Trade Fraud Task Force Surpasses $1 Billion in Recoveries

Trade Fraud Task Force Surpasses $1 Billion in Recoveries 

On July 14, the US Department of Justice (DOJ) announced that the Trade Fraud Task Force (TFTF) surpassed $1 billion in civil and criminal recoveries, penalties, forfeitures, and charged losses in less than one year of operation. The DOJ launched its joint initiative with the US Department of Homeland Security (DHS) in August 2025. The DOJ emphasized that this milestone confirms its shift in policing the global supply chain, favoring criminal and civil accountability for companies and individuals that evade US trade laws over administrative fines.

The TFTF’s enforcement priorities include combating fraud and identifying misrepresentations made to US Customs and Border Protection (CBP). These efforts span the entire supply chain and focus on labeling and declaration, tariff evasion, antidumping duty and countervailing duty circumvention, forced labor, and violations implicating public health and safety.

The DOJ highlighted a series of cases underscoring the Task Force’s reach, including a $549.5 million settlement with Perfectus Aluminum, which we covered here.

In addition to these TFTF enforcement highlights, the DOJ also unveiled the creation of a new Global Trade & Commerce Enforcement Section (GTCES) within its National Fraud Enforcement Division to investigate and prosecute trade and import fraud that poses a threat to American industries. This effort, which builds cooperation between Main Justice, US Attorney’s Offices, and local law enforcement agencies, was spearheaded by US Attorney Andrew S. Boutros of the Northern District of Illinois as part of that office’s role as the lead prosecutorial partner for the TFTF.

Finally, the DOJ released a joint DOJ/DHS Resource Guide to Trade Fraud Enforcement intended to help companies understand enforcement priorities and self-assessment expectations. 

For additional information, please review this client alert prepared by our colleagues here, and read the DOJ’s press release here.

Labcorp Agrees to Pay $14.5 Million to Resolve FCA Allegations

On July 15, Laboratory Corporation of America Holdings (Labcorp) agreed to pay $14.5 million to resolve allegations that it billed Medicare Part B for urine drug testing that was not medically necessary. The government’s allegations focused on Labcorp’s “ToxAssure Comprehensive” testing panel, which combined two types of urine drug tests and billed for both at the same time using separate medical codes.

As part of the settlement, Labcorp admitted and accepted responsibility for conduct that occurred between January 1, 2018, and November 22, 2023. That conduct included regularly submitting claims for both types of urine drug testing, performing more detailed testing without first doing an initial screening test, and billing Medicare for both the all-inclusive screening code and the highest-level detailed testing code each time. The government alleged that this practice led to medically unnecessary claims being submitted to federal health care programs.

According to the DOJ, Labcorp represented that it has stopped billing both medical codes together. The DOJ gave Labcorp credit under its False Claims Act (FCA) guidance for voluntary disclosure, cooperation, and corrective action.

Read the DOJ’s press release here.

The claims resolved by this settlement are allegations only, and there has been no determination of liability.

Redi-Bag USA and CEO Agree to Pay $7.3 Million to Settle FCA Allegations Relating to Evaded Customs Duties

On July 15, New York Packaging II LLC, doing business as Redi-Bag USA, and its CEO, Jeffrey Rabiea, agreed to pay $7.3 million to resolve allegations that they violated the FCA. The DOJ alleged that they provided false information on customs forms about the country of origin for polyethylene retail carrier bags (PRCBs) to avoid paying antidumping duties. According to the DOJ, Redi-Bag imported bags made in China, shipped them through Hong Kong, and listed Hong Kong as the country of origin on customs filings to avoid duties of up to 77.57%.

The DOJ also alleged that Redi-Bag and Rabiea directed employees to cover up “Made in China” labels on the bags, told manufacturers to remove those labels before shipping, and canceled orders after learning that a shipment was set for customs inspection.

The settlement resolved a civil lawsuit initiated in the US District Court for the District of New Jersey by a relator, John Maierhoffer, a former employee of Redi-Bag USA. Maierhoffer filed the action under the FCA’s qui tam provision. As part of the resolution, he will receive a portion of the government’s award, totaling over $1.3 million.

The case is United States ex rel. Maierhoffer v. New York Packaging II LLC, Civil No. 21-20170.

Read the DOJ’s press release here.

The claims resolved by this settlement are allegations only, and there has been no determination of liability.

Tactile Systems Technology Agrees to Pay $550,000 to Resolve FCA Allegations Involving Fabricated Medical Records

On July 14, Tactile Systems Technology agreed to pay $550,959 to resolve allegations that it violated the FCA by submitting false claims to Medicare for pneumatic compression devices that were not medically necessary.

Tactile sells pneumatic compression devices used to treat patients with chronic swelling caused by lymphedema and chronic venous insufficiency. Medicare covers these devices only after a patient does not get enough relief from four weeks of conservative treatment, including basic compression. The prescribing health care professional also must explain in the medical records why basic compression did not adequately treat the patient’s condition.

The government alleged that, between January 1, 2019, and December 31, 2024, certain Tactile sales employees created false records or changed medical records and other clinical documents that Tactile used to bill Medicare. The US Attorney’s Office for the District of Massachusetts alleged that sales employees forged health care professionals’ signatures to make it look like they had prescribed the devices. It also alleged that employees added false statements saying patients had not improved with basic compression therapy or that patients did not have a meaningful reduction in swelling after using the basic Entre model and therefore needed the more expensive Flexitouch device.

The case was filed by a whistleblower under the FCA’s qui tam provision. The relators will receive over $129,000 of the government’s recovery.

The cases are United States ex rel. Scarborough, LLC v. Tactile Systems Technology, Inc., No. 21-cv-10813 and United States ex rel. Gorham and Gast v. Tactile Systems Technology, Inc., No. 21-cv-11809.

Read the US Attorney’s Office for the District of Massachusetts press release here.

The claims resolved by this settlement are allegations only, and there has been no determination of liability.