Whistleblowers May Receive Rewards for Reporting Systemic Fraud Against Federally Funded Programs Like Medicaid

By Janel Quinn and Anthony Primelo

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The U.S. Department of Justice (DOJ) announced that it is fast-tracking the review of whistleblower fraud cases involving federally funded, state-administered benefits programs such as Medicaid.

The announcement, published in May of 2026, comes after growing publicity around fraud in several states — including Minnesota, where the non-profit Feeding Our Future illegally siphoned between $250 million and $350 million from a federally funded child nutrition program, and California, where several recent cases involved hundreds of millions of dollars in stolen Electronic Benefits Transfer (EBT) funds and state Medicaid (Medi-Cal) funds.

The DOJ’s announcement signals a prioritization of benefits fraud cases nationwide, particularly those arising from whistleblower reports of wrongdoing.

Accelerated Review of Benefits Fraud Allegations

The DOJ’s intention is to shorten the typical investigation process for qui tam complaints alleging fraud against public benefits programs — with the initial review being performed in only 60-120 days compared to the years it often takes.

The federal False Claims Act (FCA) makes it generally illegal to knowingly submit false claims to programs, contractors, or other entities that are using funding from the federal government. The law includes a qui tam provision that allows private individuals — known as whistleblowers or relators — to file a complaint on behalf of the U.S. and qualify for monetary compensation if their information leads to a financial recovery.

The initial investigative period for FCA cases is 60 days after the filing, but it’s common for U.S. Attorneys’ Offices to request numerous extensions until investigations last for years.

The new directive still allows for extensions, but it shortens the length of them and, when seeking multiple extensions, requires approval from the assistant attorney general of the DOJ’s Civil Division.

The expectation is that this change will encourage U.S. Attorneys’ Offices to pay special attention to cases involving benefits fraud.

New Plan of Action for Benefits Fraud Cases

The purpose of the initial review is for the U.S. government to determine if it will intervene in a case — which means taking over the litigation of it — or decline to intervene, leaving it to the whistleblower and their attorney to decide if they want to continue pursuing the case independently.

The DOJ’s new guidance provides a specific plan of action for the government’s initial investigative period of between 60 and 120 days, which includes the following instructions:

• Promptly issue Inspector General subpoenas and/or Civil Investigative Demands (CIDs), which are both tools used to gain critical information from target entities;
• Initiate enforcement actions if the target entities fail to produce the requested information in a timely manner;
• Make specific requests for information (with early witness interviews as a potential alternative for documents);
• Seek assistance from whistleblowers and their attorneys when needed; and
• Consider finalizing damages estimates after making an intervention decision rather than extending the investigation to assess details beyond the government’s general loss.

We expect that these steps will be advantageous to whistleblowers and their legal counsel, allowing for greater efficiency, transparency, and focus on their cases.

The conclusion of the initial review remains the same as with other FCA cases. The DOJ’s Civil Division will decide whether to:

1. Continue investigating the allegations;
2. Move to dismiss the case; or
3. Allow the whistleblower and their attorney to proceed with the case on behalf of the federal government under the DOJ’s supervision.

How to Spot Benefits Fraud

The DOJ is focusing on fraud involving state-administered programs that receive funding from the federal government, including but not limited to:

• Medicaid;
• Supplemental Nutrition Assistance Program (SNAP);
• Temporary Assistance for Needy Families (TANF);
• Unemployment insurance; and
• Grants under the Child Care and Development Fund (CCDF).

These programs generally support low-income individuals and families. Many states rely on contractors and third-party companies to administer or distribute these benefits.

Fraud can occur at many levels, including:

• Coordinated and widespread schemes to intentionally falsify information, such as income or other qualifying factors, on benefits applications;
• Billing Medicaid for medically unnecessary services, services not provided, or services provided by unlicensed personnel; and
• General and substantial misuse of funds intended for specific groups, such as low-income families, children, or the elderly.

A New Approach to Benefits Fraud Enforcement

The decision to accelerate these investigations is the latest step in the federal government’s efforts to combat fraud involving taxpayer-funded benefit programs.

The DOJ has shifted to what it describes as a “whole-of-government” approach, which promises more inter-agency cooperation to ensure prompt resolutions. This opens the door for earlier administrative penalties against target entities and parallel criminal investigations.

Multiple announcements have shown that the federal government intends to take a more aggressive and multi-faceted approach to benefits fraud cases. At the beginning of the year, the DOJ announced a new Division for National Fraud Enforcement, and the White House issued an Executive Order establishing the inter-agency Task Force to Eliminate Fraud.

Contact a Whistleblower Attorney

If you’re aware of a fraud scheme exploiting a benefits program, we encourage you to speak with one of our experienced whistleblower attorneys who can guide you through your available options and the sometimes lengthy process of pursuing an FCA case. Your information could help uncover fraud and lead to a financial award for your efforts.

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Janel Quinn is a principal at The Employment Law Group, P.C.; Anthony Primelo is an associate at the firm.

