Last week we gave you the bottom line of how much DOJ (and relators) recovered in FY 2017. As we promised, we are doing a series of sector-specific posts – analyzing each for industry-specific trends. Today is Healthcare: Who’s paying, how often, and how much?
The medical industry remains the single largest target for FCA enforcement, coming in with 138 individual recoveries and $2.37 billion (that’s 68.8% of all the FCA recoveries as percentage of revenue this year). Recoveries in the pharmaceutical subcategory gave DOJ the biggest bang for their buck, with only 18 pharmaceutical recoveries representing around 40% of the Healthcare total dollars recovered. But Healthcare defendants come in a diverse range, with significant recoveries in the medical provider (just under $403 million), nursing home/ambulance (around $340 million) and medical device (around $415 million) subcategories as well, with the remainder spread out across laboratory, financial services, or other miscellaneous healthcare specialties.
Healthcare Outpaces Other Industries in Top Recoveries…
Of the top five recoveries we tracked across all industries in DOJ FY 2017, four were from Healthcare defendants. Two belonged in the pharmaceutical subcategory, one was a medical device case, and one had to do with electronic health records software. Only one of this year’s top five cases fell outside of the Healthcare industry entirely – a recovery out of the Other category dealing with mortgage insurance fraud.
Mylan Inc. took the prize for the number one payout this year, a pharmaceutical case settling for $465 million allegations that it had knowingly misclassified the EpiPen as a generic drug to avoid paying Medicaid rebates. The other pharmaceutical defendant with a significant recovery was Celgene Corp., who paid out on a $259 million settlement over allegations of off-label promotion for its cancer treatment drugs.
In second place overall this year was medical device manufacturer Shire Pharmaceuticals LLC and Advance BioHealing’s $350 million settlement dealing with alleged kickbacks and fraudulent inducement for sales of its product Dermagraft, and fifth place overall was taken by eClinicalWorks, a company vending electronic health records software that allegedly could not perform as advertised and had been promoted through alleged kickbacks. That settlement came in at $155 million, meaning that over one third of the total recoveries for DOJ across the board in DOJ FY 2017 were shared between these four Healthcare-industry recoveries.
… and in Quantity of Recoveries
Unfortunately, the news is bad on all fronts for Healthcare defendants. This sector not only is the biggest dollar value contributor to FCA recoveries; it also comprises the most likely FCA defendants at any price. In DOJ FY 2017, we counted 187 recoveries total. 137 of them were Healthcare. This is a modest drop from DOJ FY 2016’s number, which tallied up to 222 recoveries (about $400 million more than this year’s Healthcare total), but without any stand-out blockbuster recoveries in either year the trend seems generally to be a consistent and urgent enforcement effort in this industry. And with healthcare being such a hot political issue on both sides of the aisle, we see no likely relief in sight for the industry as a whole. The meaning and implementation of healthcare regulations – particularly those tied to the Affordable Care Act – are sure to be scrutinized from all directions in the coming year.