Across the healthcare industry, providers are increasingly relying on AI-assisted billing tools to automate medical coding, prior authorization workflows, and the submission of claims to Medicare, Medicaid, and other federal payors. Some vendors advertise “clean” claim rates exceeding 98%, meaning payors almost always accept submitted claims without further intervention or correction. But a high clean-claim rate is an operational metric, not a compliance safe harbor. It does not establish that the claim was properly coded, medically necessary, supported by documentation, or free from overpayment risk. The efficiency gains can be substantial, as can the heightened False Claims Act (“FCA”) exposure these systems can create. At the same time, many of these tools may improve consistency and reduce certain forms of human error when implemented and monitored appropriately. As AI continues to develop and becomes more widely integrated into healthcare billing, relators and prosecutors are likely to explore new avenues for evaluating, and litigating, how these tools are deployed, monitored, and overseen.
Federal Circuit Stays Injunctions Against Section 122 ‘Balance-of-Payments’ Tariffs Pending Appeal
On June 11, 2026, the U.S. Court of Appeals for the Federal Circuit granted the federal government’s motions for a stay pending appeal in State of Oregon v. Trump (Nos. 2026-1804, 2026-1805), consolidated appeals from two decisions of the U.S. Court of International Trade (CIT) that had enjoined enforcement of tariffs imposed under Proclamation No. 11012 and Section 122 of the Trade Act of 1974. While the appeal proceeds on the merits, the government may continue to collect the Section 122 “balance-of-payments” tariffs as to the parties covered by the underlying injunctions, including the State of Washington, Burlap and Barrel, Inc., and Basic Fun, Inc., pending further order of the Federal Circuit.
The Great American AI Act: What It Means — and Doesn’t Mean — for Companies Using AI
On June 4, 2026, Representatives Jay Obernolte and Lori Trahan released a discussion draft of the Great American Artificial Intelligence Act (GAAIA). The proposal has generated significant attention, but many organizations may be overestimating its practical significance for their day-to-day operations. The bill is directed primarily at developers of “frontier” AI models, so for most companies using AI models in their daily operations, these requirements will not apply. Nonetheless, the bill has sparked conversation—it incorporates multiple bipartisan bills on AI, its drafters wrote an op-ed calling on the U.S. to create a national framework covering AI, and the U.S. House Democratic Commission on AI and the Innovation Economy released a statement that the draft “does not meet the enormity of the moment.”
Key Takeaways
- The bill is primarily aimed at the biggest AI developers with more than $500 million in revenue that are building cutting-edge AI models rather than most typical businesses developing in-house AI or deploying commercial AI models.
- The proposed preemption provision would leave many state-law obligations governing AI deployment intact, including employment, privacy, consumer protection, healthcare, financial services, and common-law claims.
- The draft would increase fraud-related penalties and reflects a broader enforcement trend toward applying existing fraud and misconduct frameworks to AI-enabled conduct.
- If this bill passes, many of the legal risks businesses face when using AI will remain unchanged.
As Courts Wrestle With Tariff Refund Cases, Importers Should Confirm Submission of Key Information and Assess Options
Parallel proceedings in two U.S. Court of International Trade cases, Euro-Notions Florida, Inc. v. United States (No. 25-00595) and V.O.S. Selections, Inc. v. United States (No. 25-00066), are rapidly converging on what may be the central unresolved question in the IEEPA tariff refund process: must the government refund duties on entries that have liquidated and become final, even for importers who have not filed suit?
Enforcement and Prosecution Policy and Trends, Fraud, Deception and False Claims, Government Contracts
How Federally Funded Organizations Should Prepare for OMB Proposed Overhaul of Grants Oversight, DEI Bans, Easier Terminations
Key Takeaways
- The Office of Management and Budget (OMB) proposed sweeping revisions to the Uniform Administrative Requirements, Cost Principles, and Audit Requirements for Federal Awards that, among other changes, would prohibit the use of federal funds to support DEI policies that violate federal anti-discrimination laws.
- The proposed rule introduces a broad discretionary termination provision, modeled after the FAR’s termination-for-convenience clause, that would allow agencies to terminate awards that no longer advance “agency priorities or the national interest.”
- New oversight measures include mandatory E-Verify participation, expanded conflict-of-interest disclosures, pre-issuance review criteria under which the government will evaluate applicants’ civil-rights compliance and foreign affiliations, and enhanced subaward reporting on SAM.gov.
- Comments are due 45 days after publication in the Federal Register July 13, 2026, with OMB targeting an ultimate effective date of October 1, 2026.
