The False Claims Act and Health Care: 2021 Recoveries and 2022 Outlook
In a significant departure from the general downward trend in False Claims Act1 (FCA) civil fraud recoveries over the past half-decade2 —and as predicted last year3 —recoveries in Fiscal Year (FY) 2021 drastically increased compared to those in FY 2020. The US$5.6 billion in recoveries reported by the United States Department of Justice (DOJ) in its 1 February 2022 press release is more than double the US$2.2 billion recovered in FY 2020, and is the second largest total recovery ever recorded.4 Yet again, the health care industry was far and away the primary driver of civil fraud enforcement activity, accounting for 90% of total recoveries—over US$5 billion.5 Notably, health care civil fraud recoveries in FY 2021 were the highest ever in a single year by a large margin, representing nearly US$2 billion more than the previous high reported in FY 2012 (and over US$3 billion more than FY 2020).6 As expected, aggregate recoveries were much greater in qui tam matters in which the DOJ participated, either by filing its own complaint, intervening in relators’ qui tam actions, or otherwise pursuing a recovery.7 This fact held true for all qui tam activity generally, and for health care matters in particular.8
The substantial increase in civil fraud recoveries in FY 2021 is due, in large part, to the highly publicized US$2.8 billion settlement with Purdue Pharma in connection with the opioid manufacturer’s marketing and sales practices.9 However, even setting aside the latter recovery, by virtually any measure, FY 2021 was marked by heavy heath care-related FCA activity. The government did not discriminate in its enforcement across the health care industry, as it targeted insurers,10 health care systems,11 medical suppliers,12 pain clinics,13 clinical laboratories,14 substance abuse centers,15 pharmaceutical companies,16 psychiatric facilities,17 home health agencies,18 and hospitals19 (among others) with its enforcement efforts. The DOJ has, again, expressed its intent to pursue health care fraud diligently, touting its “vigorous pursuit of health care fraud” as instrumental in “restor[ing] funds to federal programs such as Medicare, Medicaid, and TRICARE” and “prevent[ing] billions more in losses by deterring others who might try to cheat the system for their own gain,” as well as “protect[ing] patients from medically unnecessary or potentially harmful actions.”20
Looking ahead to FY 2022, K&L Gates LLP perceives three areas to be particularly worthy of attention. First, Congress appears primed to consider legislation that would significantly amend the FCA to make it more difficult for defendants to assert materiality defenses pursuant to Escobar21 and its progeny and for the government to dismiss qui tam actions over relators’ objections.22 Second, FCA actions predicated on the use of Electronic Health Record systems (EHRs) against vendors and providers are likely to substantially increase. And, third, industry participants should expect the DOJ to accelerate its pursuit of fraud in the Medicare Advantage arena against both insurers and providers. This article will first examine the statistics underlying FCA activity in FY 2021, and will then explore these three areas in depth.
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This publication/newsletter is for informational purposes and does not contain or convey legal advice. The information herein should not be used or relied upon in regard to any particular facts or circumstances without first consulting a lawyer. Any views expressed herein are those of the author(s) and not necessarily those of the law firm's clients.
