FCA Recoveries, HHS Cuts, OCR Investigations in Healthcare

April 15, 2026

The Health Record - Healthcare Law Insights, V 3, Issue 4, 2026

Jennifer Baker, Sara Chapman, Sarah W. King, Alexander Macia, Brienne Marco, Lynn P. Michael, Suzanne Pierce Spilman Thomas & Battle, PLLC + Follow Contact LinkedIn Facebook X Send Embed

Volume 3, Issue 4, 2026

Welcome

Welcome to our fourth issue of 2026 of The Health Record -- our healthcare law insights e-newsletter.

In this edition, we look at the record setting False Claims Act recovery results from 2025, proposed cuts at HHS, the HHS Office for Civil Rights’ investigation of 13 states, how Virginia avoided a major medical malpractice overhaul, why North Carolina legislators are questioning certain hospital fees, the impact of increases in bad debt on hospitals, and the FDA’s warning to telehealth companies about making false or misleading claims about the GLP-1 products they sell. Additionally, our own Alex Macia reviews what happened in the West Virginia Legislature this past session and the impacts on the healthcare industry.

We also invite you to join us at one of the following events:

West Virginia State Bar Annual Meeting – Constitutional Conversations, Charleston, WV, April 19-20
As a sponsor, we invite you to join us for this top-tier event exploring the evolving landscape of constitutional law in a thoughtful and engaging way. Through practical presentations and meaningful discussions, speakers will share insights on core constitutional principles and how they intersect with today’s legal challenges. Click here to learn more.

DRI 2026 Employment and Labor Law Seminar, Boston, MA, May 20-22
This comprehensive seminar provides practitioners and HR professionals with a sharp, practical update on the legal and compliance issues shaping today’s workplace. Our own Eric Kinder is the Committee Vice Chair and will be speaking. Click here to learn more.

Spilman’s SuperVision Labor & Employment Symposium, Charleston, WV, June 18
2026 Workplace Masterclass: L&E Compliance, AI, & the Brave New Employment Landscape: A fast-moving, high-impact seminar for employers navigating the modern workplace. Join Spilman attorneys for our full-day SuperVision Symposium, designed to inspire confidence in navigating complex employment decisions. This complimentary symposium is tailored for business owners, C-suite executives, HR professionals, and anyone who manages employees. Dive into a day of valuable insights on employment topics such as AI, investigations, litigation, immigration, labor law, accommodations, and much more. Spend the day with us and leave armed with strategies and solutions to tackle the ever-changing world of labor and employment law. Please click here to learn more and register.

Thank you for reading!

Brienne T. Marco
Member, Chair of the Corporate Department, Co-Chair of the Health Care Practice Group, and Editor of The Health Record

False Claims Act Recoveries Hit a Record $6.8 Billion in 2025

“DOJ’s 2025 fraud takedown charged 324 defendants and alleged $14.6B intended loss; Operation Gold Rush centered on $10B+ catheter/DME claims using stolen identities, shells, and laundering.”

Why this is important: The record-breaking False Claims Act (FCA) results from fiscal year 2025 serve as an important reminder of why a robust compliance program is not optional — it is essential. The federal government recovered a record $6.8 billion through FCA cases in 2025, with healthcare accounting for $5.7 billion of that total — 84 percent of all recoveries — the highest single-year recovery in the statute's history. Whistleblower activity also hit a record high, with 1,297 qui tam lawsuits filed, reaffirming that employees, competitors, and other insiders remain the primary driver of FCA enforcement. Enforcement is also becoming increasingly data-driven and pattern-focused, accelerated through the use of artificial intelligence, meaning that billing anomalies and documentation gaps are more likely than ever to attract scrutiny. Critically, the DOJ emphasized its commitment to incentivizing self-disclosure and cooperation, noting that several settlements resulted in reduced payments for parties who self-reported misconduct and implemented remedial measures — a clear signal that organizations with strong, proactive compliance programs are better positioned to detect problems early, correct them internally, and avoid the catastrophic reputational and financial consequences of a government investigation. The article quotes Shannon Sumner, CPA, CHC, managing principal of PYA’s Nashville office and the firm’s chief compliance officer, who sums it up perfectly: “The OIG has made it clear that the absence of an effective compliance program is an aggravating factor in enforcement actions, even for small practices. Prevention really is the best medicine.” --- Brienne T. Marco

Trump Requests Nearly $16 Billion in Cuts at HHS

“The White House’s budget request would reduce HHS’s budget by 12.5 percent if enacted.”

