DOJ Recovers More Than $3 Billion in False Claims Act Cases in FY 2019

Perkins Coie
Contact

Perkins Coie

The Department of Justice (DOJ) recovered more than $3 billion in settlements and judgments from civil cases involving the False Claims Act (FCA) in the fiscal year ending September 30, 2019, according to statistics released by DOJ on January 9, 2020. DOJ’s recoveries for the last fiscal year were slightly higher than in FY 2018 and reflect a robust level of enforcement against companies in healthcare and government contracting consistent with past years.

A large majority of these recoveries in the past fiscal year—about $2.6 billion—concerned the healthcare and life sciences industries, a modest increase from the prior year. DOJ recovered $252 million in defense contract cases—more than double the prior year’s figure—while the total for settlements and judgments in non-defense, non-healthcare cases dropped.

Following is an overview of DOJ’s FCA statistics for 2019, which reflect the government’s priorities in the use of its primary civil remedy to combat fraud. It also addresses some of the key developments relevant to FCA investigations and litigation occurring in the last year.

Highlights From 2019’s FCA Enforcement Statistics

Since 1986, when Congress amended the FCA, DOJ has recovered more than $62 billion under the statute, according to DOJ’s announcement releasing its annual update to its civil fraud statistics. DOJ has obtained more than $2 billion in FCA cases each year since 2009.

Among the key takeaways from the newly released statistics:

  • Settlements and Judgments Are Mostly Consistent With Prior Years. The government’s recovery of about $3 billion in FCA settlements and judgments in FY 2019 is a slight (about $151 million) increase from FY 2018, when it obtained $2.9 billion. FY 2018 represented a roughly $500 million decrease from the prior year, and was the first time in eight consecutive years that FCA recoveries fell below $3 billion. Overall, the government’s total FCA recoveries in FY 2019 are mostly consistent with those obtained in recent years, showing that the risks for companies that are subject to potential exposure under the statute remain significant.
  • Qui Tam Suits Remain Steady. In 2019, 636 new qui tam cases were filed, according to DOJ’s statistics. That is an average of about 12 cases per week. By comparison, 646 new qui tam cases were filed in FY 2018 and 681 in FY 2017.
  • Healthcare Recoveries Increase. As in prior years, the large majority of DOJ’s settlements and judgments under the FCA related to healthcare, including actions brought against drug and medical device manufacturers, managed care providers, hospitals, pharmacies, and physicians. FY 2019 was the 10th consecutive year that DOJ’s civil healthcare fraud recoveries exceeded $2 billion. DOJ’s recovery of $2.6 billion in FCA healthcare cases in FY 2019 reflects a modest upward trajectory. In FY 2018, the value of FCA recoveries in healthcare cases totaled roughly $2.53 billion, which was moderately higher than the previous year’s figure of about $2.14 billion. According to DOJ, two of the largest recoveries in the healthcare industry this past year came from settlements with opioid manufacturers.
  • Department of Defense Recoveries Bounce Back. Recoveries in defense procurement fraud-related cases bounced back after a drop in FY 2018. DOJ’s figures show that FCA settlements and judgments in Department of Defense (DOD) cases totaled approximately $252 million in FY 2019. That is more than double the $107 million recovered in FY 2018, which was a sharp drop from FY 2017’s total of $220 million. According to DOJ, 53 new DOD-related FCA cases were filed in 2019, up from 47 in 2018. Forty of those cases were initiated by qui tam relators.
  • Other Areas. DOJ recovered about $196 million in non-defense, non-healthcare FCA cases in FY 2019, compared to approximately $260 million in 2018. The new figure reflects a drop-off in total recoveries in this category compared to past years.
  • Qui Tam Suits Continue to Generate Cases. Lawsuits brought by relators under the FCA’s qui tam provisions continue to be the source of most of the government’s settlements and judgments. Of the $3 billion in FCA recoveries reported in FY 2019, about $2.2 billion arose from qui tam cases. However, the total value of share awards paid to relators dropped markedly during the past fiscal year to about $271 million, compared to roughly $341 million in FY 2018 and $536 million the year before that.

