January 2020

On January 9, 2020, the Civil Division of the U.S. Department of Justice (DOJ) announced that it recovered over $3 billion from civil False Claims Act (FCA) judgments and settlements in the fiscal year ending September 30, 2019. Although the DOJ ended its two-year streak of falling recoveries with a roughly 7% increase over 2018, the annual recoveries from 2019 are still below the Department’s five-year average of $3.5 billion. Based on data released by the DOJ, this year’s uptick is due in large part to increased recoveries from cases involving the U.S. Department of Defense (DOD). In 2019, DOD-related recoveries accounted for $252.1 million, more than double the $107.5 million in recoveries from the previous fiscal year.

Health care fraud cases continue to comprise the lion’s share of  the DOJ’s recoveries, accounting for $2.6 billion of the judgments and settlements in FY 2019. Health care-related cases account for approximately 91% of all recoveries from last year, representing a 3% increase over 2018 and the highest proportion of total recoveries ever. This is also the 10th consecutive year that the Department’s civil health care fraud settlements and judgments have exceeded $2 billion. 

While the health care-related cases pertain to a wide array of providers, including device manufacturers, managed care providers, hospitals, pharmacies, hospice organizations, laboratories, and physicians, the DOJ’s press release expressed a particular emphasis on holding drug companies accountable for their role in the opioid crisis, with two of the largest recoveries this past year coming from opioid manufactures, including: (1) Insys Therapeutics, which paid $195 million to resolve allegations that it paid kickbacks to induce physicians and nurse practitioners to prescribe Subsys to their patients; and (2) Reckitt Benckiser Group plc, which paid a total of $1.4 billion to settle criminal and civil liability related to the marketing of the opioid addiction treatment drug Suboxone. 

Non-health care related cases also accounted for increased recoveries, as the DOJ announced a $162 million settlement involving five South Korean companies to resolve allegations that they colluded on bids for defense contracts to supply fuel to the U.S. military. Another example of a high-dollar resolution is a $112.5 million settlement with Duke University to resolve allegations that it violated the FCA by submitting applications and progress reports that contained falsified research on federal grants to the National Institutes of Health (NIH) and the Environmental Protection Agency (EPA).  

The DOJ also highlighted its increased willingness in 2019 to utilize its dismissal power on meritless and burdensome qui tam FCA cases following an internal policy memorandum issued in early 2018, commonly referred to as the “Granston Memo.” The DOJ stated that “during the past year, [it] made increasing use of this tool to help prioritize and protect the expenditure of government resources.” 

On January 28, 2020, Polsinelli will present its annual Fraud & Abuse Year in Review webinar, wherein it will discuss the Government’s increased use of its dismissal authority as well as how Federal courts have responded over the last year. We will also drill down on important settlements, noteworthy cases, recent trends, and predictions for the coming year. Please click here to register for the 2019 Year in Review Webinar.