Due to regulatory changes and government enforcement priorities, D&O claims are shifting, while competitive pressures and evolving industry standards add layers of complexity. Understanding these developments is essential for navigating the current risk environment and anticipating future trends.
False Claims Act
▼The False Claims Act (FCA) is a U.S. federal law designed to combat fraud against the government by allowing private individuals, known as whistleblowers, to file lawsuits on behalf of the government against entities that knowingly submit false or fraudulent claims for government funds.1
The Trump Administration's approach to the FCA marks a significant departure from previous administrations, notably utilizing the FCA as a tool to enforce compliance with the Trump administration’s political objectives (DEI initiatives, transgender issues, tariffs etc.) Three recent cases highlight the evolving nature of FCA claims and perhaps forecasts additional FCA actions given the Administration’s apparent focus.
Public Insurance Brokerage Firm
Alleged Improper Kickbacks Leads to FCA Action and Follow on Securities Class Action
On May 1, 2025, the U.S. Department of Justice (DOJ) filed a FCA lawsuit against a public insurance brokerage firm, alleging that between 2016 and at least 2021, the company accepted hundreds of millions of dollars in illegal kickbacks from health insurers.2 According to the DOJ, the company misled Medicare beneficiaries by 1) steering them toward plans that paid the highest commissions, regardless of suitability, and 2) claiming to provide unbiased coverage options. After the company’s stock dropped 19%, a securities class action (SCA) was filed regarding alleged misleading statements.3
Biotechnology Company
Alleged Cybersecurity Misrepresentations Leads to FCA Cybersecurity Enforcement
Following a whistleblower complaint, the DOJ claimed an American biotechnology company misrepresented the security of its products by selling genomic sequencing systems with known cybersecurity vulnerabilities to U.S. government agencies.4 The DOJ further alleged that the firm failed to implement or maintain adequate cybersecurity controls and quality systems and “falsely represented that the software on the genomic sequencing systems adhered to cybersecurity standards.”5
The firm agreed to pay $9.8 million to resolve these allegations.
Office Furniture Company
Alleged 2020 Tariff Evasion Scheme Leads to DOJ Enforcement
Between 2019 and 2023, a Canadian manufacturer of office furniture allegedly engaged in a “double invoicing scheme,” submitting falsified entry summaries and invoices to U.S. Customs and Border Protection that undervalued imported office chairs, thereby reducing the duties paid on the merchandise.6
After a whistleblower’s lawsuit filed in March 2020, the DOJ intervened in mid July 2025 to pursue civil enforcement under the FCA, emphasizing the enforcement priority on tariff evasion and customs fraud.
Trade Secrets
▼Another growing trend involves trade secret claims involving employees who have joined competitors and are accused of taking confidential information to benefit their new employer. For example, in one recent filing, the plaintiff alleged that a former executive, who was subject to a non-compete agreement, misappropriated trade secrets including customer information, market strategy and pricing metrics. The filing further alleges that the executive used the information to steal plaintiff’s large clients and place them with plaintiff’s competitors.
Recent cases show the FCA’s expanding role in targeting fraud, cybersecurity lapses, and tariff evasion, can lead to follow-on litigation such as SCAs. Meanwhile, trade secret claims remain a persistent risk as employees move between competitors, with insurance coverage frequently restricted by policy exclusions.
To navigate these challenges, organizations should proactively review their D&O policies to ensure they are prepared for the complex risks emerging from both regulatory actions and business friction.
1 - Civil Division | The False Claims Act
2 - Office of Public Affairs | The United States Files False Claims Act Complaint Against Three National Health Insurance Companies and Three Brokers Alleging Unlawful Kickbacks and Discrimination Against Disabled Americans | United States Department of Justice
3 - Id.
4 - Office of Public Affairs | Illumina Inc. to Pay $9.8M to Resolve False Claims Act Allegations Arising from Cybersecurity Vulnerabilities in Genomic Sequencing Systems | United States Department of Justice
5 - Id.
6 - District of South Carolina | United States Files Complaint Against Myrtle Beach Office Furniture Supplier, Owner for Customs Fraud | United States Department of Justice
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