False Claims Act Recoveries Top $3 Billion in Fiscal Year 2019
Last week the Department of Justice announced that federal False Claims Act recoveries topped $3 billion in fiscal year 2019. This announcement of the annual totals has become something of a tradition at the Department of Justice, and many lawyers practicing in this area await it with great anticipation.
History is, I think, a combinaton of two elements: (1) relatively stable long-term trends, and (2) a more or less random series of events. Many positive long-term trends in this area of law continued last year, as we will see in this post.
Long Term Trends in federal False Claims Act Enforcement Continue, Part I: FCA Cases Brought by Qui Tam Whistleblowers have the Best Results.
It is no surprise that Qui Tam cases continue to result in the lion’s share of FCA recoveries. (As regular readers know, only cases brought by whistleblowers qualify as qui tam cases). Of the $3 billion in settlements and judgments reported by the government in fiscal year 2019, over $2.1 billion came from lawsuits filed under the qui tam provisions of the False Claims Act. That is, by my math, 70% of the government’s total recoveries.
And this is one long-term trend that looks to continue. Last year, qui tam relators filed 633 cases in the 94 U.S. District Courts. While this number has increased steadily over time, there was — if memory serves — one year not too long ago where about 1,000 cases were filed.
Long Term Trends in federal False Claims Act Enforcement Continue, Part II: Healthcare recoveries.
Last year one of the key long-term trends in false claims act enforcement continued, in that health care recoveries were the largest part of the total. Specifically, of the roughly $3 billion recovered, $2.6 billion of it was the result of health care fraud. According to the press release, health care recoveries exceeded $2 billion for the tenth consecutive year.
A running total of the recoveries since the 1986 amendments breathed life back into the statute can be found here.
Long Term Trends in federal False Claims Act Enforcement Continue, Part III: Increased Liability for Individual Wrongdoers.
Wrongdoers continued to be individually liable in 2019. This is a direct result of the continuing influence of the Yates memo (issued in 2015) which announced an increased focus on individual wrongdoers for the first time.
The press release discusses in particular the recovery of millions of healthcare dollars from the individual owners in the Osteo Relief Institutes, Vanguard Healthcare, and Diabetic Care Rx cases. A little closer to home (and on the non-healthcare front) Luke Hillier (the former CEO of Virginia-based defense contractor ADS, Inc.) paid $20 million to settle allegations that he violated the FCA by fraudulently obtaining federal set-aside contracts reserved for small businesses.
Long Term Trends in federal False Claims Act Enforcement Continue, Part IV: Non-healthcare Recoveries.
FY 2019 also saw some interesting non-healthcare recoveries. Among others, the department recovered over $27 million from Northrop Grumman Systems Corporation (NGSC) in a settlement resolving False Claims Act allegations related to two battlefield communications contracts with the United States Air Force. The settlement resolved allegations that NGSC billed the Air Force for labor hours by individuals stationed in the Middle East who had not worked the hours claimed.
In an interesting case from the Eastern District of Virginia, an Oregon aluminum extrusion manufacturer agreed to pay $46 million to NASA, the Department of Defense, and others to resolve criminal charges and civil claims relating to a 19-year fraud scheme that included falsifying thousands of certifications for aluminum extrusions provided to hundreds of government customers.
Other interesting non-healthcare cases come from the usual suspects, including underpayments of royalties for minerals and natural gas removed from federal lands, false certifications of compliance with environmental laws, and false claims to federal student loan programs.
Long Term Trends in federal False Claims Act Enforcement Continue, Part V: Qui Tam Whistleblower Recoveries in Non-Intervened Cases.
It was also nice to see the government include information on non-intervened cases like the one against Duke University. That case is particularly note-worthy to fans of this blog because of its size ($112.5 million), its relator share of a 30%, and the fact that it was obtained by our good freind John Thomas at Hafeman Magee & Thomas. So far as I know, a 30% relator share is unprecedented in a case of that magnitude.
It is indeed good to see all of these positive trends in FCA enforcement continue; stay tuned dear readers, for more updates to come!