Why this is important: Trump’s requested cuts in funding for the Department of Health and Human Services (HHS) include a $5 billion cut from the National Institutes of Health, and propose eliminating entire institutes, including the National Institute on Minority Health and Health Disparities, the Fogarty International Center, and the National Center for Complementary and Integrative Health.

Although Congress ultimately determines the final funding levels, the President’s budget provides an important signal of policy direction – particularly with respect to funding priorities and program restructuring. It reflects a continued emphasis on consolidating federal programs, reducing funding, and realigning HHS operations with the administration’s Make America Healthy Again (MAHA) agenda under HHS Secretary Robert F. Kennedy Jr. --- Suzanne Y. Pierce

HHS Office for Civil Rights Investigates 13 States for Allegedly 'Coercing' Coverage for Abortion

“The states are forcing health plans to provide coverage for abortions as a condition of offering coverage in the state, OCR says.”

Why this is important: The U.S. Department of Health and Human Services’ Office for Civil Rights has opened investigations into 13 states over whether their insurance mandates requiring abortion coverage violate the Weldon Amendment, a federal funding condition that protects healthcare entities with conscience-based objections. The investigations signal an emphasis on enforcing the Amendment as a constraint on how states structure their insurance markets.

The issue turns on whether requiring all plans to include abortion coverage amounts to “discrimination” against insurers or plan sponsors that object to such coverage. OCR’s recent interpretation broadens the scope of protected entities to include insurers, strengthening the argument that states must allow some pathway for abortion-free plans if they wish to remain compliant with federal law.

The practical stakes are significant. If OCR finds noncompliance and states do not adjust their laws, they risk losing federal healthcare funding. For healthcare entities and insurers, the investigations create a potential opening to challenge state requirements that limit plan design based on abortion coverage. For states, they raise the prospect that broadly drafted coverage mandates with no opt-out mechanism may be vulnerable under federal spending conditions. --- Sarah W. King

Medical Malpractice in Virginia was Nearly Overhauled. What Happened?

“Legislators opted to require hospitals and insurers to disclose more information on malpractice cases instead of overhauling the legal landscape for medical malpractice cases, but they signaled that changes were inevitable.”

Why this is important: Proposed sweeping legislation affecting medical malpractice lawsuits underwent a last-minute rewrite in the Virginia House of Delegates, resulting in an almost entirely new bill. The initial legislation intended to raise Virginia’s cap on damages from under $3 million to $6 million by 2027, but after healthcare providers voiced concerns over the impact of a cap increase on their medical malpractice liability insurance, the six Virginia lawmakers tasked with reworking the legislation now say that the cap will stay the same. In lieu of overhauling the medical malpractice system in Virginia at this time, legislators have opted to require hospitals and insurers to disclose more information on malpractice cases while signaling that there is a recognition that the cap is currently too low. The final bill, now headed to Gov. Abigail Spanberger, requires hospitals and insurance companies to disclose details about premiums, doctors covered under programs, claim payments, settlement litigation costs and more, in a report to state lawmakers in September. Lawmakers believe this information will empower them with the information necessary to make a more comprehensive assessment of the medical malpractice system in the future. --- Jennifer A. Baker

NC Legislators Question Hospital Fees Charged for Outpatient Care

“State senators have pushed for limits on the charges called ‘facility fees,’ concerned that they contribute to inflated medical bills.”

