DHS Tightens Screws on False Claims with New Penalties
Published Date: 11/2/2025
Rule
Summary
Starting November 3, 2025, the Department of Homeland Security is updating how it handles cases of fraud to recover money and impose penalties. This change affects anyone involved in DHS programs by raising penalty amounts, clarifying rules, and letting special judges handle disputes. These updates come from a new law aiming to keep government funds safe and make the process smoother and fairer.
Analyzed Economic Effects
8 provisions identified: 0 benefits, 7 costs, 1 mixed.
Maximum Claim Threshold Raised
DHS raises the maximum value of disputed claims that a presiding officer may hear from $150,000 to $1,000,000. The $1,000,000 ceiling will be adjusted annually for inflation under the Federal Civil Penalties Inflation Adjustment Act.
Recovered Funds First Reimburse Agency Costs
Amounts collected under AFCA will first be credited to reimburse the Federal entity that expended investigation or prosecution costs, and those reimbursed amounts remain available until expended; any remaining amounts are deposited as miscellaneous receipts in the U.S. Treasury.
Longer Statute of Limitations Window
DHS adopts the AFCA limitation that an action may be brought not later than the later of: 6 years after the violation or 3 years after the authority head knew (or reasonably should have known) the facts, but in no event more than 10 years after the violation.
No Private Qui Tam Participation
Under the AFCA as implemented, private plaintiffs (qui tam relators) do not participate in DHS AFCA hearings. The parties to a hearing will be the Defendant and the Authority only.
Assessments Up To Twice The Claim
If the Government made a payment on a claim, a person subject to penalty may also be assessed not more than twice the amount of the Claim (an assessment of up to 2x the claimed amount), which in most cases is in lieu of damages.
Broader Definition of Claim and Material Terms
DHS updates definitions so a 'Claim' includes requests or submissions that conceal or improperly avoid or decrease an obligation to pay or transmit property, services, or money, and adopts the meanings of 'Material' and 'Obligation' from 31 U.S.C. 3729(b).
Board Judges May Serve as Presiding Officers
DHS allows members of a board of contract appeals to serve as Presiding Officers when DHS does not employ or have an available Administrative Law Judge. When a board judge serves, the hearing will follow the Civilian Board of Contract Appeals Rules of Procedure.
AG Notice Required Before Settlement
Before entering any agreement to compromise or settle allegations under 31 U.S.C. 3802, the Reviewing Official must notify the Attorney General in writing not later than 30 days before entering the agreement.
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Key Dates
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