By Nicholas Woodfield and Kirsten Fetrow

IMPORTANT: The following article is intended as a general summary of facts and law and not as individual legal advice upon which you should rely or act. Every case is unique and specific. This article represents our firm’s best knowledge as of August 2026.

Losing your job can be a difficult situation regardless of the circumstances, but it can feel even harder to bear when you’ve been fired unfairly. What if your employer fired you for reporting discrimination? Or your employer or a coworker deliberately attempted to harm you? Or you endured months of harassment while management looked the other way?

Compensation for lost wages and mental anguish are the typical remedies in successful employment cases, but sometimes they do not address the degree of the egregiousness an employer engaged in. Punitive damages might then deliver the justice warranted when an employer’s conduct is especially harmful.

Maryland employees can seek punitive damages but only in limited circumstances. Those who work in Howard County, Montgomery County, and Prince George’s County, however, have more options than the rest of the state — in part because of a pivotal lawsuit litigated by The Employment Law Group® law firm.

What Are Punitive Damages?

Punitive damages are awarded when a jury or judge decides that a defendant’s actions were so egregious that they warrant punishment. Where compensatory damages aim to make up for measurable financial losses or emotional harm, punitive damages are meant to deter defendants from engaging in similar conduct in the future. A claim for punitive damages is made in conjunction with other claims, such as discrimination.[1]

An employee seeking punitive damages must show that their employer acted with “actual malice”[2] or “reckless indifference,” which we’ll explain further in a later section.

Can You Get Punitive Damages for Discrimination Cases Under Maryland Law?

Employees can seek punitive damages under the Maryland Fair Employment Practices Act (MD FEPA). MD FEPA prohibits employment discrimination based on an employee’s protected status such as race, sex, religion, national origin, age, miliary status, disability, and gender identity.[3] The law’s anti-discrimination provisions generally apply to employers with 15 or more employees, while its anti-harassment provision may apply regardless of size.

The amount of punitive damages employees can get under MD FEPA is capped; it depends on employer size and is combined with compensatory damages.[4] For example, the combined compensatory and punitive damages cap for an employer with 15-100 employees is $50,000. For an employer with 101 to 200 employees, the cap is $100,000; for an employer with 201 to 500 employees, the cap is $200,000; and for an employer with 500 or more employees, the cap is $300,000.[5]

Employees in Howard County, Montgomery County, and Prince George’s County also can seek punitive damages for discrimination claims under Md. Code Ann., State Gov’t § 20-1202, which establishes the right to pursue discrimination claims in the aforementioned counties. Anyone outside of those three counties can’t bring a discrimination claim under that law but may be able to seek punitive damages under MD FEPA or federal laws, such as Title VII, depending on the size of their employer.

The ability to seek punitive damages is not explicitly mentioned in Section 20-1202. It wasn’t until 2013 that a court opinion determined that employees in Howard, Montgomery, and Prince George’s counties could receive punitive damages.

The case, Edgewood Mgmt. Corp. v. Jackson, involved a manager who was punished for acting on an employee’s discrimination complaints. The Employment Law Group represented Donna Jackson, who had worked at the property management company Edgewood for over 30 years.

One of Ms. Jackson’s subordinates complained that a supervisor treated her differently than a male employee. Ms. Jackson told leadership about the employee’s complaint. In retaliation, she was told that her pay would be cut and that she would be transferred to properties far from her home. Ms. Jackson sued Edgewood, asking for compensatory and punitive damages.

The jury awarded Ms. Jackson $650,000 in compensatory and economic damages. However, the trial court judge reduced the award to $89,195 and denied Ms. Jackson punitive damages.

The Employment Law Group appealed the decision, and the appeals court found there was no limit on the amount or type of damages that could be awarded under Section 20-1202. Ms. Jackson’s jury award of $650,000 was reinstated.

This appellate decision in Edgewood wrote into case law that plaintiffs in Howard, Montgomery, and Prince George’s counties can seek punitive damages under Section 20-1202. Punitive damages awarded under this law are not subject to a cap, but the amount awarded might be reduced if the court determines that it’s excessively disproportionate to the other damages awarded or otherwise unfairly large for the actual harm done, which would violate the U.S. Constitution’s Due Process Clause.

How to Get Awarded Punitive Damages for Discrimination Cases Under Maryland Law

Punitive damages can be awarded at the jury’s discretion, but it requires a two-step showing. First, the employee must prove that discrimination or retaliation occurred. Then they must prove that the discrimination and/or retaliation was accompanied by particularly egregious conduct or malicious intent. If the employee satisfies both requirements, the jury may decide whether to award punitive damages and, if so, how much to award.

Step One: Proving Discrimination or Retaliation

For a successful complaint, an employee would need to establish that:

• They possess a protected trait (e.g., gender, race, or disability status), or they engaged in a “protected activity” to oppose illegal discriminatory acts (e.g., reporting discrimination or participating in an internal investigation);
• Their employer took an adverse employment action (e.g., failing to promote the employee accordingly, paying them less, or terminating them unfairly); and
• There is a direct link between the employee’s protected status or activity and the employer’s adverse action.