Why this is important: The North Carolina House of Representatives is considering NC Senate Bill 316, a broad bill covering many aspects of healthcare-related issues in North Carolina. One item of specific interest to healthcare consumers and insurance companies is S.B. 316, Part IV, Section 4.1.(a), in which healthcare providers are not allowed to “charge, bill, or collect a facility fee unless the services are provided on a hospital's main campus, at a remote location of a hospital, or at a facility that includes an emergency department.” Facility fees are an area of confusion for many patients who are charged these new fees when the medical practices they traditionally attended are purchased by hospitals. Typical outpatient offices, with normal business hours, are now charging additional facility fees on top of their regular charges for routine care like preventative care, telehealth visits, and blood draws. The consumers and taxpayers ultimately foot the bill for facility charges, whether paid by private insurance or by government-supported health plans. Nine states have similar limitations on facility fees at this time. It has been estimated that SB 316’s provisions on the reduction of facility fees could reduce healthcare costs by $200 million per year. --- Lynn P. Michael

Hospitals are Facing More Bad Debt

“Bad debt has been climbing and hospitals are providing more charity care, Kaufman Hall said in its most recent National Hospital Flash Report.”

Why this is important: Hospitals will face more bad debt and charity cases as a result of the loss of Medicaid coverage for some patients, expiration of the Affordable Care Act credits, and the increased utilization of Medicare. Up to 10 million people may lose Medicaid coverage under program cuts. Further, ACA coverage will double in cost for some consumers. These consumers may opt out of having health insurance entirely. Uninsured and underinsured patients will add financial stress to hospitals, resulting in more bad debt and charity cases. Drug pricing and medical supplies for patients on Medicare also put a strain on hospital finances. Hospitals may be forced to decide which lines of service will be successful for them and then reduce other services or sell off lines of business to other providers. --- Lynn P. Michael

FDA Sends Warning to 30 Telehealth Companies Selling ‘Illegal’ GLP-1s

“According to the FDA, the companies they contacted made ‘false or misleading claims’ about the GLP-1 products they sold on their websites, including implying ‘sameness with FDA-approved products and obscuring product sourcing.’”

Why this is important: Online companies are offering compounded GLP-1 medications at lower prices than FDA-approved versions. The FDA has accused these companies of making false and misleading claims about their GLP-1 products, suggesting they are equivalent to FDA-approved drugs and hiding their sources.

Since GLP-1 drugs like tirzepatide and semaglutide are readily available and not in short supply, compounding pharmacies are not allowed to mass market compounded versions. Kin Meds, GoodGirlRx, WeightCare, and PharmaZee received FDA letters about these compounded medications. Additionally, the Department of Health and Human Services referred Hims & Hers to the Department of Justice for potential criminal violations related to selling compounded versions.

GLP-1s are popular medications, and the availability of compounded versions online and in medispas is a trend to watch. The companies claim they are only trying to provide the medications to fill a gap in care for patients who are unable to gain the medications due to cost and insurance coverage. The FDA has asked the companies to provide a written response detailing how they will address the violations and prevent future occurrences, emphasizing that these products cannot be claimed as FDA-approved or evaluated for safety. --- Sara E. Chapman

Featured Attorneys Question & Answer

This is our Featured Attorney Q&A to introduce you to our large healthcare law team. To help you get to know our team a little better, we are highlighting attorneys in each issue by asking them a healthcare-related question. We hope their responses will be insightful for you.

Alexander Macia
Member; Co-Chair, Government Relations Practice Group; Co-Chair, Deliberate Intent Practice Group; Co-Chair, OSHA & MSHA Practice Group
Office 304.340.3835
amacia@spilmanlaw.com

Q: The West Virginia State Legislature just concluded its 2026 session. As someone heavily involved in our government relations practice and a regular attendee during the session, are there any important updates that will impact healthcare organizations operating within the Mountain State?

