False Claims Act Recoveries at a Decade Low Signal to Potential Increase in Enforcement

False Claims Act (“FCA”) cases brought by the Department of Justice (“DOJ”) returned only $2.2 billion in recovered funds in 2020, down from $3.0 billion in 2019 and $2.9 billion in 2018, making 2020’s FCA recovery amount the lowest since 2008 ($1.4 billion).[1]

Though COVID-19 may have put a strain on the DOJ’s resources, the government has made it clear that prosecuting FCA claims remains a priority. For example, Assistant Attorney General, Jeffrey Clark, recently stated, “[e]ven in the face of a nationwide pandemic, the department’s dedicated employees continued to investigate and litigate cases involving fraud against the government and to ensure that citizens’ tax dollars are protected from abuse and are used for their intended purposes.” Given this sentiment, 2020’s comparatively lower recovery amount does not, in any way, signal that the DOJ has relaxed its position on prosecuting FCA violations. Indeed, notwithstanding the diminished recovery experienced in the 2020 year, the sheer number FCA actions brought in the 2020 year has increased dramatically. Specifically, the number of whistleblower, or qui tam, actions filed against companies in 2020 (672 actions) is up significantly from years prior (648 qui tam actions brought in 2018 and 638 qui tam actions brought in 2019) and the number of new non-qui tam FCA actions increased by over 66% in 2020 from the previous fiscal year, further signaling the increase in FCA enforcement actions.

While these statistics take into account FCA actions across all industries, the lion share of the total recovery amount is generally derived from the healthcare sector. To be sure, over 80% of the DOJ’s total recovery for 2020 was from the healthcare industry (down from 87% in the 2019 fiscal year). One major source of 2020’s recovery is the Novartis Pharmaceuticals Corporation (“Novartis”) settlement, in which Novartis paid $591 million in 2020 to resolve claims that it paid kickbacks to doctors to induce them to prescribe its medications. Additionally, during the 2020 year, Novartis along with Gilead Sciences paid a total of over $148 million to resolve claims that they illegally paid patient copays on prescriptions written for their own medications. Thus, though the 2020 recovery amount was lower than the years prior, given that the vast majority of recovery dollars pertain to resolutions of healthcare cases, the healthcare industry in particular should expect a significant uptick of forthcoming actions and recoveries in the coming years.

How Frier Levitt Can Help

Frier Levitt is dedicated to helping various healthcare providers avoid potential False Claims Act violations and aiding healthcare providers to grow their businesses in a compliant way. Contact us today to discuss potential avenues for your business while ensuring compliance with the applicable laws and regulations.

[1] The FCA is a federal statute which prohibits knowingly submitting, or causing to be submitted, false or fraudulent claims to the Government. The Statute permits individual whistleblowers and allows a whistleblower to file a qui tam lawsuit on behalf of the Government.  

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