In advance of the anticipated rollout of the “TrumpRx” website, a platform promising lower-priced drugs sold directly to consumers, the Office of Inspector General of the Department of Health and Human Services released a special advisory bulletin on Jan. 27, 2026, outlining the Federal Anti-Kickback Statute implications for direct-to-consumer drug sales. The OIG concludes that the risk of AKS violations is minimal if certain guidelines are followed, adding that its bulletin “clears the path” for DTC programs including the TrumpRx program. However, a letter from Sens. Richard Durbin, Elizabeth Warren, and Peter Welch to the OIG suggests that not all stakeholders share this confidence in TrumpRx, citing to concerns arising from a recent investigation into other DTC platforms. Pharmaceutical companies and other stakeholders can submit public comments until March 30, 2026. Read on to learn more about the guidance and what the pharmaceutical industry should know.
DoW Announces Line-by-Line Review of Certain 8(a) Contracts Amid Government-wide Scrutiny of the 8(a) Program
The Jan. 16, 2026, announcement by Secretary of War Pete Hegseth that “every small business, sole source, 8(a) contract that is over $20 million” will undergo a “line by line review” raises significant questions and considerations for all government contractors that participate in 8(a) program activities. For example, 8(a) participants that are currently performing – or that recently performed – set-aside or sole-source awards may want to consider developing a complete picture of their program-based portfolio, including awarding agency, contract value, period of performance, applicable small-business and socioeconomic requirements, and any recertification obligations. As part of that analysis, 8(a) participants may want to further assess where on the risk spectrum the company’s participation may sit and, if appropriate, prioritize review readiness.
Read on to learn more about how the policy developed over the past seven months and other considerations for contractors.
Creation of DOJ Fraud Division Signals Increased White-Collar Enforcement
On January 8, 2026, the White House announced the establishment of a new division of the Department of Justice: The Division for National Fraud Enforcement. In a White House Fact Sheet, the Trump Administration stated that the new division will “combat the rampant and pervasive problem of fraud in the United States,” and “enforce the Federal criminal and civil laws against fraud targeting Federal government programs, Federally funded benefits, businesses, nonprofits, and private citizens nationwide.”
OIG Solicits Proposals for AKS Safe Harbors and Special Fraud Alerts
The Office of Inspector General (OIG) of the Department of Health and Human Services (HHS) is accepting public proposals for new or modified safe harbor provisions under the Federal Anti-Kickback Statute, as well as recommendations for new Special Fraud Alerts. The deadline to submit ideas is 5 p.m. ET on February 9, 2026.
OIG Issues Remote Patient Monitoring Report: Billing Pitfalls and Compliance Risks
On August 25, 2025, the U.S. Department of Health and Human Services Office of Inspector General (“OIG”) issued a report analyzing Medicare billing practices for remote patient monitoring (“RPM”) services during 2024. As RPM technologies have matured and become more accessible, their availability has driven widespread adoption and enhanced patient care by enabling continuous, data-informed management outside the clinic; at the same time, this proliferation has attracted heightened government attention. The report highlights the rapid growth of RPM utilization and payments, identifies patterns that may be indicators of potential fraud and abuse, and reiterates the need for enhanced oversight by the Centers for Medicare & Medicaid (“CMS”). The OIG’s findings assist providers in assessing regulatory and compliance implications.
Marketing, Misconduct and Healthcare: Ninth Circuit Issues First EKRA Appellate Ruling
On July 11, 2025, in United States v. Schena, the U.S. Court of Appeals for the Ninth Circuit issued the first appellate decision interpreting the Eliminating Kickbacks in Recovery Act (“EKRA”). The decision marks a significant development in EKRA’s enforcement, as it represents the first time a federal appeals court has addressed EKRA’s reach and moved toward some clarity in its application to marketing arrangements within the healthcare industry, particularly in the often-discussed lab context.
Seventh Circuit Allows Percentage-Based Marketing Relationship
On April 14th, 2025, the U.S. Court of Appeals for the Seventh Circuit reversed the Anti-Kickback Statute (AKS) conviction of Mark Sorensen, the owner and operator of a Medicare-registered durable medical equipment distributor in United States v. Sorensen, 134 F.4th 493, 496 (7th Cir. 2025). The lower court had found that Sorensen’s practice of hiring advertising and marketing companies based on a percentage-based fee to sell orthopedic braces to Medicare patients violated the AKS at 42 U.S.C. § 1320a-7b(b)(2)(A). In reversing the district court, the Seventh Circuit followed the Fifth Circuit’s United States v. Marchetti, holding that the central question was whether the defendant intended to “induce ‘referrals,’ which is illegal” or whether he intended to “compensate advertisers, which is permissible.” Finding that there was no evidence of this improper intent, particularly as the marketers were not in a position to influence patients, the Seventh Circuit reversed.