A: In 2026, the West Virginia Legislature squarely addressed healthcare in the state by enacting several bills specifically addressing the causes of some of the bad health outcomes that have plagued the state. For instance, the Legislature secured West Virginia’s share of federal grants to transform the delivery and infrastructure of rural healthcare with the passage of Senate Bill 570, which appropriated $199 million to the Department of Health for the purpose of establishing grant spending authority for the Rural Health Transformation Program. The Rural Health Transformation Program is a five-year program that aims to “transform the existing rural health care infrastructure and build sustainable health care systems that expand access, enhance quality of care, and improve outcomes for patients and comes from the federal Centers for Medicare and Medicaid. The state must use this spending authority, and to ensure that such is accomplished within this year, the Legislature enacted House Bill 4740, which exempted the grant program from the delays and cumbersome processes required by the state purchasing system. In addition, in order to meet one of the benchmarks for receiving funding under the Rural Health Transformation Project, physicians will now be required to take a Continuing Medical Education course related to nutrition. House Bill 4951 extends this requirement to both allopathic and osteopathic physicians starting this year. In expressly recognizing that nutrition-related chronic diseases are prevalent among Medicaid members and contribute to poor health outcomes and increased health care costs, the Legislature enacted House Bill 4982, which authorized the use of nutrition-based interventions, known as Food Is Medicine services, to improve health outcomes and reduce avoidable medical utilization. This bill, also known as the Make West Virginia Healthy Act of 2026, reestablishes the statewide Healthy Lifestyles Program and expands the authority of the Office of Healthy Lifestyles for the promotion of wellness initiatives, coordinates efforts among state agencies and reinstates the Presidential Fitness Test in public schools.

Other successful legislation of interest relating to healthcare includes Senate Bill 231, which reorganizes the state’s addiction care system into a value-based continuum of care and incentivizes coordination, integration, and accountability for recovery success. “Value-based payment" means a payment model that rewards providers for quality and cost-effective care and penalizes providers for failure to meet specified metrics, thus shifting from paying for volume (fee-for-service) to paying for patient health outcomes and experiences. Metrics include housing stability, sobriety, criminal justice and child welfare avoidance, and self-sufficiency. After July 1, 2028, the Bureau for Medical Services shall require the managed care organizations to provide a value-based payment in conformity with the approved outcome measures and standard billing codes to be developed as a result of this new law.

The West Virginia Legislature regulated vape products in House Bill 5437, the Vape Safety Act, which comprehensively regulated the operation of vape shops in the state. Vape products include any electronic cigarette, electronic cigar, electronic cigarillo, electric pipe, or similar product or device. Applicants for licensure must be U.S. citizens and persons of good character, honesty, and integrity to be verified by criminal background checks. Any person associated with a corporation applicant must disclose any corporate holding company, parent company, or subsidiary company. No person may use or permit the use of any vape or smoke shop as a residence. In addition, after March 1, 2027, no manufacturer of a vapor product may, in the name, labeling, packaging, or marketing of the product, use any terms or references to candy, bubble gum, cotton candy, gummy bear, or other items which may appeal to children, including cartoons, cartoon characters, or superheroes. Vape or smoke retailers shall be located at least 300 feet from a church, school, or daycare center, as measured by a straight line from the entrance to the property line of the nearest place in question. Finally, these provisions are enforceable by administrative penalties as well as criminal sanctions.

At the same time Senate Bill 906 was enacted to provide that if a drug containing an organic psilocybin substance or the pharmaceutical composition of crystalline polymorph psilocybin is approved by the Food and Drug Administration and rescheduled by the Drug Enforcement Administration, it shall be lawful to prescribe, distribute, and market based upon the recommendations of the Food and Drug Administration, despite its listing as a controlled substance under Schedule I.

Similarly, Senate Bill 985 provides a narrower definition of kratom and regulates its sale. Notably, kratom is now defined as the natural leaf of the plant mitragyna speciosa and any simple physical form of the leaf, including whole, crushed, or powdered. The new law expressly excludes from the definition any kratom product that has been synthetically manipulated or chemically concentrated beyond the leaf’s natural alkaloid profile. In addition, the law now provides for age verification while authorizing the Commissioner of Agriculture to impose administrative penalties for violation of the law. Finally, the Commissioner is authorized to employ a software system to monitor the registration of kratom manufacturers, processors, distributors, and retailers, as well as kratom products.

Unlike the previous legislative session, which was dominated by debate over bills abolishing the certificate of need for healthcare facilities, abortion restrictions, and religious exemptions to the state’s compulsory immunization laws, this session was remarkably quiet as those bills failed to advance.

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