DOJ Reports Nearly $2.9 Billion in False Claims Act Recoveries in FY 2018
The DOJ's press release can be found here. That number brings DOJ’s total FCA recoveries since FY 1987 to more than $59 billion, and its total since 2009 to more than $37.3 billion. The FCA is the federal government’s primary tool for combatting fraud involving government funds.
DOJ’s 2018 haul represents nearly a $600 million reduction year-over-year from 2017, due in part to decreased recoveries from mortgage-fraud cases that were resolved in 2017. Overall, however, the statistics evince the government’s continued efforts to vigorously enforce the FCA, especially in cases involving alleged health care fraud.
Recoveries in health care fraud cases increased from nearly $2.2 billion in 2017 to more than $2.5 billion in 2018, marking the ninth consecutive year in which health care fraud recoveries exceeded $2 billion. These cases involved drug and medical device manufacturers, managed care providers, hospitals, pharmacies, hospice organizations, laboratories, and physicians, among others.
In contrast, recoveries in FCA matters involving defense contracting decreased by more than half year-over-year, from roughly $220 million in 2017 to roughly $108 million in 2018. This represents the lowest amount of net defense-related recoveries since 2014, and the third-lowest in the past decade.
Whistleblowers — known as “relators” — remain DOJ’s most significant source of new FCA matters. According to DOJ statistics, 645 of the 767 new FCA matters in 2018 originated from whistleblower referrals and qui tam suits, an average of more than 12 new cases each week. These matters led to more than $2.1 billion of the nearly $2.9 billion in total FCA recoveries, or roughly 73%, while non-qui tam matters amounted to only about $767 million of all FCA recoveries.
Under the FCA’s relator‑bounty provisions, whistleblowers received nearly $302 million in relator-share awards in 2018. Despite the significant settlements and judgments in whistleblower matters, this represents a 37% year-over-year reduction from 2017, and the lowest overall amount of relator‑share awards since 2009. The past year’s whistleblower haul brings the total amount of relator-share awards since 1987 to more than $7 billion.
DOJ’s press release echoed some of the same themes expressed in 2017. Just like last year, DOJ emphasized “[t]he number and variety of judgments and settlements” and “the diversity of fraud cases pursued by” the government. DOJ also emphasized “its continued commitment to use the False Claims Act and other civil remedies to deter and redress fraud by individuals as well as corporations,” which is consistent with the 2015 “Yates Memo” and its forthcoming revisions announced by Deputy AG Rod Rosenstein in November.
Notably, DOJ’s press release also remarked that “Congress also included in the False Claims Act authority for the government to dismiss cases, and during the past year the government made increasing use of this tool to help prioritize the use of government resources.” A DOJ memorandum to prosecutors on this topic, commonly referred to as the “Granston Memo,” leaked in January 2018, and described factors government prosecutors should consider when deciding whether to move for voluntary dismissal of a qui tam suit under 31 U.S.C. § 3730(c)(2)(A). Over the past year, the memorandum has led to increased government scrutiny of frivolous qui tam cases that waste government resources and pose other problems, a trend that is likely to continue into 2019.
Based on recoveries reported thus far in FY 2019, we see no signs of FCA investigations or enforcement slowing. DOJ’s report can be daunting to entities in highly regulated industries that benefit from government expenditures—such as health care or government contracting—but it serves as an important reminder to maintain robust compliance programs and proactively address potential FCA concerns with experienced counsel. Otherwise, even a seemingly minor regulatory oversight can snowball into substantial exposure under the FCA’s treble-damages and civil-penalties provisions, or even debarment.