$18.5 Million DOJ Settlement On Free Housing For Substance Abuse Patients
On June 26, the Department of Justice announced an $18,500,000 settlement agreement with NUWAY Alliance (NUWAY), a substance use disorder treatment clinic, arising out of medical necessity and kickback allegations. The complaint, filed first in 2021 by a whistleblower and unsealed last month, alleges that NUWAY and its CEO, David Vennes, engaged in a scheme to induce Medicaid patients to participate in NUWAY’s intensive outpatient treatment.
The underlying allegations center around free housing and free food conditioned on participation in NUWAY’s intensive outpatient (IOP) treatment services. If a patient attended a required number of treatment hours per week, NUWAY would pay third parties who housed the patients in non-clinical sober homes up to $550 for housing and food for the patient. Patients who stopped attending treatment immediately lost their housing support. The complaint notes NUWAY marketed this housing support in the community and the free housing offer was widely known among the patients that selected NUWAY for their services.
The complaint alleged that this offer led to clinically unnecessary outpatient care. Certain patients received higher levels of outpatient care than necessary so as to meet the weekly treatment requirements to get the free housing. Affidavits to the complaint suggest many patients did not require that level of outpatient care when discharged from inpatient care. In addition, the complaint also noted the reverse. In other words, many of the patients receiving IOP care from NUWAY were actually underserved, selecting this treatment option for free housing/food when another treatment program would have provided more appropriate levels of care to the patient.
DOJ also viewed the free housing offer as an unlawful kickback under the Federal Anti-Kickback Statute (AKS). The complaint described the housing offer as conditioning free services on their participation in NUWAY’s treatment services. As the AKS can apply to anyone including patients, remuneration to the patients selecting NUWAY’s treatment program could also constitute a kickback. Patient offers may also constitute violations of the Civil Monetary Penalties Law’s beneficiary inducement prohibitions, although these were not at the center of this case. That said, this settlement serves as a reminder for the potential of such incentive programs to hurt healthcare providers offering them. Experienced counsel can help with advisement on these programs.
The whistleblower was an executive with a competing company. He discovered the alleged conduct when he saw former patients that their team believed needed a different level of care being admitted to the NUWAY IOP treatment. It is yet another reminder to healthcare providers that fraud can be uncovered by both insiders and outsiders they interact with, particularly when such factual allegations were successful, as they appear to have been here. The complaint alleges that as a direct result of these offered incentives, NUWAY’s revenues grew from just over $1 million in 2005, before they began to offer the free housing incentive, to over $38 million in 2019 alone.
The authors thank McGuireWoods’ summer associate, Zachary Abbas, for his assistance in preparing this legal alert. He is not licensed to practice law.
Defense Contractor, Private Equity Firm to Pay $1.75M to Settle FCA Allegations Regarding Cybersecurity Violations
On July 31, 2025, the U.S. Department of Justice announced a $1.75 million False Claims Act (FCA) settlement with Aero Turbine, a California-based defense contractor, and private equity firm Gallant Capital Partners. The settlement arises out of allegations that Aero Turbine failed to comply with cybersecurity requirements under a U.S. Air Force contract and provided impermissible foreign third-party access to sensitive defense information.
Read on to learn how this settlement highlights an example of the DOJ’s increased scrutiny of cybersecurity requirements under the Cyber Fraud Task Force under the FCA and its focus on pursuing private equity investors and rewarding entities that self-disclose and remediate wrongdoing.
DOJ Targets Remote Patient Monitoring Company in $1.29M FCA Settlement
Remote patient monitoring (“RPM”) continues to see increased growth and evolution. With that industry growth, the government has begun to examine whether certain RPM models may have fraud and abuse concerns when others will not. To that end, on June 26, 2025, the Department of Justice (“DOJ”) announced that Health Wealth Safe, Inc. (“Health Wealth Safe”) and owner, Dr. Subodh Agrawal, paid $1.29 million to settle allegations of submitting false claims to Medicare under the False Claims Act (“FCA”). Health Wealth Safe allegedly failed to refund the government for 2.5 years of claims for improperly provided RPM services in violation of the FCA’s “reverse false claims” provision. Additionally, the United States alleged that Health Wealth Safe paid physician practice groups illegal kickbacks in exchange for patient referrals, and billed Medicare for RPM services that DOJ alleged were not reimbursable.