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DOJ’s False Claims Act Recoveries Rise to More Than $3 Billion in FY2019, With Continued Emphasis on Health Care Fraud Cases

On January 9, 2020, the Civil Division of the U.S. Department of Justice (DOJ) announced that it recovered over $3 billion from civil False Claims Act (FCA) judgments and settlements in the fiscal year ending September 30, 2019. Although the DOJ ended its two-year streak of falling recoveries with a roughly 7% increase over 2018, the annual recoveries from 2019 are still below the Department’s five-year average of $3.5 billion. Based on data released by the DOJ, this year’s uptick is due in large part to increased recoveries from cases involving the U.S. Department of Defense (DOD). In 2019, DOD-related recoveries accounted for $252.1 million, more than double the $107.5 million in recoveries from the previous fiscal year.

Health care fraud cases continue to comprise the lion’s share of  the DOJ’s recoveries, accounting for $2.6 billion of the judgments and settlements in FY 2019. Health care-related cases account for approximately 91% of all recoveries from last year, representing a 3% increase over 2018 and the highest proportion of total recoveries ever. This is also the 10th consecutive year that the Department’s civil health care fraud settlements and judgments have exceeded $2 billion. 

While the health care-related cases pertain to a wide array of providers, including device manufacturers, managed care providers, hospitals, pharmacies, hospice organizations, laboratories, and physicians, the DOJ’s press release expressed a particular emphasis on holding drug companies accountable for their role in the opioid crisis, with two of the largest recoveries this past year coming from opioid manufactures, including: (1) Insys Therapeutics, which paid $195 million to resolve allegations that it paid kickbacks to induce physicians and nurse practitioners to prescribe Sybsys to their patients; and (2) Reckitt Benckiser Group plc, which paid a total of $1.4 billion to settle criminal and civil liability related to the marketing of the opioid addiction treatment drug Suboxone. 

Non-health care related cases also accounted for increased recoveries, as the DOJ announced a $162 million settlement involving five South Korean companies to resolve allegations that they colluded on bids for defense contracts to supply fuel to the U.S. military. Another example of a high-dollar resolution is a $112.5 million settlement with Duke University to resolve allegations that it violated the FCA by submitting applications and progress reports that contained falsified research on federal grants to the National Institutes of Health (NIH) and the Environmental Protection Agency (EPA).  

The DOJ also highlighted its increased willingness in 2019 to utilize its dismissal power on meritless and burdensome qui tam FCA cases following an internal policy memorandum issued in early 2018, commonly referred to as the “Granston Memo.” The DOJ stated that “during the past year, [it] made increasing use of this tool to help prioritize and protect the expenditure of government resources.” 

© Polsinelli PC, Polsinelli LLP in California

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About this Author

Shareholder

As a shareholder in the Government Investigations practice, Brian Rafferty leverages a distinguished background serving as Chief of the Criminal Division of the United States Attorney’s Office for the Southern District of Georgia. In his more than ten years of experience as a federal prosecutor, Brian oversaw and managed some of the most high-profile and complex investigations in the Southern District of Georgia. Before his work as a federal prosecutor, Brian was a partner at white collar criminal litigation boutique in New York, where he represented individuals in government...

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Kevin M. Coffey, Polsinelli PC, Chicago, Planning Advocacy Lawyer, Compliance matters Attorney
Associate

Kevin Coffey blends advocacy skills and a proactive planning approach in providing comprehensive health care legal representation to a broad range of organizations in fraud and abuse and compliance matters. He works closely with clients to proficiently respond to investigations based on alleged violations of various civil, criminal, and administrative laws, including the False Claims Act and OIG’s Civil Monetary Penalties. Kevin is well-versed in federal and state health care regulatory schemes and laws.

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