FCA Enforcement Developments and Case Law in 2019

Behind the numbers are several developments occurring in the last year relevant to enforcement and judicial interpretation of the statute that will likely continue to play out this year.

DOJ’s Increased Use of Dismissal Authority

DOJ’s press release notes that, during the past year it “made increasing use” of its statutory authority to seek dismissal of qui tam actions “to help prioritize and protect the expenditure of government resources.” The so-called “Granston Memo,” codified in Section 4-4.111 of the Justice Manual, directs DOJ attorneys to consider whether the government’s interests are served by seeking dismissal of a qui tam suit under 31 U.S.C. § 3730(c)(2)(A), citing various factors. In a December 19, 2019, letter to Senator Chuck Grassley, DOJ noted that it has filed motions to dismiss in 45 FCA cases since January 2018, accounting for less than 4% of the 1,170 qui tam suits filed during that period. The U.S. Circuit Courts of Appeals are split as to the proper standard of review for such motions, and further litigation on that topic is likely in 2020.

Post-Escobar Issues

Lower courts in 2019 continued to address various FCA-related questions left open by the Supreme Court’s 2016 opinion in Universal Health Services, Inc. v. United States ex rel. Escobar, 136 S. Ct. 1989. Courts continue to grapple with what evidence is necessary to establish that false claims are material to the government’s payment decisions. Also, the circuits are split as to the proper standard for a motion to dismiss under Rule 9(b) and whether the FCA’s first-to-file bar, which precludes a qui tam suit based on the facts underlying a pending action, is jurisdictional. The U.S. Supreme Court has so far declined to address such issues.

Restrictions on Use of Sub-Regulatory Guidance

Recent developments illustrate the increasing limitations on the use of sub-regulatory guidance in enforcement of the FCA.

In Azar v. Allina Health Services et al., 139 S. Ct. 1804, the Court held that notice-and-comment rulemaking must be used for any Medicare issuance that establishes or changes a “substantive legal standard” governing the scope of benefits and other matters. Although Allina was not an FCA case, it appears likely to have a significant impact on healthcare FCA cases, which are routinely grounded on alleged violations of sub-regulatory guidance issued by federal agencies, as demonstrated by an October 31, 2019, memorandum issued by the U.S. Department of Health and Human Services’ (DHS) deputy general counsel advising agencies to conform their practices to Allina.

The judicial application of Allina in FCA cases has started. A federal district court in Pennsylvania recently stated that a relator’s claims failed as a matter of law because the Center for Medicare and Medicaid Services’ (CMS) sub-regulatory guidance that he alleged had been violated was a substantive legal standard that required notice-and-comment rulemaking. Polansky v. Executive Health Resources, Inc., et al., Final Memorandum No. 12-CV-4239 (E.D. Pa.) (Nov. 5, 2019).

Also, on October 9, 2019, President Trump issued Executive Order 13892, which, among other things, prohibits agencies from using guidance documents to “impose new standards of conduct” on persons outside the executive branch “except as expressly authorized by law or as expressly incorporated into a contract.” The executive order effectively models DOJ’s approach under the so-called “Brand Memo” limiting DOJ’s use of guidance documents in affirmative civil cases.

DOJ Cooperation Credit Guidance

In May 2019, DOJ issued guidance giving DOJ civil attorneys express discretion to award credit to cooperative defendants in FCA cases. The guidance, codified in section 4-4.112 of the Justice Manual, identifies various factors that DOJ will consider when defendants self-disclose misconduct, cooperate with FCA investigations or settlements, or take effective remedial measures. The implications of the guidelines in settlements will continue to play out.

Statute of Limitations

In a May 2019 decision, the Supreme Court resolved a circuit split regarding the FCA’s statute of limitations in a way that favors relators. In Cochise Consultancy, Inc. et al. v. United States ex rel. Hunt, 139 S. Ct. 1507, the Court held that relators have up to 10 years to file suit against defendants in cases in which the government declines to intervene, provided that the suit is filed within three years of the government knowing, or having reason to know of, the relevant facts. The Court also held that relators’ knowledge of the facts is irrelevant to the statute of repose.

