Regular readers undoubtedly have noticed that I have been writing a lot lately about the False Claims Act (FCA). That is because the Trump Administration has decided to deploy the FCA as one of its principal legal tools to enforce and advance its policy objectives. Insurers wondering what the administration’s enforcement approach may mean for their claims portfolios may want to take a look at the securities class action lawsuit recently filed against online insurance broker SelectQuote. The company, whom the DOJ sued in May in a False Claims Act suit alleging the company received “illegal kickbacks” from insurers, has now been hit with a follow-on securities suit relating to the FCA allegations. As discussed below, the new follow-on lawsuit suggests that D&O insurers will want to consider the implications of the administration’s active deployment of the FCA as an enforcement tool. A copy of the August 11, 2025, lawsuit against SelectQuote can be found here.

The Trump Administration and the FCA

Since its inception in January,  the current Trump administration has brandished the FCA as a key enforcement tool. For example, and as I noted in a post last month (here), the Trump administration has already demonstrated its intent to use the FCA to pursue companies that seek to evade tariffs. The administration has also declared its intent to use the FCA to target companies it believes engage in “illegal DEI,” as discussed in a recent law firm memo (here). And as I noted in a post earlier this week, the DOJ is now using the FCA to pursue companies for cybersecurity violations. The administration clearly believes the FCA is a multipurpose tool that will enable the administration to advance its policy objectives.

The SelectQuote Lawsuit

On August 11, 2025, a plaintiff shareholder filed a securities class action lawsuit in the Southern District of New York against SelectQuote and certain of its directors and officers. The complaint purports to be filed on behalf of a class of investors who purchased the company’s securities between September 9, 2020 and May 1, 2025.

The complaint alleges that on May 1, 2025, the DOJ filed a False Claims Act complaint against SelectQuote. As reflected in the DOJ’s May 1, 2025 press release (here), SelectQuote was sued along with several other insurance brokers, as well as several health insurers.

The FCA complaint alleges that for several years, SelectQuote received “tens of millions of dollars in “illegal kickbacks” from health insurance companies in exchange for steering Medicare beneficiaries to enroll in the insurers’ plans. The FCA complaint alleges further SelectQuote made materially false claims by stating that it offers “unbiased coverge comparisons” when in fact it “repeatedly directed Medicare beneficiaries to the plans offered by insurers that paid them the most money, regardless of the quality or suitability of the insurers’ plan.” The securities complaint alleges that the company’s share price declined nearly 20% on the news of the DOJ complaint filing.

The securities lawsuit complaint alleges that during the class period the defendants failed to disclose  “(1) that the Company was directing Medicare beneficiaries to the plans offered by insurers that best compensated SelectQuote regardless of the quality or suitability of the insurers’ plans; (2) that SelectQuote did not provide unbiased comparison shopping for Medicare Advantage insurance plans; (3) that SelectQuote received illegal kickbacks to steer Medicare beneficiaries to certain insurers and limit enrollment in competitors’ plans; (4) that as a result, Select Quote had not complied with applicable laws, regulations and contractual provisions; (5) that SelectQuote was vulnerable to regulatory and legal sanctions as a result of its conduct, including claims that it had violated the False Claims Act; and (6) that, as a result of the foregoing, Defendants’ positive statements about the Company’s business, operations, and prospects were materially misleading and/or lacked a reasonable basis.”

The securities complaint alleges that the defendants violated Sections 10(b) and 20(a) of the Securities Exchange Act of 1934 and Rule 10b-5 thereunder. The complaint seeks to recover damages on behalf of the plaintiff class.

Discussion

The underlying FCA lawsuit here is not related to any of the Trump administration’s signature policy initiatives. However, this new securities suit is relevant for insurers thinking about what the Trump administration’s willingness to deploy the FCA may mean for their claims portfolios.

To put the issue in the context of insurers’ public company insureds, a False Claims Act lawsuit against a public company is unlikely to trigger the company’s D&O insurance policy, as the typical public company D&O insurance policy provides entity coverage only for securities claims. As an FCA action is not a securities claim, the FCA action would not trigger the entity coverage in the defendant company’s insurance policy. However, were the same company to be hit – as SelectQuote was here – with a follow-on securities suit based on the allegations in the underlying FCA action, the entity coverage in the defendant company’s D&O insurance policy would be triggered.

The fact that the Trump administration clearly intends to use the FCA as a way to drive many of its policy objectives has its own set of implications for insurers. The possibility of a follow-on securities suit, of the type filed against SelectQuote here, has further insurance implications. Insurers will want to consider the possibility of an FCA follow-on action in thinking about what the administration’s deployment of the FCA may mean.