In the choppy waters of FCA recoveries, whistleblowers still steer the ship

Last week, the Department of Justice (DOJ) released its annual report on False Claims Act (FCA) recoveries in fiscal year 2015. Considering last year's historic $5.7 billion total, it was a little surprising--at least initially--to see FCA recoveries had dropped 40 percent.

Of course, the healthcare industry saw a much milder 18 percent decline, dropping from $2.4 billion in 2014 to $1.96 billion in 2015, but it was a decline nonetheless.

So what's going on? Is the government getting lazy in its FCA enforcement? Did one epic year get to its head and now it's sitting back on its haunches, like an athlete who slumps after a $200 million contract?

There are a couple explanations. One is that, historically, FCA recoveries ebb and flow. In fact, Mintz Levin has has a few graphics that help visualize the peaks and valleys over the last 20 years.

Another exaplnation for the overall decline in FCA recoveries is the unique circumstances of FY 2014. A major chunk of the government's $5.7 billion came from the housing and mortgage industry, which pitched in $3.1 billion thanks to a handful of huge settlements in the wake of the mortgage crisis.  

The DOJ had its own explanation:

"These recoveries restore valuable assets to federally funded programs such as Medicare, Medicaid and TRICARE--the healthcare program for the military. But just as important, the department's vigorous pursuit of healthcare fraud prevents billions more in losses by deterring others who might otherwise try to cheat the system for their own gain."

From the sound of that quote, the DOJ pictures a bunch of people huddled in a dark, smoky back room concocting an elaborate fraud scheme when, suddenly, a press release freezes them in their tracks.

Shut it down, guys. Just look at this recovery rate. Let's volunteer at the soup kitchen instead.

There's no doubt the government has put more resources toward detecting and prosecuting healthcare fraud, particularly with the Health Care Fraud Prevention and Enforcement Action Team and Medicare Fraud Strike Force units. But, as any U.S. Attorney or special investigative unit director will tell you, the element that makes it so difficult to investigate--and prevent--fraud is its constantly evolving nature.

So, no, the DOJ has not plugged up all the holes in the dam, officials just haven't noticed the one that's gushing water right behind them.

Which brings us to the last--and probably the most important--reason healthcare FCA recoveries are the lowest they've been since 2009: Manpower.

Like just about every other year, whistleblower (or qui tam) cases made up the overwhelming majority of healthcare FCA settlements and judgements ($1.83 billion) in 2015. The 423 whistleblower cases filed this year accounted for two-thirds of all whistleblower claims. However, the DOJ collected just $1.36 billion in cases where it intervened, nearly $1 billion less than the previous year. Instead, nearly half a billion dollars were tied to qui tam cases where the DOJ declined to intervene, which represents a seven-fold increase from the previous year.

Nearly all of that is from a $450 million settlement with DaVita Healthcare Partners Inc., a case in which the whistleblower moved forward without the government's help. If it wasn't for that settlement, the feds would be explaining away a much steeper decline.

FCA recoveries aren't down because the DOJ scared everyone away. More likely, the government is struggling to dedicate the resources and manpower necessary to prosecute the flood of whistleblower claims.

If you read this week's Q&A with former U.S. Attorney Bill Killian, you'll see that civil fraud claims coming into his office increased five-fold over his five-year tenure. I'd be surprised if his district was the only one experiencing that influx. It appears fraudsters haven't been deterred by high priced FCA recoveries; an overloaded system just hasn't brought them to justice yet. 

That could change. In June, the Office of Inspector General announced a new 10-attorney litigation team that will focus exclusively on civil monetary penalties and exclusion cases. In September, the White House budget director called for a more aggressive strategy to combat improper payments, and pointed specifically to Medicare's high improper payment rate. In February, the DOJ sought to double its healthcare fraud enforcement budget, citing an increased number of whistleblower cases.

One thing is for certain: Whistleblowers are in the driver's seat when it comes to FCA litigation, and they aren't slowing down. So, as whistleblowers are more willing to come forward with FCA claims, the feds are regrouping in an effort to keep pace.

If anything, 2015 simply represents a statistical lull--a calm before the storm, as whistleblower claims push forward with more intensity. - Evan (@HealthPayer)

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