Yesterday, the Department of Justice (DOJ) announced that 2016 was its third highest recovery year in False Claims Act (FCA) history. According to the press release, “DOJ obtained more than $4.7 billion in settlements and judgements from civil cases involving fraud and false claims against the government.” This brings up the fiscal year average to approximately $4 billion since 2009.
While 2016’s recoveries were down from the record breaking year of 2014, which had almost $6 billion in recoveries, 2016 exceeds recoveries from 2015 by $1.2 billion, an increase of over 34%. Similarly, 2016’s recoveries also exceed amounts collected in 2013 and 2011 by 29% and 57%, respectively. Further, 2016’s recoveries are only $2 million shy of the second highest recovery year in 2013. Bryan Cave expects to see 2017 recoveries to be in the $4 billion range.
Of the $4.7 billion recovered in 2016, over half came from the health care industry. Notably, this “reflects only federal losses” and does not include state FCA recoveries, which include additional millions of dollars for state Medicaid programs. Recoveries from the financial industry, mostly relating to housing and mortgage fraud, were the next largest. Other recoveries included procurement fraud, fraud associated with federal education funds, and customs fraud.
Over half of the amounts recovered were from law suits brought by whistleblowers under the qui tam provisions of the FCA. These whistleblowers received $519 million as their share of the recovery.
All indications are that fraud and abuse will once again be a priority in 2017. For the past year, there has been a clear message from DOJ: they are taking an aggressive stance on fraud and using all tools available to them to combat it. It is imperative that companies that do business with the government have robust compliance programs and policies in place at all levels of the corporate structure. Qui tam avoidance efforts will continue to grow in importance. We invite you to review our Whistleblower Litigation Mitigation Checklist to assist you in you.
For more information about this update, or if you have any questions regarding the False Claims Act, please contact the authors of this alert or any other member of Bryan Cave’s White Collar Defense and Investigations Group.