With the trillions of dollars pumped in to prop up the economy in 2020, and with a substantial portion of that money focused on health care, we can expect a surge of health care litigation in 2021 addressing false claims and other fraud.
The US Department of Justice reported recovering only $2.2 billion from both settlements and judgments in False Claims Act (FCA) investigations and litigation in 2020. This was the lowest level since 2008 and almost $1 billion less than what was recovered in 2019. Of that, the vast majority of recoveries came from the health care and life sciences industries, meaning that health care remains the prime target for FCA investigations and litigation. Indeed, the government and individual qui tam plaintiffs collectively filed more FCA cases in 2020 than in any past year. At least with regards to qui tam plaintiffs, the vast majority of filings were related to health care. Given the 2020 filings, the ongoing pandemic, and the government's plan to pump even more funds into the economy, we can anticipate that 2021 will likely include an even greater number of FCA filings by the government and qui tam relators. For companies in the health care industry who obtain reimbursement from the government in any form or fashion, these numbers are an indication that they can expect more government scrutiny and possible whistleblower claims.
In addition to deliberately fraudulent actors, some of the FCA lawsuits and investigations in 2021 may stem from uncertainty on how to interpret changes in the rules. The US Department of Health and Human Services (HHS), through the Centers for Medicare and Medicaid Services and its Office of Inspector General, released new rules in 2020 governing how to interpret the Stark and Anti Kickback statutes governing health care provider compensation arrangements. While these rule changes are designed to provide greater clarity around fair market value, expand the number of legitimate compensation arrangements, and allow for more safe harbors, ambiguities and uncertainty in their interpretation are likely to lead to more litigation until the courts have weighed in on their meaning.
Meanwhile, as the COVID-19 vaccine and other countermeasures (such as COVID tests and personal protective equipment) continue to spread and become a part of our everyday lives, tort, breach of contract, and other personal injury lawsuits will invariably arise from their distribution and administration, particularly when those countermeasures are employed by private companies seeking to push forward with business as usual.
Over a dozen states (e.g., Connecticut, Kentucky, North Carolina, Washington, and Wisconsin) have enacted corporate immunity regimes to protect private business in the administration and use of covered countermeasures. In addition, the federal government has enacted the Public Readiness and Preparedness (PREP) Act, which provide broad immunity and preemption powers to covered persons who administer and distribute covered countermeasures pursuant to state or federal guidance. Private parties and HHS are debating the contours of this federal immunity in lawsuits across the country. 2021 will likely see decisions on whether the Act applies to cases of failure to properly administer countermeasures, whether state-law claims are preempted, and whether a PREP Act defense gives rise to federal jurisdiction.
The COVID-19 vaccine and other countermeasures spread across the country, lawsuits will invariably arise from their distribution and administration, particularly when those countermeasures are employed by private companies seeking to push forward with business as usual.
Another hot area for false claims litigation and investigations has been pharmaceutical companies. The DOJ recovered hundreds of millions in 2020 against companies for paying physician speakers to induce prescribers to write prescriptions and for illegally paying patient copays for their own drugs through purportedly independent foundations that the companies treated as conduits for these payments. The DOJ announced just after the close of fiscal year 2020 that it had reached a $2.8 billion settlement with a pharmaceutical company for alleged FCA violations arising from its purported unlawful promotion of its opioid drugs related kickback schemes to induce prescriptions of its opioids. We can expect these types of recoveries to continue, as the DOJ recently emphasized that the ongoing opioid crisis is one of the department's key priorities.
Perhaps the highest profile matter in health care law to be decided in 2021 will be the Supreme Court's decision that either once again saves or finally strikes down the Affordable Care Act (ACA), a statutory regime that impacts nearly every facet of American life. A federal district judge in Texas found the ACA unconstitutional after Congress repealed the individual mandate which required all Americans to carry insurance. The justices heard oral arguments in November, and evinced very little enthusiasm for these latest efforts to strike down the law. Still, the possibility of the justices finding the law unconstitutional has left uncertainty in the industry, which will be magnified greatly if the law is declared unconstitutional and likely setting off a wave of related litigation. 2021 is shaping up to be a busy year for health care litigation.
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