On February 7, 2023, the Department of Justice released its report on False Claims Act Settlements and Judgments for Fiscal Year 2022, showing that the DOJ recovered over $2.2 billion last year. That same day, in his State of the Union speech, President Biden pushed for increased anti-fraud strike forces and said, “For every dollar we put into fighting fraud, taxpayers get back at least ten times as much.” While the timing of the DOJ’s announcement of billions of dollars in recoveries was not likely coincidental, this year’s DOJ report was interesting for two reasons. First, $2 billion is the lowest recovery amount for FCA cases by the DOJ since 2008. Second, for the first time, the DOJ recovered more money in cases where the government declined to intervene than in cases where it did intervene.
Summary of FY 2022 FCA Recoveries
The DOJ FCA recoveries and settlements report breaks down the number of FCA cases by subject area or department. The report is separated into three categories: healthcare, defense, or neither. Consistent with past years, healthcare-related cases comprised the bulk of the government’s recovery in FCA cases. Of the $2.2 billion recovered, over $1.76 billion was related to healthcare, or more specifically, matters involving the Department of Health and Human Services. The vast majority of the healthcare-related FCA recoveries related to allegations that healthcare providers, clinical laboratories, pharmaceutical companies, and/or DME manufacturers paid kickbacks to induce referrals in violation of both the FCA and the Anti-Kickback Statute. Last year also saw over $100 million of recoveries in matters related to allegations of unnecessary services or substandard care. These included cases involving allegations of “grossly substandard” skilled nursing services, unnecessary drug testing, and the provision of hospice services for patients who were not terminally ill.
Outside of the healthcare space, there were multimillion-dollar recoveries in cases involving military contracts. These included cases alleging inflated prices, kickbacks paid by subcontractors, and defective equipment. Also, the DOJ highlighted recoveries in COVID-related fraud cases, including matters alleging improper or duplicate payments under the Paycheck Protection Program and improper disbursement of PPP funds by lenders. While the recovery amounts on the COVID-related fraud cases reflect a small proportion of the total DOJ recovery, these recoveries do indicate that the DOJ views these cases as important to pursue even if the amount at issue is small.
Takeaways from DOJ Report
The main conclusion from the report, and consistent with President Biden’s statements during his State of the Union address, is that the use of the False Claims Act as a mechanism to combat fraud on the government is as strong as ever. Even though the amount recovered by the Department of Justice last year was the lowest since 2008, $2 billion is still a substantial amount of money. FCA cases take time — often years — to investigate and litigate. Thus, sometimes the numbers can seem skewed if there are one or two large cases settled in a given year. For example, in fiscal year 2021, the DOJ recovered over $5.7 billion, almost three times what was recovered in fiscal year 2022. Of that amount, $2.8 billion related to a single case — Purdue Pharma’s resolution of civil FCA liability. Also, the number of new whistleblower complaints was in line with years past. Interestingly, the number of new, non-qui tam matters opened last year by the DOJ was the largest in almost 30 years. It is possible that this number was higher than years past due to the number of PPP-related investigations that were opened by the government or it could indicate that the DOJ is seeking to affirmatively investigate more matters on its own, instead of waiting to receive a whistleblower complaint.
Second, whistleblower counsel continue to file False Claims Act cases and, more than ever, are willing to litigate those cases on their own if the government declines to intervene. This conclusion is supported by the remarkable fact that fiscal year 2022 was the first year in which the government recovered more money from FCA cases where it declined to intervene than in cases where it intervened and litigated. The government recovered approximately $780 million from cases where it intervened, but recovered almost $1.2 billion in declined cases where the relators’ counsel litigated on their own. Notably, relators received $347 million from cases where the government declined to intervene. Such large recoveries in cases where the government chose not to proceed will likely further energize relators and their counsel to pursue False Claims Act cases.