An employer will claim that they didn’t do anything wrong. The employee will need to prove that their employer is making up an excuse to cover up for their discrimination/retaliation and must submit sufficient evidence to show that it is more likely than not that the discrimination/retaliation occurred. Lawyers and judges refer to this “more likely than not” standard as a “preponderance of the evidence.”

Step Two: Proving “Actual Malice” or “Reckless Indifference”

Punitive damages are not available in every case. An employee must also prove that the defendant acted with actual malice (meaning they intentionally attempted to mistreat the employee) or reckless indifference to the consequences of their actions.

Malice or reckless indifference can be shown in many ways. Some examples include an employer:

• Reprimanding an employee for performance issues that didn’t previously exist;
• Spreading false information about an employee to harm their reputation;
• Making threats, such as, “you’ll regret this” or “I’ll make sure you never work here again.”

Proving malice requires a stricter standard of evidence. This reflects the seriousness of punitive damages, which are meant to punish particularly egregious conduct rather than compensate every successful claimant.

An employee must present “clear and convincing evidence” that the discrimination or retaliation was harmful enough to warrant punitive damages. The evidence needs to be strong enough to convince the jury that the misconduct was highly probable or reasonably certain — a firm belief rather than just “more likely than not.”

In Hanna v. Emergency Med. Assocs., P.A., Dr. Rebecca Hanna claimed her employer wrongfully terminated her in retaliation for filing a sex discrimination complaint. The court determined that she had sufficient evidence to seek punitive damages.

Dr. Hanna provided testimony at trial that her employer wrongfully accused her of incompetence and did not give her an opportunity to respond to accusations before firing her. One of the accusations involved criticisms of Dr. Hanna’s patient charts, but she had not previously received any negative feedback. Her employer also did not allow Dr. Hanna to resign in lieu of being fired and failed to give her the 30-day notice required under her employment contract. The employer then gave contradictory references to her prospective employers.

Can You Sue Individual Managers in Maryland Discrimination Cases?

A supervisor can be liable if they take an adverse action and are motivated by discriminatory reasons.[6]

MD FEPA allows lawsuits against “any person” who engages in, aids, abets, or compels a discriminatory act, which generally covers individual supervisors who directly participate in unlawful employment practices.[7]

Under Section 20-1202, however, arguments for individual liability depend on the employee’s specific county code. Each county has a different definition for what counts as an “employer.”[8]

The Montgomery County Code[9] and the Prince George’s County Code[10] both define an employer as a “person” who has at least one employee. The use of the word “person” as well as the low threshold can be the basis for arguing that the law is not meant to be limited to corporate or business entities.

The Howard County Code has a higher threshold — at least five employees — but similarly uses the word “person.”[11] If an individual supervisor meets that threshold, an employee can perhaps argue for individual liability.

A discrimination complaint against an individual supervisor should be filed initially with the specific county’s office of human rights and should specify that the individual manager is a “person” who committed or caused the discriminatory practice.

Can Requesting Punitive Damages Help My Case?

A viable claim for punitive damages can result in a faster and more favorable resolution.

Going to trial means risking a jury siding with the employee and awarding punitive damages. The damages might get reduced later, but either way, the employer will still have to pay whatever amount the court deems appropriate. Employers may wish to avoid this possibility by offering a reasonable settlement instead.

Employers might also want a quick resolution to avoid the reputational harm that can result from allegations of egregious discriminatory conduct becoming part of the public record.

Making a claim for punitive damages can be a powerful strategy in negotiating and settling a discrimination claim. If you are a Maryland employee and you believe your employer has discriminated or retaliated against you, contact The Employment Law Group.

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[1] Warnick v. Delmarva Power & Light Co., No. CV RDB-23-0175, 2023 WL 7282950, at *4 (D. Md. Nov. 3, 2023).
[2] Owens-Illinois, Inc. v. Zenobia, 325 Md. 420, 460 (1992).
[3] Md. Code Ann., State Gov’t § 20-606.
[4] Id. §§ 20-1009(b)(3) and 20-1013.
[5] Id. § 20-1009(b)(3).
[6] Staub v. Proctor Hosp., 562 U.S. 411, 419, 131 U.S. 1186, 1192, 179 L. Ed. 2d 144 (2011)
[7] Id. § 10 101 et seq.
[8] See Edgewood Mgmt. Corp. v. Jackson, 212 Md. App. 177, 199, 66 A.3d 1152, 1165 (2013).
[9] Montgomery County Code, Sec. 27-19(c).
[10] Prince Georges County Code, PGCC § 2-186.
[11] Howard County Code, Sec. 12.208.

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Nicholas Woodfield is a principal and general counsel at The Employment Law Group, P.C.; Kirsten Fetrow is an associate at the firm.