National Fraud Enforcement Division Shifts Healthcare Fraud Enforcement

April 10, 2026

New Blanche memo confirms shift in fraud crackdown: What the new National Fraud Enforcement Division means for business

Jonathan Diesenhaus, Gejaa Gobena, Michele Sartori, David Sharfstein, Peter Spivack, Matthew Sullivan, Stephanie Yonekura Hogan Lovells + Follow Contact LinkedIn Facebook X Send Embed

On April 7, 2026, Acting Attorney General Todd Blanche issued a memorandum formally establishing the National Fraud Enforcement Division (NFED), in the most significant restructuring of the Department of Justice's (DOJ or Department) fraud enforcement apparatus in decades. As outlined in the Memorandum, the new NFED will merge criminal fraud investigative capabilities under a single Assistant Attorney General (AAG), marshalling resources from the Criminal Division, the U.S. Attorney's Offices, and law enforcement agencies to detect, investigate, and prosecute fraud on government programs.

Since Vice President Vance first previewed the NFED in January 2026, framing it as a centerpiece of the Administration's anti-fraud agenda, questions have swirled about the structure and remit of the new division. The April 7 Memorandum provides some clarity and a timeline – but key questions still remain.

The NFED’s centralized purpose and expanded resources are likely to intensify enforcement across Administration priority areas, such as health care, federal contracting, benefits administration, and trade fraud. Organizations that may be impacted – ranging from government contractors and recipients of federal funds, to companies engaged in importing and exporting goods, among others – should understand that the creation of the NFED represents the implementation of an enforcement priority for the Administration and should prepare for increased scrutiny from federal enforcement authorities.

The April 7 Memorandum

According to the April 7 Memorandum, the core mission of the NFED is to “zealously investigate and prosecute those who steal or fraudulently misuse taxpayer dollars.” The Memorandum states that “the Department has never adopted a comprehensive and coordinated approach to investigating and prosecuting fraud against taxpayer dollars and taxpayer-funded programs.” The Memorandum provides a detailed plan for building out the new division in support of this expansive mandate. The plan – which we outline below – foretells a potentially dramatic shift in fraud enforcement:

• Immediate reallocation of DOJ resources: The April 7 Memorandum immediately vests operational control of the Criminal Division’s Tax Section; Health Care Fraud Unit; and Market, Government, and Consumer Fraud Unit with newly confirmed AAG for the new division, Colin McDonald. Although the existing “supervisory chain” for these units will remain intact for now, AAG McDonald will set priorities and allocate resources within these components. The Memorandum instructs the Criminal Division’s Appellate Section; Money Laundering, Narcotics, and Forfeiture Section; and Filter Unit to provide ongoing support to the NFED. The eventual restructuring described in the April 7 Memorandum appears to be a departure from previous expectations about how the new division would be constituted. Shortly after the initial announcement of the NFED, Criminal Division Chief Tysen Duva informed his prosecutors that “the Fraud section [would] remain entirely intact under the current Criminal Division structure.” Days later, however, AAG for Administration Jolene Lauria wrote to Congress stating that the DOJ would fund and staff the NFED with its “existing resources.” The April 7 Memorandum resolves this ambiguity by immediately transferring operational control of existing Criminal Division units to the NFED.

The Memorandum describes the initial reallocation of resources as an “interim period” and gives the Office of Legal Policy thirty days to make permanent decisions about the reorganization of resources – but with a “presumption” that these units will remain within NFED and that any criminal unit or section with a mission similar to that of the NFED could potentially be brought within the new division.

• Foreign Corrupt Practices Act Unit, Health and Safety Unit, and Corporate Enforcement and Compliance Unit to remain in Criminal Division: The April 7 Memorandum is silent on the status of the Foreign Corrupt Practice Act (FCPA) Unit, the Health and Safety Unit (HSU), and the Corporate Enforcement and Compliance (CEC) Unit, leaving them housed within the Criminal Division, at least for the near term. But the Memorandum leaves open the possibility that the Office of Legal Policy could realign some or all of these units’ resources if it determines they have a “mission similar to” the NFED.
• Leveraging local resources: Beyond restructuring Main Justice, the April 7 Memorandum requires each U.S. Attorney to designate a dedicated NFED prosecutor by April 28, 2026. Acting Attorney General (AG) Blanche noted, “in many states, more than one” prosecutor will be designated. The Memorandum also gives U.S. Attorney’s Offices two weeks to provide the DOJ with a list of all investigations into fraud perpetrated against taxpayer-funded programs and the status of those investigations. The Memorandum also directs the NFED to partner with “tribal, state, territorial, and local law enforcement on fraud-fighting efforts.”
• Ramping up recruitment: Not only will the NFED pull from existing DOJ resource, it will also recruit new hires to join the division. The April 7 Memorandum directs the creation of a hiring plan to “rapidly and substantially increase prosecutorial resources” including instructing DOJ’s grant-making components to establish opportunities for state and local prosecutors to join the NFED’s mission as Special Attorneys or Special Assistant U.S. Attorneys.
• National Fraud Detection Center: A centerpiece of the April 7 Memorandum is the creation of the National Fraud Detection Center – a prosecutor-led, multi-agency data analytics hub that will identify fraud patterns across taxpayer-funded programs and generate investigative leads. The Memorandum provides few details about the specifics of this new effort or the ways in which it will improve upon existing fraud detection methods.

