Health Law Advisor

In June 2026, the Trump administration announced nearly $2 million in federal grant funding for an Embryo Adoption Awareness and Services (EAA) program administered through the Department of Health and Human Services (HHS). While embryo adoption programs have existed at the federal level since 2002, the new grant notice contains language that may have far-reaching implications for reproductive health law, in vitro fertilization (IVF) regulation, and the ongoing legal debate over fetal personhood.

On June 15, 2026, Vermont Governor Phil Scott signed H. 583—imposing significant restrictions on private equity groups, hedge funds, and entities they control, including management services organizations (MSOs). The legislation prohibits interference with the clinical judgment of health care providers and establishes reporting requirements to an independent state agency regarding ownership and control.

On June 23, 2026, the U.S. Department of Justice (“DOJ”) announced the results of the annual National Health Care Fraud Takedown (“2026 Takedown”)—the first under DOJ’s new National Fraud Enforcement Division (“NFED”) announced on April 7. This year, the 2026 Takedown charged 455 defendants in connection with more than $6.5 billion in alleged fraud.

Although much of the content of the prosecutions is the same as in past years (e.g. wound care, opioids), Medicaid fraud—long the province of state Medicaid Fraud Control Units (“MFCUs”)—featured prominently in the 2026 Takedown. DOJ claims to have charged the largest number of Medicaid fraud defendants and Medicaid fraud loss in DOJ history: 295 defendants and over $518 million in alleged false claims submitted to Medicaid. Per the DOJ press release, the MFCUs of all 50 states participated, the highest number ever.

On June 18, 2026, the Food and Drug Administration (“FDA”) announced the submission of a proposed collection of information to the Office of Management and Budget (“OMB”) pertaining to the manufacturing, packaging, labeling, or holding of dietary supplements to ensure their quality (“FDA Notice”). Written comments (including recommendations) are due to OMB by July 20, 2026.

On June 10, 2026, the Department of Health and Human Services Office of Inspector General (OIG) issued Advisory Opinion 26-14 (AO 26-14), another favorable advisory opinion (its fourth in as many years) involving sponsored tests.

On May 28, 2026, both houses of the Illinois legislature passed HB 5000, enhancing oversight of health care mergers, acquisitions, and contracting affiliations in the state.

So, I had some free time today and decided to work with AI on an assessment of comments submitted to FDA’s November 2023 Proposed Rule (the “proposed rule”) to classify antimicrobial wound dressings and washes. The final rule was slated to be published in May 2026, and though that time has passed, the absence of a withdrawal notice, or any other information on FDA plans, is undoubtedly disconcerting to the wound care community.

The project included various prompts and refinements on my part, and time reviewing and confirming or adjusting inferred or borderline findings manually. The proposal, for those who don’t know, aims to create new device classifications covering hundreds of currently marketed antimicrobial wound dressings—devices that primarily incorporate ingredients like hypochlorous acid or silver, have been staples of wound care for decades, and have excellent safety and efficacy profiles. 

In April 2026, a complaint alleging “one of the most egregious examples of piracy in the medical technology industry” landed on the docket of the U.S. District Court for the Eastern District of Texas.

The 180-page patent infringement lawsuit by Heartflow, Inc.—a California-based medical company that advances coronary care through artificial intelligence (AI)-powered three-dimensional models of a patient’s heart—alleges that a former Heartflow consultant founded a rival company, Cleerly, Inc., using Heartflow’s “revolutionary cardiovascular diagnostic technology, trade secrets, and confidential business information” while still bound by contractual obligations.

“By this action, Heartflow seeks to protect the extraordinary investment—measured in hundreds of millions of dollars, decades of research protected by hundreds of patents, and the contributions of countless scientists, engineers, and physicians—that created the world’s first AI-powered, non-invasive cardiac diagnostic platform, as recognized by the U.S. Food and Drug Administration (FDA) and Centers for Medicare & Medicaid Services (CMS),” the Heartflow complaint states.

Cleerly issued a statement on April 17, calling the filing a “lawsuit to limit competition.”

“We strongly disagree with the allegations and will vigorously defend against these baseless claims,” Cleerly wrote. The company’s answer is due July 8, 2026.

We discuss this patent infringement case in further detail below.

The Highlights

• Accelerated FCA Investigative Timeline: The U.S. Department of Justice (DOJ) is taking new steps to implement the directives of Executive Order 14395 of March 16, 2026, “Establishing the Task Force To Eliminate Fraud,” by expediting the review for newly filed False Claims Act (FCA) qui tam actions involving federally funded state-administered benefits programs. The May 27, 2026, memorandum from Assistant Attorney General Brett A. Shumate (“Shumate Memo”) states that all newly filed state-administered benefits program fraud qui tam actions will now be reviewed by DOJ in 60 to 120 days after filing to determine if the government will continue its investigation, permit the whistleblower to proceed, or act to dismiss the case.
• DOJ Reaffirmation of Relator Authority: The Shumate Memo reaffirms DOJ’s position that whistleblowers may “stand in the shoes” of the government and indicates that the agency will let relators lead litigation subject to DOJ’s “oversight and ultimate control.”
• Automatic Criminal and Administrative Referrals: New benefits program fraud qui tam matters will be automatically referred to the Criminal Division and/or the National Fraud Enforcement Division for evaluation of potential criminal violations and to the affected agency for potential administrative action, including payment suspension.

Pharmaceutical and biotech manufacturers using artificial intelligence (AI) to support compliance with Food and Drug Administration (FDA) regulations should take note: the lack of human oversight of AI quality tools can constitute a current good manufacturing practice (CGMP) violation.