DOJ Announces Second-Largest Annual Total Recoveries in False Claims Act History

The United States Department of Justice Civil Division ("DOJ") recently announced a recovery of more than $5.6 billion in settlements and judgments from False Claims Act ("FCA") cases in fiscal year 2021. This total is the second largest in FCA history, confirming that the 2020 recovery "dip" was temporary. As in years past, the overwhelming majority of the recovered funds—nearly 90%—derived from enforcement in the health care industry. 

Although the reported number of non-qui tam cases dropped from 250 in 2020 to 203 in 2021, both years' numbers still reflect an overall uptick. Until 2020, the number of DOJ-initiated FCA actions had not exceeded or even approached 200 since 1995. While the number of new qui tam actions filed remained fairly constant, the dollar amount of recoveries attributable to qui tam cases was eclipsed by DOJ-initiated cases (with qui tam recoveries falling from 75% of total dollar amounts in 2020 to 28% in 2021, representing the lowest percentage attributable to qui tam cases since 1991). 

Notable areas of DOJ's focus include: 

Allegations of Kickbacks and Medically Unnecessary Services

Consistent with previous years, investigations into potentially unlawful kickbacks and alleged provision of medically unnecessary services continued to fuel a significant number of judgments and settlements, as well as significant recovery dollars. DOJ reported such settlements with defendants across the health care industry, including durable medical equipment suppliers, clinical laboratories, electronic health records technology vendors, pharmaceutical manufacturers, home health care agencies, hospitals, substance abuse treatment facilities, and medical device manufacturers. This group of cases represented more than $1 billion of the total 2021 DOJ recoveries. 

Prosecutorial Focus on Medicare Advantage Program (Medicare Part C)

In 2021, DOJ reportedly prioritized investigating and litigating matters relating to Medicare's managed care program, known as Medicare Part C. DOJ entered into settlements with Medicare managed care plans and health care providers for more than $96 million in connection with allegedly submitting unsupported risk-based adjustments to the capitated amount covered by Medicare Part C and inflating federal reimbursements. 

Ongoing Paycheck Protection Program ("PPP") Review and Enforcement

DOJ continues to pursue cases against small businesses, including medical practices, involving allegedly improper receipt of PPP funds and/or improper use of PPP funds. Not surprisingly, these recoveries tend to be smaller than other FCA recoveries, but DOJ nevertheless emphasizes this effort in its press release. 

Cyber as an Area of Future DOJ Emphasis

Although DOJ did not report any 2021 recoveries relating to cybersecurity, the press release emphasizes that, under the Civil Cyber-Fraud Initiative that it announced in October 2021, DOJ will use the FCA to pursue misrepresentations by government contractors and grant recipients regarding the government's acquisition of technology designed to protect highly sensitive government information. 

These trends illustrate the government's continued emphasis on enforcement with respect to government spending, particularly in the health care industry, and reinforce the importance of companies developing strong compliance programs well in advance of any enforcement scrutiny.