/>iOn July 9, 2025, the U.S. Department of Justice (“DOJ”) announced it sent more than 20 subpoenas to physicians and clinics involved in providing gender-affirming care to minors, and that the subpoenas related to investigations into healthcare fraud, false statements and other misconduct.[i] DOJ’s recent announcement, combined with the other actions described below, signal the government’s interest in pursuing action against providers that bill federal healthcare programs for gender-affirming care for minors, including puberty blockers, hormone therapy and surgeries. Specifically, these actions strongly suggest that the government will investigate not only criminal claims but also civil claims under the False Claims Act[ii] (“FCA”) against gender-affirming care providers that bill federal healthcare programs for services provided to minors, relying on bases related to miscoding/misbilling, lack of informed consent and lack of medical necessity. The FCA provides for treble damages and penalties of up to $28,619 per claim. We discuss each of these theories below and what providers can do to reduce potential exposure under these theories.
On January 28, 2025, the White House issued Executive Order 14187[iii] (the “EO”) entitled “Protecting Children from Chemical and Surgical Mutilation.” The EO directed the federal government to take steps to ensure that the federal government does not “sponsor, promote, assist, or support” the “‘transition’ of a child from one sex to another,” including the provision of gender-affirming care to individuals under the age of nineteen. The EO directed federal agencies to ensure that institutions receiving federal research or education funding terminate their provision of gender-affirming care for minors and that reimbursement under certain federal healthcare programs for gender-affirming care for minors be discontinued. The EO also stated that federal agencies should rescind or amend policies relying on guidance issued by the World Professional Association for Transgender Health (“WPATH”), which had been the authoritative guidance relied upon by providers in performing gender-affirming care for minors. Although the EO did not mention the FCA, the EO directed the U.S. Attorney General to enforce an existing federal law against “female genital mutilation”[iv] which is defined as “any procedure performed for non-medical reasons that involves partial or total removal of, or other injury to, the external female genitalia” and excludes surgical operations necessary for the health of the patient.
On April 22, 2025, Attorney General Bondi issued the “Preventing the Mutilation of American Children” Memorandum,[v] directing the Department of Justice (“DOJ”) to investigate providers of gender-affirming care to minors (the “AG Memo”). The AG Memo directed the DOJ to pursue claims of civil and criminal liability against these providers under three existing laws: (1) the federal law banning female genital mutilation referenced in the EO; (2) the Food Drug & Cosmetics Act against manufacturers and distributors of puberty blockers, hormones and other drugs due to off-label promotion which would constitute misbranding;[vi] and (3) the FCA. The AG Memo, in particular, directed the DOJ to pursue investigations under the FCA for “miscoding” or “misbilling” by providers of gender-affirming care for minors, i.e. prescribing treatment for an illegitimate reason but reporting a legitimate purpose, or performing gender-affirming procedures but billing for an entirely different procedure.[vii]
On May 1, 2025, HHS issued a 400-page publication on “Treatment for Pediatric Gender Dysphoria,”[viii] questioning the benefits of gender-affirming care for minors, asserting various risks including infertility and sterility, and criticizing the WPATH guidance.
On May 28 2025, Dr. Mehmet Oz, the Administrator of the Centers for Medicare and Medicaid Services (“CMS”), sent letters[ix] to select hospitals expressing that “the United States Government has serious concerns with medical interventions for gender dysphoria in children” and requesting policies and procedures and financial data related to federal reimbursement for gender-affirming care for minors. In these CMS Letters, CMS reiterated the positions outlined in HHS’ May 1 publication, describing gender-affirming care for minors as involving potentially serious risks and questioned its benefits. CMS also requested information on the recipient-hospitals’ quality standard adherence policies and procedures relating to the following:
- the adequacy of informed consent protocols for children, including how children could provide informed consent and when parental consent was required;
- changes to guidelines and protocols in response to HHS’ May 1 publication; and
- any adverse events related to these procedures. CMS also requested complete financial data for all pediatric gender-affirming procedures performed at the hospitals which were paid in whole or in part by federal healthcare programs —attaching a non-exhaustive list of potentially relevant diagnosis and procedure codes—including:
- all billing codes utilized for the procedures;
- facility- and provider-level revenue—or utilization data—generated, directly or indirectly, from these procedures (from 2020 to present);
- facility- and provider-level operating and profit margins for each procedure type; and
- projected revenue forecasts for these service lines.
