United States: DOJ Rings In The New Year With FY2019 FCA Stats Release, Announcing $3 Billion In FCA Recoveries

Evidently waiting for Qui Notes to announce our FY2019 False Claims Act recoveries breakdown during our January 9 webinar, DOJ finally released its annual FCA statistics for FY2019. DOJ reports having recovered just over $3 billion in FY2019, the overwhelming majority of which ($2.6 billion) came from Health & Human Services (HHS) matters. Healthcare recoveries have now exceeded $2 billion each year for 10 consecutive years. According to DOJ's press release, FY2019 saw particularly aggressive enforcement against pharmaceutical manufacturers, particularly companies that manufacture opioids. DOJ also recovered $252 million in defense-related matters and $196 million in what DOJ classifies as "Other" matters (i.e., any matters not involving HHS or the Department of Defense).

Stay tuned for a deeper dive into the numbers, but at a high level, FY2019 shows a slight uptick from the ten-year low of $2.9 billion recovered in FY2018, but still marks the second-lowest total since the 2010 Affordable Care Act (ACA) amendments to the FCA, which strengthened the statute's qui tam provisions. FY2019 also saw a slight increase in the overall number of new FCA matters filed, with 782 new matters (146 non-qui tams and 636 qui tams) filed, up from 762 in FY2018.

One big takeaway from DOJ's FY2019 statistics is the reduced role that relators appear to be playing in DOJ's recoveries. Although the overall number of new matters increased, the number of new qui tam matters fell for the fourth straight year, hitting an eight-year low with only 636 new relator-brought cases. The total amount paid out in relator share awards hit a 10-year low, with relators bringing in between $265 million and $272 million in FY2019, by far the lowest total since the ACA amendments.* Since 2009, relator share awards had never previously dipped below $340 million.

Unsurprisingly given this development, qui tam actions also make up a smaller portion of the total dollars recovered. Qui tam actions accounted for only 72% of the total recoveries in FY2019, the third year in a row we have seen a reduction on that front. The drop is particularly notable on the healthcare side, where relator-brought actions have historically accounted for the lion's share of healthcare recoveries. But in FY2019, only 73% of healthcare recoveries came from qui tam actions. DOJ recovered nearly $700 million in healthcare cases brought directly by DOJ, by far the highest total since 2006. This number was driven by several large recoveries out of the District of Massachusetts, stemming from an investigation of pharmaceutical manufacturers related to copay assistance programs. (See our reporting on the issue of manufacturer donations to charity patient assistance programs here.) The drop in qui tam recoveries will be an interesting trend to watch in coming years. Is the decrease due, at least in part, to courts more closely scrutinizing materiality post- Escobar and DOJ focusing more closely on weeding out meritless qui tam cases through its (c)(2)(A) dismissal authority?** Will we continue to see relators play a smaller role? Stay tuned as Qui Notes tracks this issue throughout the year.

As for the defense industry, DOJ bounced back in a big way in FY2019. The $252 million in defense-related recoveries marked a nearly 150% increase from the paltry $107 million recovered in FY2018. As DOJ's press release notes, settlements with five South Korean companies totaling $162 million made up a large chunk of this total. Meanwhile, "Other" recoveries continued to decline, which does not come as much of a surprise as we move further away from the financial crisis that brought substantial FCA enforcement against the financial services industry, and the mortgage industry in particular.

As those of our readers who attended our January 9 webinar know, DOJ reports having recovered more in FY2019 than we at Qui Notes identified through our tracking. We are digging into the numbers to see where the discrepancies lie, but DOJ's figures have been known to include some recoveries that otherwise were not publicly available.

Check back with Qui Notes for more in-depth analysis on DOJ's FY2019 performance and updates on FY2020 as the year unfolds.

* DOJ's press release states that relator share awards were $265 million, but DOJ's stats chart lists the amount as $272 million.

** Since nearly two years have passed since the Granston Memo was issued and it has now been enshrined in formal DOJ policy, moving forward, we will be referring to DOJ motions to dismiss over relators' objections according to the statutory source of DOJ's dismissal authority (31 U.S.C. § 3730(c)(2)(A)), rather than as "Granston motions."

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