Government Recovers a Record-Breaking $5 Billion in Healthcare Sector in FY 2021

During the 2021 fiscal year, The U.S. Department of Justice (DOJ) recovered $5.6 billion in civil settlements and judgments involving fraud and violations of the False Claims Act; a record-breaking $5 billion of this recovery was derived from judgments and settlements in the healthcare industry, including from drug and medical device manufacturers, managed care providers, hospitals, pharmacies, hospice organizations, laboratories, and physicians. The amount recovered in the healthcare sector in FY 2021 is nearly double the recovery seen in any given year previously in this sector. This represents a return on investment of four dollars for every one investigative dollar the government spent over the last three years.

The following, without limitation, contributed to this historic recovery amount, noting a healthy portion deriving from civil enforcement actions against the parties responsible for triggering and fueling the opioid epidemic:

  • The Purdue settlement in which Purdue agreed to allow an unsecured bankruptcy claim for $2.8 billion to resolve civil allegations that it promoted its opioid drugs to healthcare providers despite that it knew its uses were medically unnecessary and that it paid kickbacks to prescribers to induce prescriptions
  • Indivior’s agreement to pay $209.3 million to resolve civil allegations relating to the promotion of an opioid-addiction treatment drug, Suboxone, to physicians who wrote prescriptions that were not medically necessary, while claiming the medication was less prone to abuse and diversion.
  • Sutter Health paid$90 million to resolve civil allegations that it knowingly submitted incorrect diagnosis codes resulting in higher reimbursements.

The proportionally large recovery in the healthcare industry signals that the government has amplified its enforcement efforts in this sector. Indeed, over the last few years, the government has employed a variety of methodologies, including use of strike forces (see, for example, The Creation of an Opioid Strike Force Signals Yet Another Increase in Enforcement Actions Related to Controlled Substances), to combat fraud in this arena.

In addition to its success in resolving matters in FY 2021, the DOJ continued to initiate a sizable number of new investigations and actions, including opening 831 new criminal investigations into healthcare fraud and 805 new civil healthcare fraud investigations. For example, in FY 2021, charges were filed in 462 cases and 312 defendants were convicted of healthcare fraud-related crimes. Additionally, HHS filed 504 criminal actions and 669 civil actions in FY 2021. These numbers suggest the government is not slowing down and that enforcement in this arena will continue.

How Frier Levitt Can Help

The DOJ’s historic recovery in the healthcare space arose from targeting an array of conduct (from accepting kickbacks in exchange for prescribing to submitting claims for services not rendered to promoting medications improperly) engaged in by a range of stakeholders in the healthcare arena (from manufacturers to pharmacies, large hospital systems to individual providers). If nothing else, this massive recovery demonstrates that, when it comes to healthcare, with all the highly technical regulations, the potential for misstep exists at every turn.

Frier Levitt has extensive experience representing providers and others in the healthcare arena in a variety of types of matters, from prospective compliance to responding to subpoenas and negotiating settlements with the government to defending a complaints and criminal charges. Contact us for a complimentary consultation for more information regarding these or any other healthcare topics.