DOJ-HUD Memorandum of Understanding

In October 2019, DOJ and the U.S. Department of Housing and Urban Development (HUD) issued a Memorandum of Understanding (MOU) setting prudential guidance on the use of the FCA against Federal Housing Administration (FHA) lenders. The MOU sets forth criteria for when violations of FHA program requirements should be enforced administratively by HUD rather than be referred to DOJ for potential FCA litigation.

Procurement Collusion Strike Force

Also, on November 5, 2019, DOJ announced the formation of a Procurement Collusion Strike Force focusing on combating procurement-related antitrust crimes such as bid-rigging conspiracies and related fraudulent schemes. The strike force will be an inter-agency partnership consisting of DOJ prosecutors from the Antitrust Division and U.S. Attorneys’ Offices, FBI investigators, the DOD Office of Inspector General, the U.S. Postal Service Office of Inspector General, and other federal offices of inspector general. The strike force will focus on investigating and prosecuting antitrust crimes in procurement, grant, and program funding.

[View source.]

DISCLAIMER: Because of the generality of this update, the information provided herein may not be applicable in all situations and should not be acted upon without specific legal advice based on particular situations.

© Perkins Coie | Attorney Advertising

Written by:

Perkins Coie
Contact
more
less

Perkins Coie on:

Readers' Choice 2017
Reporters on Deadline

"My best business intelligence, in one easy email…"

Your first step to building a free, personalized, morning email brief covering pertinent authors and topics on JD Supra:
*By using the service, you signify your acceptance of JD Supra's Privacy Policy.
Custom Email Digest
- hide

JD Supra Privacy Policy

Updated: May 25, 2018:

JD Supra is a legal publishing service that connects experts and their content with broader audiences of professionals, journalists and associations.

This Privacy Policy describes how JD Supra, LLC ("JD Supra" or "we," "us," or "our") collects, uses and shares personal data collected from visitors to our website (located at www.jdsupra.com) (our "Website") who view only publicly-available content as well as subscribers to our services (such as our email digests or author tools)(our "Services"). By using our Website and registering for one of our Services, you are agreeing to the terms of this Privacy Policy.

Please note that if you subscribe to one of our Services, you can make choices about how we collect, use and share your information through our Privacy Center under the "My Account" dashboard (available if you are logged into your JD Supra account).

Collection of Information

Registration Information. When you register with JD Supra for our Website and Services, either as an author or as a subscriber, you will be asked to provide identifying information to create your JD Supra account ("Registration Data"), such as your:

  • Email
  • First Name
  • Last Name
  • Company Name
  • Company Industry
  • Title
  • Country

Other Information: We also collect other information you may voluntarily provide. This may include content you provide for publication. We may also receive your communications with others through our Website and Services (such as contacting an author through our Website) or communications directly with us (such as through email, feedback or other forms or social media). If you are a subscribed user, we will also collect your user preferences, such as the types of articles you would like to read.

Information from third parties (such as, from your employer or LinkedIn): We may also receive information about you from third party sources. For example, your employer may provide your information to us, such as in connection with an article submitted by your employer for publication. If you choose to use LinkedIn to subscribe to our Website and Services, we also collect information related to your LinkedIn account and profile.

Your interactions with our Website and Services: As is true of most websites, we gather certain information automatically. This information includes IP addresses, browser type, Internet service provider (ISP), referring/exit pages, operating system, date/time stamp and clickstream data. We use this information to analyze trends, to administer the Website and our Services, to improve the content and performance of our Website and Services, and to track users' movements around the site. We may also link this automatically-collected data to personal information, for example, to inform authors about who has read their articles. Some of this data is collected through information sent by your web browser. We also use cookies and other tracking technologies to collect this information. To learn more about cookies and other tracking technologies that JD Supra may use on our Website and Services please see our "Cookies Guide" page.

How do we use this information?

