Takeaways:

• FY 2023 saw the most FCA settlements and judgments ever.
• $2.69B in total recoveries is an uptick from 2022’s down year but still below historical norms.
• New non-qui tam cases surged to the highest in history as the Department of Justice’s pandemic fraud crackdown gains steam.
• Relators continue to see success in non-intervened cases – netting $442mm for taxpayers when they have pursued their claims alone.

On February 22, 2024, the Department of Justice (“DOJ”) published its annual review of cases and recoveries under the False Claims Act. Through the end of fiscal year 2023, total recoveries (across all years) under the False Claims Act have eclipsed $75 billion with over $8.99 billion awarded to relators for their whistleblowing efforts.

Whistleblowers Remain the Bedrock of the FCA

Whistleblower lawsuits gave rise to $1.8 billion of the total $2.3 billion in annual recoveries (i.e., over 86% of the total annual recoveries). And, like prior years, whistleblowers were richly awarded for their efforts with over $349 million awarded to FCA whistleblowers last year.

Curiously, the Number of Recoveries Surges but the Monetary Total Remains Low

The $2.68 billion in settlements and judgments last year reflects a slight increase from FY 2022. FY 2022 was the worst year for FCA recoveries in over a decade. However, the number of recoveries (i.e., settlements and judgments) stood at 543 in FY 2023 – the most in history. That means that DOJ and relators are obtaining more resolutions, but the average FCA recovery is declining. That surely reflects, at least in large part, the jump in Paycheck Protection Program (“PPP”) fraud and related pandemic relief cases which tend to involve relatively modest sums of money. DOJ’s focus on pandemic relief fraud means more, but smaller, FCA cases.

New Non-Qui Tam Cases Jump to Historical Highs as the PPP Fraud Crackdown Rolls On

Over the last decade, DOJ has typically opened between 100 and 200 new non-qui tam FCA matters per year. Last year, we saw that number rise to 305 cases, and this year the number is even higher at 500 cases. This too reflects DOJ’s crackdown on pandemic relief fraud. We should expect to see more pandemic relief cases and more recoveries in those cases for the foreseeable future.

Qui Tam Cases Continue to Rise

FY 2022 saw the most qui tam filings in nearly a decade. Relators filed 712 qui tam complaints last year. This was the most since 2024 and an 8% jump from last year. Yet, the number of healthcare qui tam cases fell to 348 last year, the lowest number since 2009. So, the increase in overall qui tam cases (despite a fall in healthcare cases) no doubt reflects that relators are blowing the whistle on PPP Fraud too.

Healthcare Still Dominate FCA Recoveries – and Medicare Advantage Cases, in Particular, Continue to Bubble Up

Of the $2.68 billion recovered last year, $1.8 billion (67%) arose from healthcare matters. Healthcare is a perennial focus of the FCA given the extent of federal spending on healthcare services.

DOJ’s annual report made sure to highlight key areas of focus. DOJ put particular emphasis on Medicare Advantage fraud. Medicare Advantage allows private insurers to provide health plans funded by the federal government. Today, most (51%) of Medicare beneficiaries use Medicare Advantage. Insurers are paid a capitated rate which, in significant part, reflects the health status of its plan members. DOJ has alleged that some insurers have effectively upcoded diagnostic data in order to reap excessive Medicare Advantage payments. For example, last September Cigna Group agreed to pay $172 million to resolve such allegations. Expect DOJ’s focus on Medicare Advantage to continue.

Kickbacks Cases Remain a Focal Point for FCA Enforcement

Cases involving violations of the Anti-Kickback Statute have been a fixture of the FCA landscape for years. Last year was no different. DOJ highlighted its $85.5 million settlement with a cardiac imaging lab (and related defendants), a $22.9 million settlement involving the alleged use of medical directorship opportunities to induce referrals, and a series of cases involving the alleged use of management service organizations (“MSOs”) as a sluice for channeling kickbacks to providers.

The Road Ahead

PPP fraud cases will continue to demand significant DOJ resources. But whether those cases will lead to substantial recoveries remains to be seen. Unless the government successfully pursues banks or other large institutions that may have facilitated PPP fraud, the government’s broadside against PPP fraud may yield modest monetary results. But the FCA’s import is not purely monetary – by pursuing even relatively small PPP fraud cases, the federal government is sending a message that even “small” fraud will not go unnoticed. That is important as a matter of public policy.

Beyond PPP fraud, expect Medicare Advantage cases to take up an even larger share of DOJ resources and a larger share of FCA recoveries. Medicare Advantage’s share of federal healthcare spending is simply too large to ignore, and it continues to grow each year. Given the nature of the Medicare Advantage system, where both insurers and providers are often financially incentivized to submit higher-reimbursing diagnostic data, Medicare Advantage cases will continue to ensnare insurers and providers alike.

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