The Department of Justice recently published its annual False Claims Act (FCA) recoveries statistics for Fiscal Year 2017, reporting $3.7 billion in FCA settlements and judgments in FY 2017. That number brings DOJ’s total FCA recoveries since FY 1987 to more than $56 billion, and its total since 2009 to nearly $34.5 billion.
Although DOJ’s 2017 haul represents a $1 billion reduction year-over-year from 2016, it evinces the Government’s continued efforts to vigorously enforce the FCA. Indeed, DOJ’s total 2017 FCA recoveries rank fourth overall, surpassed only by 2012 ($5 billion), 2014 ($6.1 billion), and 2016 ($4.8 billion). The DOJ’s report and supporting statistics highlight several other continuing and notable trends.
Whistleblowers—known as “relators”—remain DOJ’s most significant source of new FCA matters. According to DOJ statistics, 674 of the 799 new FCA matters in 2017 originated from whistleblower referrals and qui tam suits. These matters led to roughly $3.4 billion of the $3.7 billion in total FCA recoveries, or nearly 93%, while non-qui tam matters amounted to only about $266 million of all FCA recoveries. Under the FCA’s relator‑bounty provisions, whistleblowers received nearly $393 million in relator-share awards. Despite the significant settlements and judgments in whistleblower matters, the 2017 relator-share awards represents a 25% year-over-year reduction from 2016, and the lowest overall amount of relator‑share awards since 2009.
Health-care fraud matters—typically involving fraud on Medicare and Medicaid—continue to account for the lion’s share of FCA recoveries. Specifically, health‑care fraud matters were responsible for nearly $2.5 billion in FCA recoveries in 2017, or nearly 67% of all FCA recoveries. This number is slightly less than last year’s $2.6 billion in health-care-fraud recoveries, but represents a greater portion of total FCA recoveries year-over-year. As in the past, the most substantial recoveries involved the pharmaceutical-drug and medical-device industries. In all, since 1986, DOJ has recovered nearly $36.5 billion arising from 8,137 health‑care matters. Relators have received nearly $5 billion of that amount. These figures, while substantial, do not include additional recoveries by state attorneys general from FCA suits filed in federal district court that involve Medicaid fraud.
Recoveries in FCA matters involving defense contracting remain substantial, and increased compared to 2016. Total FCA recoveries involving defense contractors in 2017 amounted to nearly $220 million, representing nearly an 80% increase over 2016, but representing a 22% reduction compared to 2015, when DOJ recovered nearly $283 million in defense-related matters.
As in the past, DOJ also recovered substantial sums in FCA matters involving industries other than health care and defense contracting. Specifically, DOJ recovered more than $1 billion in these cases in 2017. In its press release, DOJ touted the “diversity of cases pursued by the department to root out fraud and false claims against the government wherever they may be found.” For instance, DOJ reported more than $543 million in housing-and-mortgage fraud in 2017, and several big‑ticket procurement fraud cases.
DOJ’s press release emphasizes that “[t]he department continued to ensure individual accountability for corporate wrongdoing by pursuing False Claims Act and other civil remedies to redress fraud by individuals as well as corporations.” This pronouncement is consistent with the Memorandum on Individual Accountability for Corporate Wrongdoing, known as the “Yates Memo,” issued by DOJ in 2015.
Based on the flurry of FCA investigations and recoveries already trumpeted by DOJ in the first quarter of FY 2018, ending December 31, we see no signs of FCA investigations or enforcement slowing. Although DOJ’s recovery statistics can be daunting to entities in highly regulated industries that benefit from government expenditures—such as health care or government contracting—the report provides an important reminder to these entities that they should maintain robust compliance programs and proactively address potential FCA concerns. Otherwise, even a seemingly minor regulatory oversight can snowball into substantial exposure under the FCA’s treble-damages and civil-penalties provisions, or even debarment.