Key Takeaways from DOJ’s Annual FCA Recoveries Press Release: FY 2020 Edition

 In Blog, Government Compliance & Investigations

Ladies and gentlemen, boys and girls, come gather around ye olde water cooler (virtually, you know, because COVID), it’s that time of year. It is time for the Department of Justice’s (DOJ) annual press release bragging on its recoveries in False Claims Act (FCA) actions! The headline has an eye-catching $2.2 billion total, but let’s take a quick look at what we can really learn from DOJ’s victory lap this time around.

Qui tam filings by whistleblowers had been trending downward since FY 2016, but they reversed course in FY 2020, jumping to 672 filed cases compared to last year’s 633. $1.6 billion, or 73%, of DOJ’s FCA recoveries arose from qui tam cases brought by whistleblowers.

  • DOJ recovered over $2.2 billion in affirmative civil fraud cases and government investigations in FY 2020. This is down from over $3 billion in FY 2019 and $2.8 billion in FY 2018. What is more interesting is that over $1.8 billion, or approximately 82% of the FY 2020 recoveries came from the healthcare industry, mostly from Medicare fraud. Though this is the first time in a decade that healthcare recoveries have dipped below $2 billion, healthcare continues to be DOJ’s favorite industry, and it is not close.
  • Qui tam filings by whistleblowers had been trending downward since FY 2016, but they reversed course in FY 2020, jumping to 672 filed cases compared to last year’s 633. $1.6 billion, or 73%, of DOJ’s FCA recoveries arose from qui tam cases brought by whistleblowers. Last year, I speculated that the Supreme Court’s 2016 decision in Universal Health Servs., Inc. v. United States ex rel. Escobar, 136 S. Ct. 1989 (2016), which set a high standard for materiality in FCA cases, may have been part of the downward trend because it makes it more difficult for whistleblowers to pursue their claims if the United States declines to intervene. Perhaps relators’ counsel are becoming more accustom to the new standard when building their cases.
  • The largest FCA recoveries, not surprisingly, came from the drug industry, with Novartis paying over $591 million due to alleged kickbacks to physicians to incentivize prescriptions. In addition, Novartis (tough year for them) and Gilead Sciences payed a combined $148 million “to resolve claims that they illegally paid patient copays for their own drugs through purportedly independent foundations that the companies in fact treated as mere conduits for these payments.”
  • Among DOJ’s other stated healthcare priorities are opioids, kickbacks, and – you guessed it – electronic health records (EHR) systems. Now where could you have heard that before? DOJ again cited the $145 million Practice Fusion settlement as an example of its commitment to fighting the opioid epidemic and as evidence that “complex EHR-related fraud schemes remain a focus of the Department’s work.”
  • While a smaller chunk of the overall FCA pool, non-healthcare procurement fraud matters still brought in about $400 million in recoveries. These related mostly to inflated labor hours on federally funded projects, bribery schemes concerning government contracts, and provision of non-compliant goods and services under federal contracts.
  • DOJ also highlighted that it continues to hold individuals, not just corporations, accountable for FCA violations, citing resolutions involving a number of physicians and some individual shareholders in a federal contractor. These examples notwithstanding, the long-term effects of DOJ’s partial retreat from the Yates Memo remain to be seen.

We continue to monitor developments in the FCA space. Subscribe to the SRVH blog and follow us on Twitter for future updates. Contact the lawyers in our Government Compliance & Investigations or Healthcare groups with any questions or concerns.

Chris Sabis is a healthcare and procurement fraud lawyer specializing in Government Compliance and Investigations, Healthcare, and Litigation.

Photo By Lightspring from Shutterstock

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