On February 7, 2023, the U.S. Department of Justice released its annual False Claims Act (“FCA”) Report for the fiscal year 2022 (“Report”). The Report revealed that FCA litigation resulted in only $2.2 billion in settlements and recoveries in the fiscal year 2022, the lowest amount since 2008. The relatively low amount of recoveries in 2022 is in stark contrast to the $5.7 billion the law generated in the fiscal year 2021.
Rather than expressing disappointment at the lower dollar value of the recoveries, the DOJ expressed enthusiasm regarding the 351 settlements and judgments that occurred in 2022, the second-highest number in a single year.
The Report didn’t specify a reason for the sudden uptick in settlements and judgments while seeing a decrease in overall value. However, it’s safe to assume that it relates to the spike in FCA cases filed by the DOJ since the beginning of the COVID-19 pandemic, which are typically lower-value cases. This trend continued throughout 2022 with 296 new matters, one of the highest amounts in FCA history.
Most of the pandemic-related enforcement has been related to relatively modest cases tied to the Paycheck Protection Program fraud and allegations that ineligible entities obtained PPP loans from the U.S. Small Business Administration. In the Report, the DOJ highlighted that it resolved 35 PPP-related cases in 2022, recovering $6.8 million and avoiding more than $1.5 million in losses for the SBA concerning federal guarantees on improper loans.
In the Report, the DOJ celebrated whistleblowers, highlighting that cases brought by relators accounted for $2 billion or 90% of the $2.2 billion total. The DOJ also noted that it paid nearly $500 million in whistleblower rewards in the fiscal year 2022.
Almost half of the FCA’s total 2022 recoveries resulted from a $900 million settlement with drugmaker Biogen Inc. in late September, just before the end of the fiscal year. Biogen agreed to the nine-figure settlement to resolve allegations that it disguised kickbacks as fees for services it didn’t need or use. The settlement resulted in a record-breaking relator award of $268 million for a former Biogen sales representative who brought the case and continued litigation even after the government declined to intervene.
Notably, recoveries from individuals or entities overseen by the U.S. Department of Health and Human Services constituted $1.8 billion or 80% of the total. This amount fell short of the 90% milestone a year earlier, showing DOJ’s continued desire to concentrate on the healthcare industry in FCA litigation. In the Report, the government also highlighted FCA recoveries in other notable sectors, including defense, Covid-19, and cybersecurity.
It remains to be seen how the FCA realm will develop throughout the fiscal year 2023. Still, the Report illustrates that the DOJ remains laser-focused on healthcare as the primary interest of FCA litigation but is paying increased attention to other industries, specifically Covid relief, and cybersecurity.