DOJ Releases False Claims Act Statistics for Fiscal Year 2021

On February 1, 2022, the U.S. Department of Justice (DOJ) announced that it collected more than $5.6 billion in False Claims Act (FCA) settlements and judgments in fiscal year 2021. This is the largest annual total since 2014, and the second largest in FCA history. Though $2.8 billion in recoveries are the result of the civil portion of the settlement with Purdue Pharma, the government still collected $2.8 billion from other FCA defendants. This number is in line with recent annual trends and marks an increase from the $2.2 billion collected in fiscal year 2020.

Key FCA Enforcement Trends

Healthcare Fraud

Healthcare recoveries accounted for $5 billion of the $5.6 billion total, once again making healthcare fraud the leading source of DOJ’s recoveries. This number, though inflated by the $2.8 billion claim that Purdue Pharma agreed to allow in its bankruptcy, includes $2.2 billion recovered from other healthcare fraud defendants. DOJ announced its main areas of focus in fiscal year 2021, and moving forward, are opioid abuse, Medicare Advantage Part C fraud, illegal kickbacks, and billing of unnecessary medical services. Among Medicare billing schemes that were pursued under the FCA in 2021, several involved medical services that were unnecessary, unreasonable, and performed by unskilled employees, or medical devices that manufacturers knew were defective but nonetheless billed Medicare for them. Others involved illegal patient referrals, including one scheme in which an Ohio-based hospital system paid certain physician groups more than fair market value for patient referrals and then billed Medicare for the illegally referred patients, violating the Anti-Kickback Statute. DOJ’s focus on Medicare Part C—Medicare’s managed care program—concerns schemes in which healthcare service providers fraudulently report “risk factors” that result in inflated payments. For example, a California-based provider paid $90 million to resolve allegations that it knowingly submitted unsupported diagnosis codes for patients and consequently benefitted from artificially high Medicare payments.

Procurement Fraud

In fiscal year 2021, DOJ pursued a number of FCA matters related to the government’s purchase of goods and services. This effort included pursuing allegations that government contractors falsified pricing data, provided goods or services that did not comply with agreed-upon requirements, and facilitated kickbacks in government contracts. Procurement fraud recoveries increased from $75 million in fiscal year 2020 to $119 million in fiscal year 2021, reflecting the administration’s focus on combatting corruption. Enforcement in this area will likely continue to rise on the heels of the administration’s focus on procurement fraud and the U.S. Government Accountability Office’s August 2021 report highlighting vulnerabilities in the Department of Defense’s procurement process.

COVID-19 Related Fraud

DOJ continues to focus on fraud flowing from COVID-19 pandemic relief funds. Congress authorized historic levels of funding and direct assistance through legislation, including the CARES Act and the American Rescue Plan, paving the way for new fraud schemes. One CARES Act initiative, the Paycheck Protection Program (PPP), generated significant scrutiny of improper payments. DOJ pursued small businesses that improperly received PPP loans under the FCA and settled several cases for amounts between $30,000 and $300,000. Though the dollar amount of these recoveries to date is relatively small, they are likely not fully representative of DOJ’s emphasis on FCA enforcement related to PPP funds or the COVID-19 pandemic in general. Enforcement and recoveries will likely continue across a number of areas, including healthcare. DOJ’s interagency Health Care Fraud Strike Force will likely continue its focus on misuse of the CARES Act’s Provider Relief Fund and improper billing in the healthcare industry related to COVID-19.

Whistleblower Suits

A total of $1.7 billion of the recovered $5.6 billion emerged from whistleblower lawsuits filed under the qui tam provisions of the FCA. This number is nearly identical to qui tam recoveries for fiscal year 2020, and the lowest number since 2010. There was a decline, however, in the number of qui tam suits filed and in the amount paid out to relators. Qui tam relators filed 598 lawsuits in fiscal year 2021, down from the 672 filed in fiscal year 2020. The government paid out $237 million to qui tam relators in 2021, also reduced from the $309 million paid out in 2020. While the reason for this stagnation is unclear, it can likely be attributed in part to the ongoing pandemic. Many employees spent the entirety of fiscal year 2021 working remotely, making it more difficult to identify and report misconduct. As workers return to the office in 2022, qui tam numbers will likely return to their pre-pandemic pace.

Cybersecurity Initiative

On May 12, 2021, President Biden signed an Executive Order prioritizing a proactive approach to cybersecurity incidents affecting federal government networks. On October 6, 2021, Deputy Attorney General Lisa Monaco unveiled DOJ’s Civil Cyber Fraud Initiative. The Initiative is designed to leverage the FCA to identify and deter cybersecurity incidents. Alongside the release of its 2021 FCA statistics, DOJ reiterated its commitment to civil enforcement as a means of cyber defense. DOJ noted that it will also pursue companies’ misrepresentations connected to the government’s acquisition of information technology, software, cloud-based storage, and related services designed to protect highly sensitive government information from cybersecurity threats.

Despite the effects of the COVID-19 pandemic, last year DOJ collected the second highest amount of recoveries in FCA history. DOJ will continue to focus on FCA enforcement as it explores new ways to use this critical tool to advance its priorities, like those in the cybersecurity arena. Companies should continue investing in their whistleblower programs, especially as workers return to the office, and should also investigate claims coming through those channels in a timely and objective matter to avoid costly civil suits and DOJ action. It is also critical that companies remain diligent in their compliance programs, maintain strong internal controls, and keep up to date on the most recent pronouncements from DOJ on corporate enforcement efforts.