In latest edition of The Wright Toolbox:
- DOJ Issues False Claims Act Report For Fiscal Year 2022
DOJ Issues False Claims Act Report For Fiscal Year 2022
On February 7, 2022, the Department of Justice (“DOJ”) released its annual report on the False Claims Act (“FCA”) recoveries for the fiscal year 2022 in civil cases involving fraud and false claims against the government. The DOJ recovered $2.2 billion, down substantially from the 2021 recoveries of $5.6 billion, but exactly the same as the $2.2 billion recovered in 2020. In 2021, we speculated that the large increase was probably related to a rebound from depressed activity due to COVID shut downs in 2020. In 2019, the DOJ recovered $3 billion in FCA actions, in 2018 total recoveries were $2.8 billion, in 2017 total recoveries were $3.7 billion and in 2016 total recoveries were $4.7 billion. The DOJ noted that there were 351 settlements and judgments in 2022, the second-highest number of settlements and judgments in a single year.
The FCA was originally enacted during the Civil War to protect against rampant fraud perpetrated against the United States military. The Department of Justice stated that it “has placed a high priority on rooting out and pursuing those who cheat government programs for their own gain.” Of the $2.2 billion in recoveries, $1.7 billion related to matters that involved the health care industry, including drug and medical device manufacturers, managed care providers, hospitals, pharmacies, hospice organizations, laboratories, and physicians. False Claims related to PPP money found its way into the 2022 recoveries and will likely increase in 2023. The DOJ resolved 35 FCA matters relating to individuals and entities improperly receiving PPP money and recovered over $6.8 million and avoided more than $1.5 million in losses for SBA tied to federal guarantees on improper loans.
The FCA permits private individuals to assert False Claims Act claims in qui tam suits as “relators” or whistleblowers. Typically, the whistleblower actions comprise a substantial percentage of the FCA cases that are filed each year. In 2021, whistleblowers filed 652 qui tam suits, an average of more than 12 new cases every week, and recovered over $1.9 billion. In a whistleblower action the relator typically receives a portion of the recovery ranging between 15% and 30%. In 2022, the DOJ paid $488 million to the individuals who exposed fraud and false claims by filing these actions.
The threat of FCA exposure is always present and can come from multiple sources including disgruntled current or former employees, customers or vendors or “professional” whistleblowers who target certain industries and review publicly available information to generate claims. Compliance audits and operational reviews are important in protecting against FCA claims. Contact us to learn how to protect yourself from FCA exposure.
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