In March, President Donald Trump issued a sweeping executive order aimed at eliminating fraud, waste, and abuse across government benefit programs. While broad in scope, the order places particular emphasis on healthcare fraud, with Medicaid and Medicare enforcement positioned as central priorities.
Coupled with recent Department of Justice (DOJ) policy shifts, the executive order signals an era of intensified scrutiny for healthcare organizations, executives, and boards — raising the stakes for compliance, whistleblower exposure, and insurance preparedness.
A new interagency effort
President Trump’s executive order, “Establishing the Task Force to Eliminate Fraud,” creates a multiagency task force to combat fraud, waste, and abuse in federal benefit programs.
The task force, chaired by Vice President J.D. Vance, is to coordinate efforts across major federal agencies and departments to strengthen eligibility verification, improve prepayment controls, enhance data sharing, disrupt organized fraud networks, and increase oversight of government-administered programs. The order directs agencies to identify high‑risk processes, implement minimum anti‑fraud requirements, and develop measurable implementation plans, while encouraging aggressive investigation and recovery of taxpayer funds lost to fraud.
The task force includes representation from several Cabinet departments — including the DOJ and departments of Labor, Agriculture, Housing and Urban Development, Veterans Affairs, Education, and Homeland Security — and other executive branch entities, including the Small Business Administration and Office of Management and Budget. The executive order cites food stamps programs, childcare funding, and immigration-related benefits programs as potential areas of focus.
The Department of Health and Human Services is also included, and healthcare fraud appears to be a central pillar of the task force’s mission. The executive order repeatedly cites Medicaid fraud as a primary example of systemic abuse, alleging organized criminal exploitation of healthcare and related social service programs.
Building on existing efforts
Notably, the attorney general is directed to promote and expedite False Claims Act (FCA) cases involving federal benefits fraud. Historically, the majority of FCA recoveries come from healthcare cases, particularly Medicaid and Medicare billing.
In January, the DOJ reported that for the fiscal year ending Sept. 30, 2025, the government secured more than $6.8 billion in settlements and judgments under the FCA. More than $5.7 billion of that total, or roughly 84%, was related to the healthcare industry, with continued emphasis on managed care/Medicare Advantage, prescription drugs, and medically unnecessary or substandard care.
The DOJ added that “The amounts included in the $5.7 billion reflect recoveries arising only from federal losses, but in many of these cases, the department was instrumental in recovering additional amounts for state Medicaid programs.” President Trump’s executive order referenced several states where the administration believes systemic healthcare fraud is going undetected, including California, Colorado, Illinois, Maine, Minnesota, and New York.
Whistleblower lawsuits, also known as qui tam actions, are a critical driver of FCA recoveries. In fiscal year 2025, the DOJ reported a record 1,297 qui tam suits, though not all were healthcare-related. The executive order builds on an earlier March 10 announcement by the DOJ of a new unified corporate enforcement policy, intended to serve as a consistent framework for how the DOJ handles corporate criminal enforcement. The policy emphasizes voluntary self-disclosure, full cooperation, and timely remediation. Meeting those standards offers significant benefits, including declinations or reduced penalties. At the same time, however, the DOJ reaffirmed its focus on individual accountability and warned that companies that fail to self-disclose or remediate promptly should expect aggressive enforcement and heavier penalties.
What organizations and senior leaders should expect
The March 16 executive order, coupled with the DOJ’s corporate enforcement policy, should signal to healthcare organizations a new era of regulatory scrutiny. Specifically, organizations and executives should anticipate:
Greater enforcement risk. While FCA enforcement was already aggressive, organizations that receive Medicare or Medicaid funding should expect more proactive investigations, faster government intervention, and greater coordination between federal and state authorities. In addition to civil investigations, criminal prosecutions may also be possible, particularly when cases overlap with the DOJ’s corporate enforcement policy efforts.
Greater personal exposure for executives and boards. As enforcement escalates, individual executives and directors — as opposed to organizations alone — are more likely to be named in regulatory actions and litigation. This may especially be true where billing or compliance oversight is questioned.
Greater whistleblower risk. Qui tam activity is likely to ramp up, and the DOJ is likely to respond more quickly to such actions. Internal billing or compliance issues are thus more likely to quickly evolve into formal enforcement actions.
Managing insurance programs
In light of the executive order, healthcare organizations should thoroughly review their existing directors and officers liability (D&O) and related regulatory coverage, and ensure boards and executives are familiar with coverage limitations. Even before the latest developments from the Trump administration, regulatory coverage under healthcare organizations’ D&O insurance policies had become increasingly limited due to intensifying enforcement activity and growing litigation severity. Once broadly available with minimal restrictions, this coverage has been steadily narrowing since 2018, with recent acceleration driven by declining insurer profitability and rising defense costs.
Most healthcare D&O policies — particularly for large health systems with $1 billion or more in annual revenue — include limited FCA coverage, typically only $1 million to $2 million for defense costs. Coverage often comes with large retentions and coinsurance, and billing-related allegations are generally excluded.
If recoveries from enforcement actions continue to rise, insurers may further restrict or even eliminate FCA coverage from D&O programs in future renewal cycles. Individual insurers may also reevaluate their healthcare industry offerings and underwriting approaches more broadly.
Healthcare organizations should expect greater underwriting scrutiny during upcoming renewals. Insurers are likely to ask more pointed questions about compliance and audit programs, billing controls, and whistleblower reporting mechanisms.
Finally, healthcare organizations should strongly consider purchasing stand-alone regulatory and billing errors and omissions (E&O) insurance products, which generally provide broader defense and indemnity protections — including for FCA-related risks — than those typically available under standard D&O policies. Many larger health systems, which are likely to be in regulators’ crosshairs in the near-term, already purchase these products. Smaller systems — potentially next in line for regulatory scrutiny — may also wish to explore them.
Governance in focus
In this new enforcement environment, strong governance structures are essential. Healthcare organizations should reevaluate and reinforce existing compliance and audit practices, especially around billing and federal program exposure. They should also ensure that board members are actively engaged in compliance and understand the risks that individuals and organizations face. And they may wish to establish or expand existing audit and compliance committees.
Finally, organizations should strengthen whistleblower and reporting controls. Given the potential for more whistleblower activity, organizations should ensure that clear internal reporting channels exist and encourage early escalation of issues within organizations, before they become fodder for regulators.
In addition to potentially preventing or limiting litigation or enforcement activity, taking these steps could also yield better results during future insurance program renewals. Evidence of strong governance and compliance structures could materially affect pricing and terms for healthcare insurance buyers, especially for stand-alone products.
For more, contact a member of your Lockton team, or visit our Healthcare page here. (opens a new window)
