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United States: Same Bang, But Fewer Bucks: Number Of FCA Cases Constant But Overall DOJ FCA Take Drops Precipitously In 2018
For our inaugural post at Qui Notes, we are covering
the Department of Justice (DOJ) Fiscal Year close, and by our
count, it has not exactly been a boom year for False Claim Act
(FCA) enforcement. After several consecutive years of $3
billion-plus annual recoveries, this year looks to be coming in at
a paltry $1.9 billion (approximately). If our numbers are even
close to being right (and we speak with some confidence that they
are), this means that FY2017 will stand as the single lowest
overall recovery recorded by DOJ in a decade.
Roughly three quarters of the FY2018 recovery came from
defendants in the Health Care industry ($1.5 billion), while the
Defense industry contributed $138 million and the remaining $227.1
million was derived from a variety of different types of cases in
the "Other" category.
But the number of recoveries—measured as individual cases
settled or that resulted in judgments for a relator or the
DOJ—is roughly consistent with prior years. In FY2017, there
were 185 individual recoveries located in our DOJ press release
searches (although DOJ data obtained through FOIA indicates there
may have been as many as 221).Compare that to the 209 recoveries we
have found for FY2018 and you will see why, in the absence of any
notable blockbusters in either year, we have trouble reconciling
the difference in recovery amount. The number of cases is roughly
constant, but the overall recovery total dropped precipitously.
The difference then must be in the distribution of recoveries.
That distribution is modeled in the graph below, which shows the
significantly higher proportion of small dollar recoveries in
FY2018 as compared to FY2017. Of the recoveries we tracked for
FY2018, 148 were $5 million or less. The FY2017 recoveries were
weighted more toward the heavy end of the scale, with 125 of the
recoveries at $5 million or less, and the remainder coming in at
rates that either match or exceed those reached in FY2018. The
largest single recovery we noted in FY2018 was $216 million, as
compared to $465 million in FY2017, so while there were no true
"blockbusters" either year, the biggest single recovery
of 2018 was less than half that of 2017.
The bigger question, of course, is what explains the drop in
dollars. Perhaps Escobar is showing some bite, causing
defendants to resist settlement or drive harder bargains. It could
be that DOJ is focusing more on individual defendants with
shallower pockets, and so we are finally seeing numbers reflective
of the Yates Memo's directive toward individual
enforcement (we will in a future post check to see if there are
individual defendant recoveries that might explain this trend).
Another possibility—one we hesitate to even raise—is
whether we have missed something; however, we checked and rechecked
the publicly available data and remain confident that, even if we are
off, it could not be enough to explain the big swing. We will know
more in December when DOJ releases its official statistics for the
year. In the meantime, we will spend the next several weeks
dissecting the data we have, taking a closer look at industries and
trends. We also hope to launch a new feature before the end of
October that will make our data available to readers at a
case-by-case level. If you spot something you think we are
overlooking that could account for this down year, we hope
you'll let us know.
Qui Notes is not all that disappointed that DOJ and
Relators are putting in apparently the same work, but for less
pay.
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