But what about the Civil Fraud Section and False Claims Act investigations?

Notably absent from the April 7 Memorandum are details about the fate of Civil Division units investigating most claims of fraud on government programs. The Memorandum directs the Civil Division to designate an NFED liaison to ensure that civil and criminal tools are leveraged to combat fraud but otherwise leaves the structure of the Civil Division unchanged.

The False Claims Act (FCA) – a federal statute that imposes civil liability on individuals and entities that knowingly submit fraudulent claims for payment to the government – is one of the most versatile and effective weapons in the government’s arsenal for enforcing claims of fraud on the public fisc. Given the close alignment between the statute’s purpose and the NFED’s mission, FCA violations are clear analogues to and sources of leads for NFED prosecutions. But when pressed about whether FCA investigations fall within the ambit of the NFED, AG Blanche indicated that the new division would focus initially on criminal matters.

AG Blanche did not close the door, though, on the possibility that the new division might eventually absorb fraud-focused units from the Civil Division. Indeed, the April 7 Memorandum gives the Office of Legal Policy 120 days to determine whether “non-criminal elements” of the DOJ – e.g., the Civil Fraud Section – might move to the new division. Regardless, it is not unusual to see parallel criminal and civil fraud investigations involving the same facts and potential targets. Reading between the lines of the Memorandum, those coordination practices will continue with criminal prosecutors reporting up through NFED.

Key takeaways

Although the April 7 Memorandum leaves some questions unanswered, a picture has begun to emerge of the NFED. The allocation of resources described in the Memorandum makes clear that the NFED will focus – at least initially – on criminal fraud prosecution in the following priority areas:

• Health care: Health care-related enforcement remains a priority for the Administration and, it seems, for the new NFED. With its “ strike force” model, the Health Care Fraud Unit – which the NFED is set to absorb – is already well-positioned for nationwide enforcement. The unit had a record-setting year in 2025, and the additional resources, connection, and coordination that the NFED offers could bolster an already-robust unit.
• Federal contractors and grant recipients: The White House Fact Sheet and Criminal Division Fraud Section's 2025 Year in Review both underscore sustained enforcement focus on procurement and grant fraud, misuse of relief funds, and false certifications submitted in connection with federal funding. Any entity receiving federal contracts, grants, or with cooperative agreements should take steps to minimize any potential exposure.
• Benefits program administrators: The new division will closely scrutinize public benefits programs and their administrators. In announcing the NFED, Vice President Vance singled out the DOJ’s Minnesota-based fraud investigations and indicated those efforts would expand nationally. The Task Force to Eliminate Fraud, with which the NFED is directed to coordinate, has been tasked with enhancing oversight of state-administered federally funded programs covering health care, housing, and nutrition. Any entity associated with the administration of federally funded benefits programs should prepare for additional scrutiny.
• Trade and customs: With the transfer of the Market, Government, and Consumer Fraud Unit to the NFED, the new division is poised to take over trade and customs fraud enforcement – one of ten "high-impact" criminal enforcement priority areas for the DOJ more broadly. The new unit may leverage the existing cross-agency (DOJ and Department of Homeland Security) Trade Fraud Task Force, which is focused on developing cases against importers engaging in false country-of-origin, undervaluation, and misclassification claims. As the new division grows and evolves, it seems likely that its priorities will be closely monitored – and perhaps shaped – by the White House. Historically, the dispersion of fraud enforcement cases across the Criminal Division, U.S. Attorney’s Offices, and Civil Components provided structural independence from top-down direction. The April 7 Memorandum consolidates those structures under a single politically appointed AAG and formally directs the NFED to coordinate with the Task Force established by Executive Order 14395, "Establishing the Task Force to Eliminate Fraud," chaired by Vice President Vance.

To prepare for potential increased investigation and prosecution in these and other NFED priority areas, companies should evaluate their compliance programs to ensure they are quickly identifying and rapidly remediating any gaps. With a new source of heightened scrutiny housed in the National Fraud Detection Center, entities engaged in large and small transactions with the federal government should also consider conducting proactive data-driven internal reviews of billing patterns, claim submissions, and program certifications to ferret out and address data anomalies that could, in the near future, trigger NFED-led investigations.

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DISCLAIMER: Because of the generality of this update, the information provided herein may not be applicable in all situations and should not be acted upon without specific legal advice based on particular situations.
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