We use the information and data we collect principally in order to provide our Website and Services. More specifically, we may use your personal information to:

  • Operate our Website and Services and publish content;
  • Distribute content to you in accordance with your preferences as well as to provide other notifications to you (for example, updates about our policies and terms);
  • Measure readership and usage of the Website and Services;
  • Communicate with you regarding your questions and requests;
  • Authenticate users and to provide for the safety and security of our Website and Services;
  • Conduct research and similar activities to improve our Website and Services; and
  • Comply with our legal and regulatory responsibilities and to enforce our rights.

How is your information shared?

  • Content and other public information (such as an author profile) is shared on our Website and Services, including via email digests and social media feeds, and is accessible to the general public.
  • If you choose to use our Website and Services to communicate directly with a company or individual, such communication may be shared accordingly.
  • Readership information is provided to publishing law firms and authors of content to give them insight into their readership and to help them to improve their content.
  • Our Website may offer you the opportunity to share information through our Website, such as through Facebook's "Like" or Twitter's "Tweet" button. We offer this functionality to help generate interest in our Website and content and to permit you to recommend content to your contacts. You should be aware that sharing through such functionality may result in information being collected by the applicable social media network and possibly being made publicly available (for example, through a search engine). Any such information collection would be subject to such third party social media network's privacy policy.
  • Your information may also be shared to parties who support our business, such as professional advisors as well as web-hosting providers, analytics providers and other information technology providers.
  • Any court, governmental authority, law enforcement agency or other third party where we believe disclosure is necessary to comply with a legal or regulatory obligation, or otherwise to protect our rights, the rights of any third party or individuals' personal safety, or to detect, prevent, or otherwise address fraud, security or safety issues.
  • To our affiliated entities and in connection with the sale, assignment or other transfer of our company or our business.

How We Protect Your Information

JD Supra takes reasonable and appropriate precautions to insure that user information is protected from loss, misuse and unauthorized access, disclosure, alteration and destruction. We restrict access to user information to those individuals who reasonably need access to perform their job functions, such as our third party email service, customer service personnel and technical staff. You should keep in mind that no Internet transmission is ever 100% secure or error-free. Where you use log-in credentials (usernames, passwords) on our Website, please remember that it is your responsibility to safeguard them. If you believe that your log-in credentials have been compromised, please contact us at privacy@jdsupra.com.

Children's Information

Our Website and Services are not directed at children under the age of 16 and we do not knowingly collect personal information from children under the age of 16 through our Website and/or Services. If you have reason to believe that a child under the age of 16 has provided personal information to us, please contact us, and we will endeavor to delete that information from our databases.

Links to Other Websites

Our Website and Services may contain links to other websites. The operators of such other websites may collect information about you, including through cookies or other technologies. If you are using our Website or Services and click a link to another site, you will leave our Website and this Policy will not apply to your use of and activity on those other sites. We encourage you to read the legal notices posted on those sites, including their privacy policies. We are not responsible for the data collection and use practices of such other sites. This Policy applies solely to the information collected in connection with your use of our Website and Services and does not apply to any practices conducted offline or in connection with any other websites.

Information for EU and Swiss Residents

JD Supra's principal place of business is in the United States. By subscribing to our website, you expressly consent to your information being processed in the United States.

  • Our Legal Basis for Processing: Generally, we rely on our legitimate interests in order to process your personal information. For example, we rely on this legal ground if we use your personal information to manage your Registration Data and administer our relationship with you; to deliver our Website and Services; understand and improve our Website and Services; report reader analytics to our authors; to personalize your experience on our Website and Services; and where necessary to protect or defend our or another's rights or property, or to detect, prevent, or otherwise address fraud, security, safety or privacy issues. Please see Article 6(1)(f) of the E.U. General Data Protection Regulation ("GDPR") In addition, there may be other situations where other grounds for processing may exist, such as where processing is a result of legal requirements (GDPR Article 6(1)(c)) or for reasons of public interest (GDPR Article 6(1)(e)). Please see the "Your Rights" section of this Privacy Policy immediately below for more information about how you may request that we limit or refrain from processing your personal information.
  • Your Rights
    • Right of Access/Portability: You can ask to review details about the information we hold about you and how that information has been used and disclosed. Note that we may request to verify your identification before fulfilling your request. You can also request that your personal information is provided to you in a commonly used electronic format so that you can share it with other organizations.
    • Right to Correct Information: You may ask that we make corrections to any information we hold, if you believe such correction to be necessary.
    • Right to Restrict Our Processing or Erasure of Information: You also have the right in certain circumstances to ask us to restrict processing of your personal information or to erase your personal information. Where you have consented to our use of your personal information, you can withdraw your consent at any time.

