
- Changed controls to prevent recurrence
The DOJ has signaled willingness to decline prosecution when companies self-disclose, cooperate, remediate, and make restitution. In July 2026, DOJ issued its first public declination under the Corporate Enforcement Policy to a management services organization that took these steps. Your documentation proves you acted in good faith.
Common Pitfalls
Treating FCA risk as a legal issue, not an operational one.
Compliance isn't just about having a policy. It's about whether the person coding a claim or certifying a deliverable knows what accuracy requires and has time to get it right.
Assuming only intentional fraud triggers FCA liability.
Reckless disregard and deliberate ignorance meet the "knowingly" standard. If your training is superficial and your audits are infrequent, you may be creating deliberate ignorance.
Ignoring small-dollar errors.
The Shumate Memo explicitly targets cases with damages under $10 million. A pattern of small overbilling can still result in treble damages and penalties.
Failing to track whistleblower concerns.
If an employee raises a billing concern and your investigation file shows no follow-up, that record becomes evidence in a qui tam case. Track every internal report and document your response.
Underestimating relator motivation.
Whistleblowers can receive 15-30% of recoveries. In 2025, DOJ recovered over $6.8 billion under the FCA. Even a fraction of a modest settlement is life-changing money. Employees who feel ignored or retaliated against have strong financial incentives to go external.
Quick Reference Table
| Program Element | Minimum Standard | Enhanced Practice |
|---|---|---|
| Claims audit frequency | Annual | Quarterly, risk-based sampling |
| Billing staff training | Annual generic compliance | Role-specific scenarios with documentation requirements |
| Internal reporting options | Single hotline | Multiple channels with guaranteed confidentiality |
| Investigation timelines | Closed within 90 days | Status updates to reporter every 30 days |
| Segregation of duties | Separate approval from submission | Separate service delivery, coding, submission, and approval |
| Self-disclosure protocol | Reactive when external audit finds issues | Proactive review with defined escalation thresholds |
| Retaliation monitoring | Annual policy acknowledgment | Quarterly check-ins with recent reporters |
| Documentation of remediation | Corrective action memo | Full remediation file: root cause, corrective actions, retraining records, control changes |
The Shumate Memo doesn't create new FCA liability. It accelerates enforcement and expands the pathways through which violations surface. If your compliance program relies on the assumption that investigations move slowly and whistleblowers rarely succeed without DOJ intervention, it's time to recalibrate. Build systems that catch errors before claims go out, create reporting channels employees trust, and document your response when things go wrong. That's how you reduce FCA risk in an environment where cases move faster and whistleblowers have more support than ever before.
