The U.S. Department of Justice (DOJ) Civil Division released its annual fraud statistics on February 22nd. This highlighted False Claims Act (FCA) settlements and judgments exceeding $2.68 billion in fiscal year 2023. In conjunction with remarks made by Chief Deputy Assistant Attorney General Brian Boynton of the Department of Justice at the Federal Bar Association Quitam Chapter Conference. In his remarks, Mr. Boynton outlined the Department of Justice's enforcement priorities for fiscal year 2024 and beyond, including priorities for the healthcare industry.
Mr. Boynton and the Justice Department touted a record number of FCA settlements and judgments, indicating continued traction in whistleblower and plaintiff-side courts, but the Justice Department's FCA total recoveries remained relatively stagnant, if not below pre-pandemic levels.
The collection amount in FY2023 will slightly increase from FY2022.
The FCA is perhaps the most powerful tool the government has to prosecute fraud and abuse in federal health care programs such as Medicare and Medicaid and other government-funded activities and initiatives. The FCA's treble damages and per-claim penalties allow governments and whistleblowers to recover large sums of money. With fiscal year 2023 just around the corner, the Department of Justice's financial recoveries under the FCA have totaled more than $75 billion since 1986. Although they look much the same, a closer look at the data reveals the enforcement potential of this powerful law.
The number of Qui tam filings increased slightly from 658 to 712, with an increase of 54 sealed filings compared to the 2022 data, but the recovery rate through whistleblowing was an astonishing 86%. . Specifically, recoveries focused on the healthcare industry were reported to be $2.3 billion, representing 67% of total annual recoveries. In contrast, the U.S. Department of Defense recovered just over $550 million, or only 20% of its recoveries. The disparity in enforcement recoveries associated with small and medium-sized federal agencies versus large federal agencies is a troubling and persistent feature of FCA recoveries.
The government and whistleblowers were involved in 543 settlements and verdicts, the highest number ever in a single year and a 54% increase from fiscal year 2022, the Department of Justice said. The Department of Justice also indicated that there are currently more than 500 FCA cases initiated by the Department. The Justice Department's Fraud Division has issued more than 1,500 civil investigative demands (CIDs) seeking documents, interrogations, and testimony, suggesting the investigation is very active. The Justice Department also noted that the department “contributed” to obtaining additional recoveries for the state's Medicaid program.
Qui Tam actions make up the majority of recovery.
Whistleblowers and plaintiff attorneys remain the driving force behind these FCA recoveries. FCA settlements and judgments arising under the prohibition provisions of the FCA Act accounted for $2.3 billion in recoveries, nearly 86% of the 2023 total. The whistleblower's recoveries from these matters totaled his $349 million, most of which reflects intervention cases in which the Justice Department promoted recoveries. If the Department of Justice had not intervened, the recovery would have been even more modest, just over $61 million.
The extent to which whistleblower cases focused on the healthcare industry are driving the Justice Department's enforcement resources calls into question the department's own enforcement agenda. While the recovery of these whistleblower cases is noteworthy, the fact that whistleblower cases filed remain sealed for years with 80% rejected by the Department of Justice reflects the structural inefficiency of the statute. It suggests an unfair imbalance.
Healthcare remains number one
As has been the case in past years, the healthcare sector accounted for most of the recovery in FY23. The Justice Department's announcement highlighted recoveries and judgments in four specific areas: Medicare Advantage, nursing homes, the opioid epidemic, and kickbacks. But more broadly, the Department of Justice's recalls under the FCA involved a wide range of industries in the healthcare sector, including managed care organizations and providers, hospitals, pharmacies, laboratories, long-term acute care facilities, and physicians. . These recoveries were driven by a variety of regulatory issues, including:
- Medicare Advantage Diagnosis Code Report
- Providing unnecessary services
- kickback violation
- Substandard patient care
- Inaccurate FDA Premarket Approval Application
- Unauthorized billing
- Violations of cybersecurity requirements in government contracts and grants
Of the list above, many of these areas are traditional sources of recovery for the FCA, but Medicare Advantage fraud is an area that is experiencing significant growth, primarily due to the increasing popularity of these plans. In the coming years, we expect to see an increase in the number of his FCA lawsuits related to misstatements and other actuarial issues in the Medicare Advantage space.
Department of Justice highlights enforcement priorities for 2024
The Justice Department's announcement echoed Boynton's remarks at the FBA Quitam Division meeting. He articulated the Department's wins starting in fiscal year 2023 and outlined enforcement priorities for 2024. The focus of FCA enforcement remains healthcare fraud, which Mr. Boynton outlined in detail. Mr. Boynton specifically discussed financial incentives for referrals under both anti-kickback laws and the Stark Law, programs involving nursing homes, protections for the Medicare Advantage program, and programs led by “third parties” but involving health care companies. Mentioned.
Notably, Mr. Boynton acknowledged that Medicare Advantage is a program based on time-limited risk payments, rather than traditional “fee-for-service,” even though the Department of Justice does not believe that vendors, providers, etc. said it would expand its focus on Medicare Advantage to examine the role of patients. He also reiterated the Department's concerns about “third parties,” such as private equity investors, electronic health records software providers, and coding consultants, and their respective involvement in the patient care continuum.
Important points
- The Department of Justice's FCA recalls for fiscal year 2023 show a continued increase in investigations involving whistleblower activities. The Department of Justice's enforcement activities for documents and depositions through the CID are substantial and ongoing.
- The majority of FCA recoveries are the result of whistleblowing, forcing companies to focus on compliance efforts and whistleblower management strategies. Encouraging a “Report Me First” environment may help avoid his CID in the future of your company.
- Stakeholders in the healthcare and life sciences industry, particularly Medicare Advantage organizations, private equity investors, and other “third parties” described by Boynton, will be required to comply with the Department of Justice and plaintiffs' attorneys for fiscal year 2024. It should be expected to be central to the FCA's enforcement efforts. onwards.
Do you have questions about DOJ enforcement priorities, the FCA's impact on health care providers, or compliance concerns? Contact the author or a Morgan Lewis attorney. For more information on the Department of Justice press release, as it applies to all industry sectors affected by the FCA, please visit Morgan Lewis LawFlash.