You can make a request to exercise any of these rights by emailing us at privacy@jdsupra.com or by writing to us at:

Privacy Officer
JD Supra, LLC
10 Liberty Ship Way, Suite 300
Sausalito, California 94965

You can also manage your profile and subscriptions through our Privacy Center under the "My Account" dashboard.

We will make all practical efforts to respect your wishes. There may be times, however, where we are not able to fulfill your request, for example, if applicable law prohibits our compliance. Please note that JD Supra does not use "automatic decision making" or "profiling" as those terms are defined in the GDPR.

  • Timeframe for retaining your personal information: We will retain your personal information in a form that identifies you only for as long as it serves the purpose(s) for which it was initially collected as stated in this Privacy Policy, or subsequently authorized. We may continue processing your personal information for longer periods, but only for the time and to the extent such processing reasonably serves the purposes of archiving in the public interest, journalism, literature and art, scientific or historical research and statistical analysis, and subject to the protection of this Privacy Policy. For example, if you are an author, your personal information may continue to be published in connection with your article indefinitely. When we have no ongoing legitimate business need to process your personal information, we will either delete or anonymize it, or, if this is not possible (for example, because your personal information has been stored in backup archives), then we will securely store your personal information and isolate it from any further processing until deletion is possible.
  • Onward Transfer to Third Parties: As noted in the "How We Share Your Data" Section above, JD Supra may share your information with third parties. When JD Supra discloses your personal information to third parties, we have ensured that such third parties have either certified under the EU-U.S. or Swiss Privacy Shield Framework and will process all personal data received from EU member states/Switzerland in reliance on the applicable Privacy Shield Framework or that they have been subjected to strict contractual provisions in their contract with us to guarantee an adequate level of data protection for your data.

California Privacy Rights

Pursuant to Section 1798.83 of the California Civil Code, our customers who are California residents have the right to request certain information regarding our disclosure of personal information to third parties for their direct marketing purposes.

You can make a request for this information by emailing us at privacy@jdsupra.com or by writing to us at:

Privacy Officer
JD Supra, LLC
10 Liberty Ship Way, Suite 300
Sausalito, California 94965

Some browsers have incorporated a Do Not Track (DNT) feature. These features, when turned on, send a signal that you prefer that the website you are visiting not collect and use data regarding your online searching and browsing activities. As there is not yet a common understanding on how to interpret the DNT signal, we currently do not respond to DNT signals on our site.

Access/Correct/Update/Delete Personal Information

For non-EU/Swiss residents, if you would like to know what personal information we have about you, you can send an e-mail to privacy@jdsupra.com. We will be in contact with you (by mail or otherwise) to verify your identity and provide you the information you request. We will respond within 30 days to your request for access to your personal information. In some cases, we may not be able to remove your personal information, in which case we will let you know if we are unable to do so and why. If you would like to correct or update your personal information, you can manage your profile and subscriptions through our Privacy Center under the "My Account" dashboard. If you would like to delete your account or remove your information from our Website and Services, send an e-mail to privacy@jdsupra.com.

Changes in Our Privacy Policy

We reserve the right to change this Privacy Policy at any time. Please refer to the date at the top of this page to determine when this Policy was last revised. Any changes to our Privacy Policy will become effective upon posting of the revised policy on the Website. By continuing to use our Website and Services following such changes, you will be deemed to have agreed to such changes.

Contacting JD Supra

If you have any questions about this Privacy Policy, the practices of this site, your dealings with our Website or Services, or if you would like to change any of the information you have provided to us, please contact us at: privacy@jdsupra.com.

JD Supra Cookie Guide

As with many websites, JD Supra's website (located at www.jdsupra.com) (our "Website") and our services (such as our email article digests)(our "Services") use a standard technology called a "cookie" and other similar technologies (such as, pixels and web beacons), which are small data files that are transferred to your computer when you use our Website and Services. These technologies automatically identify your browser whenever you interact with our Website and Services.

