Stay up to date by subscribing to our blog. Add your e-mail address to the Subscribe box on the right to get our timely posts delivered directly to your inbox.
The attention-grabbing headline from the Department of Justice’s (“DOJ”) annually released statistics on False Claims Act (“FCA”) settlements and judgments is that the government recovered more than $5.6 billion from FCA cases in fiscal year (“FY”) 2021. While this is the second largest annual recovery in FCA history and the largest since 2014, procurement fraud cases represented a substantially smaller percentage of the total recoveries than in years past. Healthcare resolutions dominated, accounting for more than five billion of the $5.6 billion in settlements and judgments. In previous years, healthcare matters have accounted for closer to two-thirds of the total recoveries, making last year’s outsized healthcare figure—driven by the blockbuster opioid settlements of late 2020—an outlier.
Beyond the top-line dollar figures, the report shows that FCA activity continues at a healthy, if not fully robust, pace. The COVID-19 pandemic continues to impact qui tam filings; the number of new whistleblower suits dropped to 598 in FY 2021, a ten-year low. The number of DOJ-initiated matters remains higher than the near-term average, particularly in healthcare, but also in Department of Defense (“DOD”)-related cases. Contractors, healthcare providers, and others—especially those who received federal funding through pandemic aid programs—can anticipate that FCA investigations and resolutions will play out over the next several years.
Recoveries on DOJ-initiated matters are outpacing recoveries on qui tam cases overall, but the impact of the opioid settlements is also significant in that metric. For DOD-related matters, whistleblower cases accounted for a larger share of the recovery than DOJ-initiated cases, especially in matters where the government intervened. Suffice to say that, in the DOD procurement fraud arena, contractors should continue to pay attention to and address issues raised from within.
DOJ’s press release on the FY 2021 recoveries highlighted several significant procurement fraud cases from FY 2021. Several of these involved allegations that contractors submitted inflated or otherwise false cost or pricing information. Others involved failures to meet contract requirements, including the use of unqualified labor or false certifications of proper equipment maintenance. DOJ also highlighted instances of subcontractor kickbacks. Going forward, contractors can expect to see ongoing investigations and enforcement activity in these fairly conventional areas, and should be on the lookout for queries involving potential fraud in COVID-related funding programs, anticipated infrastructure spending, and non-compliance with cybersecurity certifications and regulations—all of which are within the DOJ’s crosshairs in FY 2022 and beyond.
 The government’s $2.8 billion civil resolution with Purdue Pharma in October 2020, for example, accounts for nearly half of the total recoveries for the entire year.