The letters gave recipient-hospitals 30 days to respond.
Together, the July 9, 2025 DOJ announcement, the CMS Letters, the EO, the AG Memo and the May 1 HHS publication strongly suggest that the DOJ will pursue civil FCA claims against providers that bill federal healthcare programs for gender-affirming care for minors. Although the identity and contents of the twenty subpoenas issued by DOJ are not publicly known, the CMS Letters and other federal guidance evidence three likely civil FCA theories including: (1) miscoding or misbilling; (2) lack of informed consent; and (3) lack of medical necessity.
Theory 1: Miscoding or Misbilling.
The AG Memo posits a miscoding or misbilling theory of FCA liability for providers of pediatric gender-affirming care that bill federal healthcare programs. Under this theory, providers violate the FCA when the providers bill federal healthcare programs for a covered service but in fact provide a different service. Alternatively, providers could violate the FCA by providing for a service for an illegitimate purpose, such as gender-affirming care, while billing for a legitimate purpose, such as early onset puberty. While no FCA cases have been brought under this theory yet, states such as Texas have sued[x] providers for violations of state law on these bases. The Texas Attorney General has brought deceptive trade practices and Texas Medical Practice Act complaints against providers of gender-affirming care for minors, alleging among other things that the providers misrepresented the purpose of the testosterone and puberty blockers they were prescribing. Specifically, the complaints allege the providers falsely billed testosterone prescriptions and puberty blockers using the diagnostic codes for endocrine disorder or precocious puberty when the treatment was actually for the purpose of treating gender dysphoria. Likewise, the Tennessee Attorney General commenced an investigation[xi] against Vanderbilt University Medical Center due to alleged public statements by one of its physicians to bill gender-affirming care for minors as endocrine disorder to reduce cost sharing obligations by patients whose insurance would not cover gender-affirming care.
The DOJ or state attorneys general may bring cases under the FCA or similar state laws alleging similar miscoding/misbilling. It is noteworthy that CMS, in the CMS Letters, provided “a non-exhaustive list of potentially relevant diagnosis and procedure codes,” directed providers to include “all billing codes utilized for pediatric sex trait modification procedures,” and requested revenue information from these procedures from 2020 to present. The language of the request suggests that CMS believes that some providers may have submitted inaccurate diagnosis codes unrelated to gender-affirming care (such as for endocrine disorder or precocious puberty) to federal healthcare programs over a five-year lookback period.
Theory 2: Informed Consent.
CMS imposes on hospitals requirements to obtain informed consents for surgeries and other procedures under various conditions of participation (“CoP”) including the Patients’ Rights COP, the Medical Records CoP and the Surgical Services CoP. Hospitals are required[xii] to include a statement in the informed consent that the patient has been advised as to anticipated benefits, material risks and alternative therapies.
The CMS Letters pointedly request policies and procedures from recipient-hospitals addressing “[t]he adequacy of informed consent protocols for children with gender dysphoria, including how children are deemed capable of making these potentially life-changing decisions and when parental consent is required.” Due to the CMS Letters’ focus on informed consent protocols, it is likely that another basis of FCA liability forwarded by the government will be based on purported deficient informed consent, including allegations that minor patients could not truly consent to participation, the parents of the children did not provide permission, benefits were exaggerated, or material risks, such as infertility, increased risk of cancer, decreased bone density or depression, were not adequately disclosed. The government might contend that informed consents for gender-affirming care for minors must include the benefits, risks and alternative treatments described in the HHS May 1 publication as well as its criticism of the WPATH guidance.
