Healthcare fraud once again comprised the lion’s share of False Claims Act settlements and judgements in 2021, according to the Department of Justice (DOJ).
According to a Tuesday release, the DOJ recovered more than $5.6 billion from civil fraud and false claims cases for the fiscal year ending Sept. 30, 2021, the department’s largest haul since 2014.
Of this, more than $5 billion of the recovered funds came from cases related to the healthcare industry—well above the $1.8 billion and $2.6 billion of healthcare recoveries boasted by the department in 2020 and 2019, respectively.
“Ensuring that citizens’ tax dollars are protected from fraud and abuse is among the department’s top priorities,” acting Assistant Attorney General Brian M. Boynton of the DOJ’s Civil Division said in a statement. “The False Claims Act is one of the most important tools available to the department both to deter and to hold accountable those who seek to misuse public funds.”
The DOJ’s healthcare recoveries involved all sectors of the industry including drug and medical device manufacturers, managed care providers, hospitals, pharmacies, hospice organizations, laboratories and physicians.
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The department said that although its fraud enforcement efforts play a key role in restoring funds to federal programs, such as Medicare, Medicaid and TRICARE, the $5 billion-plus also doesn’t account for DOJ efforts that directly led to additional recoveries for states’ Medicaid programs.
Headlining this year’s recoveries were agreements made with drugmaker Purdue Pharma over its role in promoting opioid products to providers. The company had agreed to an unsecured $2.8 billion bankruptcy claim as part of its settlement, while individual members of the Sackler family who led the company agreed to pay out $225 million, the DOJ wrote.
Indivior, another prescription opioid manufacturer, similarly agreed to pay the federal government $209.3 million to resolve opioid-related civil allegations.
Beyond the opioid epidemic, the DOJ also highlighted a $90 million settlement with Sutter Health resolving allegations of unsupported diagnosis code submissions, two payments of $160 million and $38.75 million from Abbott subsidiary Alere over kickbacks and unnecessary medical services, and a bevy of smaller recoveries related to COVID-19 financial assistance such as the Paycheck Protection Program.
Kathleen McDermott, a partner with Morgan Lewis and previously an assistant U.S. attorney and DOJ healthcare fraud coordinator, told Fierce Healthcare that the disparity between healthcare recoveries and all other sectors suggests federal law enforcement has kept—and likely will continue to keep—a close eye on the healthcare industry.
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“While healthcare recoveries have been the largest industry sector for recoveries over the last 20 years accounting for $43 billion out of $64 billion recoveries since 1986, this figure is so anomalous as to seem like a typo,” she said. “It looks all [False Claims Act] enforcement is devoted to the health industry suggesting a real and easy target on an industry’s back that is heavily regulated. It is not likely there is less civil fraud in other industry sectors or need for [False Claims Act] enforcement in support of many other government programs.
“Overall, this report reasonably projects that [False Claims Act] investigations and recoveries will continue at an aggressive pace over the next few years,” she said.
McDermott also pointed to $1.6 billion in qui tam, or whistleblower, recoveries reported by the department during 2021. Although the total is on par with previous years, she noted that the money now represents a smaller proportion of the DOJ’s total recoveries even as the department is reporting an increasing number of whistleblower cases with 598 being filed during 2021.
The proportional reduction in qui tam case recoveries “could signal that DOJ is focusing more on its own enforcement agenda, rather than just False Claims Act private citizen allegations. Despite the headlines, there is arguably actually less [return on investment] associated with qui tams because the DOJ declination rates have hovered at 75% to 80% for two decades,” McDermott said.
“There is no information on what industry sectors may see an increase in [qui tam] investigations but healthcare is a good bet,” she added.
With 2021’s haul, the DOJ said that it has recovered more than $70 billion in settlements and judgments since Congress strengthened the civil False Claims Act in 1986.