In latest edition of The Wright Toolbox:
DOJ Issues False Claims Act Report For Fiscal Year 2023
On February 22, 2024, the Department of Justice (“DOJ”) released its annual report on the False Claims Act (“FCA”) recoveries for the fiscal year 2023 in civil cases involving fraud and false claims against the government. The DOJ recovered $2.68 billion, up from the 2022 recoveries of $2.2 billion, but much lower than the recoveries in 2021, which were $5.6 billion. In 2021, we speculated that the large increase was probably related to a rebound from depressed activity due to COVID shut downs in 2020. For further perspective on where this year’s recoveries fall, which provides a good gauge of the activity, in 2020 the government recovered $2.2 billion, in 2019, the recoveries were $3 billion, in 2018 recoveries were $2.8 billion, in 2017 recoveries were $3.7 billion and in 2016 total recoveries were $4.7 billion. The DOJ noted that there were a record breaking 543 settlements and judgments in 2023.
The FCA was originally enacted during the Civil War to protect against rampant fraud perpetrated against the United States military.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 $2.68 billion in recoveries, $1.8 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. Over the last year, the DOJ resolved approximately 270 False Claims Act matters, recovering over $48.3 million in connection with improper PPP loans. The DOJ noted in its report that it continues to pursue individuals on FCA matters as well as entities and that it continues to pursue its cyber fraud FCA initiatives. In one of the largest FCA procurement settlements ever, Booz Allen Hamilton Holding Corporation paid $377 million to resolve allegations that it improperly billed its government contracts for costs incurred in its non-governmental commercial and international contracts.
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 2023, whistleblowers filed 712 qui tam suits, and recovered over $2.3 billion (of the total $2.68 billion) in such qui tam suits. In a whistleblower action the relator typically receives a portion of the recovery ranging between 15% and 30%. In 2023, the DOJ paid $349 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 any member of the Wright, Constable & Skeen Government Contracts practice group to learn how to protect yourself from FCA exposure.