Last week the U.S. Department of Justice (DOJ) issued its annual summary of settlements and judgments from civil cases involving the False Claims Act (FCA). For the fiscal year 2016, the DOJ recovered $4.7 billion, the third highest total in FCA history. Since 2009, the DOJ has averaged nearly $4 billion each year for a total of $31.3 billion. The overall amount is consistent with that of past years, even accounting for the natural variation created by the timing of settlements. This indicates that the DOJ isn’t taking its foot off the gas when it comes to using the FCA to recover what it views as false claims. This is also consistent with the fact the DOJ has been adding attorneys in the Civil Fraud Section that handles these matters.
More than half of the $4.7 billion recovered in 2016 can be attributable to the healthcare industry with $2.5 billion recovered from drug manufacturers, medical device companies, hospitals, nursing homes, laboratories, and physicians. Since 2009, the DOJ has recovered $19.3 billion in healthcare fraud claims – again more than half of the total recoveries for the period.
On the healthcare front, recoveries from pharmaceutical and device manufacturers make up about half of the $2.5 billion recovery. We’re still seeing significant recoveries in this space even with the conclusion of many of the off-label suits. We expect the continued focus of the government on relationships between manufacturers and purchasers, and whether conduct in those relationships can lead to false claims – either through the failure to report commercial customers or illegal kickback arrangements – two examples cited by the government. The pharma and device space are not immune to the government’s newfound interest in analyzing relationships and whether they lead to false claims.
The same is true in the hospital space. Last year we saw significant Stark recoveries – again, through the government construing relationships as improper. This year is no different, with the largest hospital-based resolution dealing with allegedly improper relationships between a handful of hospitals and a marketing and translation services company.
Lawsuits filed under the qui tam provisions of the False Claims Act led to $2.9 billion in recoveries, and the DOJ also noted that the number of qui tam cases continues to climb. More than 700 qui tam lawsuits were filed in 2016 for an average of 13.5 new cases every week. The government shared more than half a billion dollars with whistleblowers in 2016 so there’s no reason to expect the qui tam trend to diminish.
The overall take away is that the Department of Justice is focused on reviewing and understanding relationships between providers. This means that in order to assess and control risk, all healthcare providers need to be analyzing and reviewing relationships which may relate to or impact the care delivered to government healthcare beneficiaries. The DOJ has the skills and resources necessary to review those relationships, unpack them, and if they cross the line, make them the basis of an FCA claim.
It’s also worth noting that a significant portion of the overall FCA recovery is related to financial services cases. While not specific to healthcare, this demonstrates how long these cases take to wind through the system given that many of them deal with conduct related to the 2008 financial meltdown.