Federal Anti-Fraud Push Puts Government Funding Recipients Under the Microscope

By John Harris, Michael Anderson, and Daniel Harrell

Two federal initiatives in the last month have made one thing clear: More investigations are on the way for the recipients of government funds. Businesses in industries where federal and state tax dollars make up significant portions of revenue—such as healthcare, government contracting, and adjacent industries—should expect greater scrutiny as we move into the second half of 2026.

Nationally, the White House issued an executive order establishing a new multi-agency task force to eliminate fraud in federally funded programs. Locally, the U.S. Attorney’s Office for the Eastern District of North Carolina updated its Whistleblower Program to expand the subject matter areas where corporate whistleblowers are incentivized to come forward. These initiatives are part of a national movement by the U.S. Department of Justice to increase responsiveness to whistleblower allegations and to tighten oversight over organizations that receive federal funds.

Failure to manage an investigation at the outset can result in increased attention from investigators even when the fraud allegation is ultimately meritless. On top of substantial civil penalties and potential criminal sanctions, a fraud investigation can quickly ensnare a business and impose unwanted attention and costs. And as these anti-fraud efforts ramp up, even businesses that are not the target of an investigation can nevertheless expect increased subpoenas, civil investigative demands, and other requests for information from government entities. In this evolving enforcement landscape, Smith Anderson’s attorneys stand ready to assist clients who receive a government inquiry and to help strategize and prepare in advance of one to stay compliant.

The Task Force to Eliminate Fraud

The White House’s executive order, "Establishing the Task Force to Eliminate Fraud," was issued on March 16, 2026. After high-profile investigations resulted in allegations of significant fraud in states like Minnesota and California, the order focuses on heightened anti-fraud efforts in state-administered programs involving significant federal dollars (such as Medicaid). But the order’s effect is likely to lead to increased investigations and enforcement activity far beyond state programs. The order establishes a Task Force chaired by the Vice President and comprised of representatives of at least a dozen executive agencies, including the Department of Justice, Housing and Urban Development, Health and Human Services, Agriculture, the Federal Trade Commission, and the Small Business Administration. The Task Force is charged with coordinating investigations between federal, state, local, and tribal authorities with an emphasis on creating a comprehensive national strategy for preventing fraud in federal benefit programs.

The order sets ambitious and fast-approaching objectives, all of which point to increased enforcement efforts by the second half of 2026. Immediately, each Task Force agency that administers federal benefit programs is required to identify the "transactions and processes that are most susceptible to fraud schemes." By June 15, the member agencies must submit measures for preventing fraud, coordinate efforts to adopt anti-fraud requirements, and then submit to the Vice President a measurable implementation plan for implementing those anti-fraud measures. Anti-fraud requirements suggested in the order include eligibility verification; pre-payment integrity and risk controls; and audit or remedial measures (including suspension, termination, repayment, exclusion, and debarment actions).

The order also directs the U.S. Attorney General to promote and promptly investigate whistleblower claims under the False Claims Act ("FCA"). Under the FCA, the Department of Justice ordinarily has 60 days to conduct an initial review of whistleblower lawsuits (also known as qui tam suits) to determine whether to intervene and litigate the matter itself; however, it is a very common practice for the Department to obtain one or more six-month extensions on the review of qui tam lawsuits and for the ensuing investigation to last months (if not years). This order pushes federal investigators to move more quickly to review the allegations and decide whether to intervene within the 60 days set forth under the FCA.

EDNC Expands Whistleblower Program

Closer to home, the Eastern District of North Carolina U.S. Attorney’s Office announced an updated EDNC Whistleblower Program. The Program, first announced in 2025, is designed to promote the disclosure of criminal or fraudulent conduct occurring within a company by establishing protections intended to promote whistleblowing.

Some core details of the Program remain unchanged. Under the established guidelines, a whistleblower who participated in criminal conduct and then provides information regarding such conduct undertaken by or through a public or private entity or organization can become eligible for a deferred or non-prosecution agreement. The policy provides that the disclosure must be (1) of misconduct not known to the government; (2) voluntary and not in response to an inquiry or imminent threat of disclosure; and (3) complete. The whistleblower must agree to provide substantial assistance in the investigation and prosecution of people equally or more culpable. The policy is not eligible for an entity’s chief executive officer, chief financial officer, or the functional equivalent.

In addition to the above requirements, misconduct must be related to certain topics. When the pilot version of the whistleblower program was announced, the topics were fairly limited. The whistleblower had to provide information on misconduct regarding fraud, corporate failures, intellectual property theft, violations affecting market integrity, or state or local bribery.

The updated guidelines are intended to expand the Program to include additional subjects. The expanded guidelines most notably include whistleblower protections for individuals who report fraud on federal government programs including federal programs that are state-administered (such as Medicaid). Other topics granted whistleblower protection include corporate crimes involving:

• International cartels;
• Federal immigration law;
• Money laundering;
• Sanctions;
• Trade or tariffs; and
• Procurement fraud.

Staying Ready

Fiscal year 2025 was a record year for DOJ enforcement with a record-breaking recovery of $6.8 billion in False Claims Act settlements and judgments, of which $5.3 billion is attributable to qui tam whistleblower actions. In addition, a record number of whistleblower actions were filed last year with 1,297 qui tam actions filed—about 300 more than the previous year and close to double the numbers in FY 2023 (712) and FY 2022 (660). With the announcement of the new anti-fraud Task Force and the updated EDNC Whistleblower Policy, this trend does not seem likely to end. Businesses should prepare for increasing scrutiny.

Smith Anderson lawyers are available to help your business prepare for and respond to a government investigation. If you have any questions, please contact John Harris, Michael Anderson, Daniel Harrell, or the Smith Anderson lawyer with whom you usually work, and we will be happy to help work with you on understanding these recent developments, updating your own policies and procedures, or responding to an investigation.