During remarks to False Claims Act (FCA) practitioners on February 22 in Washington, DC, and in an accompanying press release, Department of Justice (DOJ) Principal Deputy Assistant Attorney General Brian Boynton announced that recoveries from FCA settlements and judgments in fiscal year 2023 reached nearly $2.7 billion, with healthcare and procurement fraud continuing to be the largest areas of recovery.
That brings total recoveries under the FCA since 1986 to more than $75 billion and marks the 15th consecutive year that recoveries exceeded $2 billion. Recoveries were up from the more than $2.2 billion reported in 2022, and recoveries from cases initiated by qui tam relators increased to over $2.3 billion as compared to just under $2 billion in 2022. The government and whistleblowers were party to a record 543 settlements and judgments in 2023—a 54% increase from 2022.
KEY AREAS OF FCA ACTIVITY IN 2023
Healthcare Fraud
At approximately $1.8 billion, healthcare fraud recoveries were flat compared to 2022. Within the healthcare fraud umbrella, DOJ highlighted recoveries and actions relating to Medicare Advantage/Part C (including involving inaccurate and untruthful diagnosis codes), unnecessary services and substandard care, marketing and dispensing of opioids, and unlawful kickbacks.
Procurement Fraud
DOJ noted that in 2023, the “government continued its pursuit of fraud matters involving the purchase of goods and services in connection with military and similar programs.” The headline procurement fraud recovery this year was a $377 million settlement with a defense contractor that allegedly improperly billed the government for costs incurred in its non-governmental commercial and international contracts. This settlement accounted for roughly two-thirds of 2023’s nearly $552 million in Department of Defense (DOD)–related settlements and judgments—the third-highest amount of money from DOD-related recoveries since 1986.
Key Enforcement Priorities
DOJ also addressed two of its enforcement priorities in 2023: fraud relating to COVID-19 pandemic relief programs (largely Paycheck Protection Program (PPP) loans) and alleged violations of cybersecurity requirements in government contracts and grants. DOJ resolved approximately 270 FCA matters relating to PPP loans in 2023, amounting to over $48.3 million in recoveries. The number or value of recoveries relating to DOJ’s Civil Cyber-Fraud Initiative, which was announced in 2021, was not specified in the DOJ press release, but we anticipate that enforcement actions relating to cybersecurity will increase in the coming years.
Other Fraud
DOJ noted that the judgments, settlements, and lawsuits announced in 2023 “involved a variety of other programs and schemes that reflect the diversity of the government’s False Claims Act enforcement efforts.” Examples of these types of non-healthcare and non-DOD actions vary widely, from alleged violations of Federal Communications Commission competitive bidding regulations, to misclassification of vitamins and nutritional supplements to avoid paying customs duties, to failure to disclose patents and share patent royalties with a federal agency.
The DOJ press release highlighted the importance and role of qui tam relators. In 2023, relators filed 712 lawsuits, averaging more than 13 new cases each week. Just like last year, qui tam suits, both intervened and declined, accounted for the large majority of FCA recoveries—over $2.3 billion in 2023, or 86%, resulting in more than $349 million in payments to relators. Nevertheless, the number of new non-qui tam (or affirmative) FCA lawsuits hit an all-time high in 2023 of 500, largely driven by non-healthcare and non-DOD matters.
Further, DOJ emphasized its commitment to holding individual actors accountable in order to “deter future fraud, incentivize changes in both corporate and individual behaviors, ensure that the proper parties are held responsible, and promote the public’s confidence in our justice system.”
DOJ Principal Deputy Assistant Attorney General Boynton emphasized the importance of the government’s investigative efforts in pursuing these recoveries, noting that it issued 1,504 Civil Investigative Demands in 2023—an all-time record.
LOOKING AHEAD
In his remarks, Boynton highlighted the government’s “commitment to holding accountable third parties that cause the submission of false claims.” DOJ cited as examples software that can bias certain medical decisions and coding consultants and billing specialists that can “find ways for providers to improperly inflate their Medicare payments by upcoding or otherwise submitting unsupported claims.”
DOJ also mentioned investors such as private equity and venture capital firms, which may influence patient care decisions by dictating how a provider conducts its business or providing revenue targets or other benchmarks that prioritize reimbursement. Enforcement actions against individuals and entities that cause the submission of false claims can be expected to increase in the coming years as the provision of medical (and other) services becomes more complex and involves more actors.
DOJ’s announcements reflect that FCA enforcement remains robust and will continue to evolve to keep up with emerging technologies and businesses.
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