- Organizations receiving federal funding should continue to review DEI-related programs and policies, assess internal controls, and evaluate the impact of the expanded termination authority on current and future awards.
Canadian Steel Companies and Owner to Pay $19M to Settle False Claims Act Allegations Relating to Evaded Customs Duties
On May 20, 2026, the U.S. Department of Justice (DOJ) announced a settlement under the False Claims Act (FCA) with two Canada-based steel companies, Farjess Inc. and Royal Canadian Steel Inc., and their part-owner and president, Feroz Jessani, pursuant to which the companies and Jessani agreed to pay $19 million to resolve allegations that they knowingly and improperly misrepresented the country of origin and failed to pay duties owed on flat-rolled steel manufactured in Europe and Asia. The settlement underscores the government’s continued and aggressive use of the FCA to pursue Trump Administration policy priorities, including the active implementation of tariffs and customs duties, and reinforces the importance of accurate country-of-origin declarations when importing foreign materials and products.
DoW Proposed Rule Would Impose New FOCI Disclosure and Risk Mitigation Requirements on Thousands of Defense Contractors
On May 7, 2026, the Department of War (DoW) published a proposed rule that would dramatically expand the population of defense contractors that are required to disclose beneficial ownership and foreign ownership, control, or influence (FOCI) information to the Defense Counterintelligence and Security Agency (DCSA) and to mitigate identified FOCI risks. At present, DCSA addresses FOCI only when a contractor requires access to classified information in the performance of a classified contract. The proposed rule, which amends the Defense Federal Acquisition Regulation Supplement (DFARS), would require reporting and mitigation of FOCI for DoW contractors and subcontractors that seek to perform on unclassified non-commercial contracts, as well as certain unclassified commercial contracts. The proposed rule would apply to DoW contracts and subcontracts valued in excess of $5 million and implements provisions of the National Defense Authorization Acts (NDAAs) for Fiscal Years 2020 and 2021 and DoD Instruction 5205.87.
New Executive Order Mandates Shift to Fixed-Price Contracting, Requires Review of Largest Cost-Reimbursement Contracts
On April 30, 2026, President Trump signed an Executive Order titled “Promoting Efficiency, Accountability, and Performance in Federal Contracting” (the “Order”), directing executive branch agencies to default to fixed-price contracts and contracts that tie contractor profit to performance-based metrics in federal procurement. The Order also requires agencies to review and, to the maximum extent practicable, modify, restructure, or renegotiate their largest non-fixed-price contracts. For context, a companion White House Fact Sheet states that in Fiscal Year 2024, approximately $120 billion was obligated on cost-reimbursement consulting contracts, underscoring the scale of the shift the Order contemplates.
This alert summarizes the key provisions of the Order, analyzes its practical implications for federal contractors and subcontractors, and outlines recommended steps for compliance.
Monitor Upcoming Negotiations of Education Department’s AIM Committee to Inform Public Comments on Accreditation Amendments
Stakeholders negotiating sweeping amendments to federal accreditation regulations proposed by the U.S. Department of Education (ED) will begin their final session to achieve consensus on May 18, 2026.
A week-long effort in April revealed deep divisions among negotiators on the Accreditation, Innovation, and Modernization (AIM) Committee of the ED. Debates broke out over the ED’s “material error” and “safety valve” provisions, First Amendment compliance and separate-and-independent requirements — so much so that negotiators expressed doubt that consensus on all issues will be reached in the final round starting Monday.
Whether negotiators reach consensus or not, a Notice of Proposed Rulemaking will follow, and affected parties should pay attention to the negotiating record to inform their comment strategy. Read on to learn more about the ED’s proposed amendments, the negotiators’ initial responses to the proposed amendments and the likely outcome of the final session.
Read on to learn more about the ED’s proposed amendments, the negotiators’ initial responses to the proposed amendments and the likely outcome of the final session.
DOJ’s New West Coast Strike Force Puts Health Care Providers on Notice
On April 30, 2026, the Department of Justice’s (“DOJ”) National Fraud Enforcement Division (“Fraud Division”) announced the formation of the West Coast Health Care Fraud Strike Force, a multi-district enforcement initiative spanning Arizona, Nevada, and the Northern District of California. [1] Announced by Assistant Attorney General Colin McDonald, the new Strike Force signals a significant escalation of federal health care fraud enforcement in the broader West Coast region and warrants close attention from health care providers, technology companies, and other industry participants operating in the area.