It is also possible that DOJ could expand this informed consent theory of FCA liability beyond clinical care to the context of federal research grants that were funded in the past. HHS regulations impose requirements for informed consent[xiii] of human research subjects. As with the CoPs discussed above, HHS requires human subject researchers to provide subjects with information about risks, benefits and alternatives of gender-affirming care. The regulations impose heightened informed consent requirements for children participating in research and generally require soliciting the parent or guardian’s permission.
Theory 3: Lack Of Medical Necessity.
The CMS Letters and the AG Memo repeatedly cite to the HHS May 1 Publication which criticizes the WPATH guidance, questions the benefits of gender-affirming care for minors and states that risks of such treatment have been underreported. A third potential theory of FCA liability would likely be that gender-affirming care for minors lacked medical necessity and thus could not be billed to federal healthcare programs. Federal law requires that an item or service must be “reasonable and necessary” to be reimbursed by a federal healthcare program. CMS defines a “reasonable and necessary” item or service as one that “meets, but does not exceed, the patient’s medical need,” and is furnished “in accordance with accepted standards of medical practice …”[xiv] Thus, it is possible that DOJ would take the position that the HHS May 1 Publication undermined the medical necessity for gender-affirming care, thus rendering any claim for items or services for gender-affirming care for minors false under the FCA.[xv]
Action Items
Given the subpoenas issued by DOJ this month and the likelihood that the government may pursue FCA liability on these grounds, providers may consider the following actions to reduce FCA risk:
- Analyze past billing and coding to determine if suspect diagnosis codes such as endocrine disorder and/or precocious puberty have been billed in conjunction with procedure codes associated with gender-affirming care for minors. Interview revenue cycle leadership to determine if any such billing and coding for such diagnosis codes has occurred, including internal discussions and discussions with payors and/or pharmaceutical manufacturers.
- Review policies and procedures and practices regarding informed consents related to gender-affirming care for minors, including descriptions of risks, benefits and alternative treatments and whether parental or guardian permission is obtained. Consider expanding this review to include informed consents related to federally funded research involving gender-affirming care for minors.
- Preserve all historical policies and procedures and other documents related to informed consents related to clinical gender-affirming care for minors or research related to gender-affirming care for minors. These could be important to show that the provider carefully considered the risks, benefits and alternatives known at the time and thus did not act knowingly, recklessly or with wanton disregard, which must be shown to demonstrate an FCA violation.
- Review adverse incident reports regarding gender-affirming care for minors and determine whether the reports were properly handled and whether such reports should be incorporated into informed consents.
- Carefully consult with outside or in-house counsel when responding to the CMS Letters or similar informational requests as information produced could be used to generate additional document requests or take additional enforcement action.
FOOTNOTES
[ii] 31 U.S.C. § 3729.
[iii] Protecting Children from Chemical and Surgical Mutilation
[iv] 18 U.S.C. § 116.
[v] “Preventing the Mutilation of American Children” Memorandum
[vi] In April 2025, Endo USA, Inc. received subpoenas from the DOJ’s Consumer Protection Branch related to marketing and promotion of Supprelin LA, one of the main implantable puberty blocking medications.
[vii] A June 11, 2025 memorandum from DOJ Assistant Attorney General Brett A. Shumate to civil division employees stated that DOJ’s civil division would use “all available resources” to prioritize these investigations and pursue, among other things, misbranding and miscoding theories.
[viii] Treatment for Pediatric Gender Dysphoria
[ix] CMS Letters
[x] On October 17, 2024, the state of Texas brought a lawsuit requesting an injunction against a physician titled Texas v. May C. Lau in Collin County, Texas.
[xi] Tennessee Attorney General’s Office Provides Statement Regarding VUMC Investigation
[xii] Revisions to the Hospital Interpretive Guidelines for Informed Consent and Informed Decision Making
[xiii] 45 C.F.R. § 46.101.
[xiv] CMS Medicare Integrity Manual § 13.5.4.
[xv] See, e.g., Winter ex rel. United States v. Gardens Reg’l Hosp. & Med. Ctr., Inc., 953 F.3d 1108 (9th Cir. 2020).