How We Use Cookies and Other Tracking Technologies

We use cookies and other tracking technologies to:

  1. Improve the user experience on our Website and Services;
  2. Store the authorization token that users receive when they login to the private areas of our Website. This token is specific to a user's login session and requires a valid username and password to obtain. It is required to access the user's profile information, subscriptions, and analytics;
  3. Track anonymous site usage; and
  4. Permit connectivity with social media networks to permit content sharing.

There are different types of cookies and other technologies used our Website, notably:

  • "Session cookies" - These cookies only last as long as your online session, and disappear from your computer or device when you close your browser (like Internet Explorer, Google Chrome or Safari).
  • "Persistent cookies" - These cookies stay on your computer or device after your browser has been closed and last for a time specified in the cookie. We use persistent cookies when we need to know who you are for more than one browsing session. For example, we use them to remember your preferences for the next time you visit.
  • "Web Beacons/Pixels" - Some of our web pages and emails may also contain small electronic images known as web beacons, clear GIFs or single-pixel GIFs. These images are placed on a web page or email and typically work in conjunction with cookies to collect data. We use these images to identify our users and user behavior, such as counting the number of users who have visited a web page or acted upon one of our email digests.

JD Supra Cookies. We place our own cookies on your computer to track certain information about you while you are using our Website and Services. For example, we place a session cookie on your computer each time you visit our Website. We use these cookies to allow you to log-in to your subscriber account. In addition, through these cookies we are able to collect information about how you use the Website, including what browser you may be using, your IP address, and the URL address you came from upon visiting our Website and the URL you next visit (even if those URLs are not on our Website). We also utilize email web beacons to monitor whether our emails are being delivered and read. We also use these tools to help deliver reader analytics to our authors to give them insight into their readership and help them to improve their content, so that it is most useful for our users.

Analytics/Performance Cookies. JD Supra also uses the following analytic tools to help us analyze the performance of our Website and Services as well as how visitors use our Website and Services:

  • HubSpot - For more information about HubSpot cookies, please visit legal.hubspot.com/privacy-policy.
  • New Relic - For more information on New Relic cookies, please visit www.newrelic.com/privacy.
  • Google Analytics - For more information on Google Analytics cookies, visit www.google.com/policies. To opt-out of being tracked by Google Analytics across all websites visit http://tools.google.com/dlpage/gaoptout. This will allow you to download and install a Google Analytics cookie-free web browser.

Facebook, Twitter and other Social Network Cookies. Our content pages allow you to share content appearing on our Website and Services to your social media accounts through the "Like," "Tweet," or similar buttons displayed on such pages. To accomplish this Service, we embed code that such third party social networks provide and that we do not control. These buttons know that you are logged in to your social network account and therefore such social networks could also know that you are viewing the JD Supra Website.

Controlling and Deleting Cookies

If you would like to change how a browser uses cookies, including blocking or deleting cookies from the JD Supra Website and Services you can do so by changing the settings in your web browser. To control cookies, most browsers allow you to either accept or reject all cookies, only accept certain types of cookies, or prompt you every time a site wishes to save a cookie. It's also easy to delete cookies that are already saved on your device by a browser.

The processes for controlling and deleting cookies vary depending on which browser you use. To find out how to do so with a particular browser, you can use your browser's "Help" function or alternatively, you can visit http://www.aboutcookies.org which explains, step-by-step, how to control and delete cookies in most browsers.

Updates to This Policy

We may update this cookie policy and our Privacy Policy from time-to-time, particularly as technology changes. You can always check this page for the latest version. We may also notify you of changes to our privacy policy by email.

Contacting JD Supra

If you have any questions about how we use cookies and other tracking technologies, please contact us at: privacy@jdsupra.com.

- hide

This website uses cookies to improve user experience, track anonymous site usage, store authorization tokens and permit sharing on social media networks. By continuing to browse this website you accept the use of cookies. Click here to read more about how we use cookies.