Over the last year, beyond traditional healthcare and federal procurement matters, the government has pursued federal False Claims Act (FCA) investigations and enforcement across high-risk areas, including diversity, equity, and inclusion (DEI)-related representations, cybersecurity vulnerabilities in products or services provided to federal agencies, and alleged tariff evasion or customs misstatements. The US Department of Justice (DOJ) recently reported record FCA recoveries exceeding $6.8 billion in FY 2025 and a record number of new filings, underscoring a robust enforcement pipeline. As enforcement expands, companies are increasingly assessing whether insurance coverage may help defray the costs of FCA investigations and settlements.

KEY TAKEAWAYS

• FCA enforcement is expanding into additional high-scrutiny areas, increasing exposure beyond traditional sectors.
• Directors and officers (D&O) and errors and omissions (E&O) policies may provide coverage for both FCA investigations and settlements, depending on policy terms.
• Early notice to insurers is critical, including at the investigation stage when issues first arise.
• Coverage outcomes often turn on how policies define a “claim” and apply exclusions across the insurance program.
• Disputes over settlement characterization and timing can significantly impact the availability of coverage.

FCA BASICS

The False Claims Act, 31 USC §§ 3729–3733, enables the federal government to seek and potentially recover treble...

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