On December 21, 2018, the Civil Division of the US Department of Justice (DOJ) announced that it recovered over US$2.8 billion from civil False Claims Act (FCA) judgments and settlements in the fiscal year ending September 30, 2018. This was DOJ’s lowest annual FCA recovery since FY2009, and the second straight year of falling FCA recoveries, down from US$3.5 billion in FY2017 and US$4.9 billion in FY2016. Our analysis of DOJ’s raw data suggests this year’s drop stems from a sharp dip in recoveries for non-healthcare cases. Meanwhile, healthcare-related cases continued to dominate the FCA docket, accounting for two-thirds of all new FY2018 filings and 87 percent of all FY2018 recoveries (US$2.5 billion)—the highest proportion of total recoveries ever. FY2018 is also the ninth consecutive year to see over US$2 billion in healthcare-related recoveries.
Yet the overall number of new FCA matters fell for the second year in a row: only 767 new matters were brought in FY2018, down from 825 last year and 856 the year before. The decline is due largely to a 10 percent drop in healthcare cases filed by private qui tam relators since last year. The reasons for this decline remain unclear, given that the relators’ bar is not bound by DOJ’s enforcement priorities.
The Big Picture
Of US$2.9 billion in total FCA recoveries, almost three-quarters came from qui tam cases (US$2.1 billion), with relators pocketing US$301 million in awards. The remaining FCA recoveries—approximately US$770 million—came from new matters brought by DOJ itself, without an underlying qui tam complaint. This was the fifth-highest annual recovery ever for DOJ-filed actions, and almost half a billion dollars more than last year.
FY2018 also saw a continued decline in new FCA filings. There were only 645 new qui tam filings, down from 680 in FY2017 and 707 in FY2016. This drop was due to a 10 percent dip in new qui tam cases involving the US Department of Health and Human Services: 446 this year, versus 495 the year before. By contrast, relators filed a few more defense-related and other non-healthcare cases this year (199) than last year (185).
DOJ’s own filings also fell, with only 122 new matters this year, compared to 145 in FY2017 and 149 in FY2016. This decline came from fewer non-healthcare filings: 62 this year, down from 90 last year. By contrast, DOJ actually filed its second-highest number of healthcare-related FCA cases ever: 60 new matters, up from 55 last year.
Healthcare Cases Still Dominate
DOJ recovered US$2.5 billion from healthcare cases, an increase of US$329 million over last year. Most of these recoveries came from qui tam cases (US$1.9 billion), which yielded over US$266 million in relator share awards. Healthcare cases provided an unprecedented 87 percent of this year’s total FCA recoveries, given the decreased recoveries from other kinds of cases.
The proportion of healthcare filings was virtually identical to the last two years. Healthcare cases comprised almost two-thirds of all new FCA matters (506 of 767), with almost 88 percent filed as qui tam actions (446 of 506). DOJ’s press release also suggests that the government’s enforcement efforts continue to focus on alleged violations of the Anti-Kickback Statute, 42 U.S.C. § 1320-7b.
Defense-related Recoveries Fell by Over 50 Percent
Only 4 percent of all FY2018 recoveries—US$107 million—involved the Department of Defense. This was less than half of last year's US$220 million in defense-related recoveries. There were only 47 new defense-related matters, down from 50 in FY2017.
Other Recoveries Fell by Over 75 Percent
The remaining 9 percent of this year’s recoveries—US$260 million—came from non-healthcare, non-defense matters. The amount for this catchall category of FCA cases was less than a quarter of the US$1.1 billion recovered in FY2017, and the lowest amount since FY2010. The majority of this year’s amount came from a single case related to alleged mortgage fraud (US$150 million). DOJ and relators filed only 214 of these “other” FCA cases, down from 225 in FY2017, and the lowest number since FY2010.
A Nod to the Granston Memo
DOJ’s press release noted the government’s authority under the FCA to dismiss qui tam cases (see 31 U.S.C. § 3730(c)(2)(A)), and touted that “during the past year[,] the government made increasing use of this tool to help prioritize the use of government resources.” This statement reflects the guidance from a leaked January 2018 memo from DOJ official Michael Granston, which encouraged DOJ to invoke its statutory dismissal authority when appropriate. In the last few weeks, DOJ has filed a series of high-profile § 3730(c)(2)(A) dismissal motions in courts around the country. Time will tell whether these efforts reflect a lasting shift in how DOJ exercises its enforcement discretion.
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