Department of Justice details nearly $2.9 billion in False Claims Act recoveries for FY 201801.28.19
The Department of Justice has just published its annual False Claims Act recovery summary and statistics for FY 2018, and once again, DOJ’s enforcement efforts have recovered nearly $2.9 billion in total FCA settlements and judgments last year. This brings DOJ’s total False Claims Act recoveries in the past five years total more than $20.5 billion.
Healthcare was a big factor in 2018. Of the $2.9 billion recovered last year, over 87 percent (in excess of $2.5 billion) involved the healthcare industry, including hospitals, pharmacies, hospice organizations, laboratories, physicians, and drug and medical device manufacturers. As a percentage, this was the highest percentage for healthcare-related recoveries since the FCA was overhauled in 1986. 2018 also marks the ninth consecutive year that civil False Claims Act healthcare settlements and judgments exceeded $2 billion. It’s worth noting that these figures do not include sizable healthcare-related recoveries by state Medicaid programs, many of which included both federal and state components.
Whistleblower, or qui tam, suits once again comprised a substantial portion of the False Claims Act cases filed this year. Whistleblowers filed 645 new lawsuits in 2018, a slight decrease from the previous year. This past year, settlements and judgments in qui tam actions made up nearly three-quarters of all False Claims Act recoveries. Within the healthcare sphere, the percentage was higher, with 77 percent of all 2018 recoveries coming from whistleblower suits. Qui tam suits resolved this past year accounted for $2.11 billion in recoveries, of which relators took home about $301 million, or a little over 14 percent. Notably, this is the lowest relator recovery, as a percentage, since FY 2009. In healthcare matters, relator recovery averaged slightly lower – 13.7 percent – which was the lowest rate in healthcare cases since FY 2012.
In its report, DOJ highlighted a number of significant healthcare FCA settlements, including an $84.5 million settlement by the William Beaumont Hospital, a regional hospital system based in the Detroit, Michigan to resolve allegations under the False Claims Act that stemmed from alleged violations of the Anti-Kickback Statute. As DOJ made clear, it will continue “to place great importance on enforcing the safeguards contained within the Anti-Kickback Statute (AKS).” Once again, DOJ makes clear that a violation of the Anti-Kickback Statute that results in the submission of a claim to the government is a false claim for purposes of the False Claims Act.
DOJ also emphasized its continuing “commitment to use the False Claims Act and other civil remedies to deter and redress fraud by individuals,” not just corporations. This emphasis only serves to reinforce DOJ’s commitment to individual responsibility in corporate investigations as laid out in the Yates Memo. The DOJ report includes numerous examples of settlements by and judgments against individuals, including some resulting from alleged physician kickback schemes and submission of medically unnecessary claims. The Yates Memo clearly remains an integral part of the government’s toolbox when investigating corporate misconduct, including violations of the False Claims Act and all indications are that DOJ will continue to pursue individual wrongdoers where the facts of a case support individual responsibility.
Recent amendments to the False Claims Act also provided the government with increased authority to dismiss qui tam cases. In January 2018, an eight-page memorandum authored by the director of the Civil Fraud Section, Michael Granston was leaked. The so-called “Granston Memo” laid out a number of factors that government prosecutors should consider in determining whether to move to voluntarily dismiss qui tam actions under 31 U.S.C. § 3730(c)(2)(A). DOJ notes that during the past year it has used the guidance of the Granston Memo to move to dismiss a number of FCA cases in order to “help prioritize the use of government resources.” There also appears to be a small increase in the proportion of government-initiated False Claims Act cases, particularly in healthcare. Last year, 12 percent of all new False Claims Act healthcare matters were initiated by the government, not relators. This is the second-highest rate since 2009. Based on recent trends, including a single day in which DOJ filed motions to dismiss in 11 False Claims Act cases, we can expect additional DOJ scrutiny of qui tam suits and the potential for increases in the number of government-initiated False Claims Act cases.
Based on significant recoveries in FY 2018, including multiple healthcare fraud-related recoveries over $200 million, it is plain that DOJ isn’t letting its foot off the accelerator anytime soon. The sheer numbers in DOJ’s report serve as a stark reminder that entities operating in highly regulated industries – especially healthcare – should reinforce their compliance programs and proactively investigate and address concerns as they arise.
The full text of the DOJ report, including the underlying statistics, can be found here.