February 2, 2022 - Scott R. Landau / Nora Maetzener
Yesterday, the U.S. Department of Justice (DOJ) released its annual report of False Claims Act (FCA) settlements, in which it announced that the government obtained more than $5.6 billion in settlements and judgments in civil false claims and fraud cases in 2021. Remarkably, of the $5.6 billion recovered, a staggering $5 billion — nearly 90% of the total amount recovered — came from settlements in healthcare matters involving nearly every type of player in health care, including drug and device manufacturers, hospitals, physicians and physician practices, clinical testing laboratories, hospice, long term care, and skilled nursing providers, and managed care companies.
The FCA was designed to prevent “false claims for federal funds and property involving a multitude of  government operations and functions,” and is not limited just to the healthcare field. FCA cases extend across a variety of industries and practices, including defense contracting, oil and natural gas, customs duties, non-competitive bidding practices, and Federal Housing Administration loans. Essentially, the FCA covers anyone – entities and individuals – in the business of submitting claims for payment to the federal government.
That healthcare recoveries constitute the overwhelming majority of FCA recoveries in given year is nothing new. Quite the contrary, save for 2014 (when FCA settlements largely stemmed from the housing and mortgage crisis), healthcare has been the primary source of FCA recoveries in recent years, with total recoveries since 2015 totaling as follows:
2015 – Healthcare comprised $1.9 billion (54.29%) of $3.5 billion total
2016 – Healthcare comprised $2.5 billion (53.19%) of $4.7 billion total
2017 – Healthcare comprised $2.4 billion (64.87%) of $3.7 billion total
2018 – Healthcare comprised $2.5 billion (89.29%) of $2.8 billion total
2019 – Healthcare comprised $2.6 billion (86.67%) of $3 billion total
2020 – Healthcare comprised $1.8 billion (81.82%) of $2.2 billion total
So, while 2021’s figures are not necessarily surprising, DOJ’s primary focus in the false claims and civil frauds space continues to be on the healthcare industry. And despite statements from DOJ’s regarding increased scrutiny on industries other than healthcare (such as cybersecurity and government procurement), it seems unlikely that this pattern will change anytime soon, especially considering the historic levels of emergency funding that were provided by federal agencies to healthcare providers in response to the COVID-19 pandemic, as well as the cases and individuals who have already been charged (and in some cases, sentenced) related to Paycheck Protection Program (PPP) and/or Economic Injury Disaster Loan (EIDL). Quite the contrary, all indications are that the trend of continued scrutiny of and enforcement against healthcare providers – both from DOJ directly and from whistleblowers in “qui tam” actions – will continue to surge in the coming years.
AEL are expert healthcare lawyers and have significant experience navigating providers healthcare adjacent concerns through the complicated and often treacherous waters of FCA cases and parallel criminal and civil proceedings. We also specialize in healthcare related regulatory counseling, both in transactions and day-to-day healthcare operations, so that our clients can proactively and confidently identify legal/regulatory issues before they arise and avoid FCA exposure down the road. If you have any questions or we can assist you in any way please reach out to us to discuss.