Same Bang, But Fewer Bucks: Number of FCA Cases Constant But Overall DOJ FCA Take Drops Precipitously in 2018

For our inaugural post at Qui Notes, we are covering the Department of Justice (DOJ) Fiscal Year close, and by our count, it has not exactly been a boom year for False Claim Act (FCA) enforcement. After several consecutive years of $3 billion-plus annual recoveries, this year looks to be coming in at a paltry $1.9 billion (approximately). If our numbers are even close to being right (and we speak with some confidence that they are), this means that FY2017 will stand as the single lowest overall recovery recorded by DOJ in a decade.

Roughly three quarters of the FY2018 recovery came from defendants in the Health Care industry ($1.5 billion), while the Defense industry contributed $138 million and the remaining $227.1 million was derived from a variety of different types of cases in the "Other" category.

But the number of recoveries—measured as individual cases settled or that resulted in judgments for a relator or the DOJ—is roughly consistent with prior years. In FY2017, there were 185 individual recoveries located in our DOJ press release searches (although DOJ data obtained through FOIA indicates there may have been as many as 221).Compare that to the 209 recoveries we have found for FY2018 and you will see why, in the absence of any notable blockbusters in either year, we have trouble reconciling the difference in recovery amount. The number of cases is roughly constant, but the overall recovery total dropped precipitously.

The difference then must be in the distribution of recoveries. That distribution is modeled in the graph below, which shows the significantly higher proportion of small dollar recoveries in FY2018 as compared to FY2017. Of the recoveries we tracked for FY2018, 148 were $5 million or less. The FY2017 recoveries were weighted more toward the heavy end of the scale, with 125 of the recoveries at $5 million or less, and the remainder coming in at rates that either match or exceed those reached in FY2018. The largest single recovery we noted in FY2018 was $216 million, as compared to $465 million in FY2017, so while there were no true "blockbusters" either year, the biggest single recovery of 2018 was less than half that of 2017.

The bigger question, of course, is what explains the drop in dollars. Perhaps Escobar is showing some bite, causing defendants to resist settlement or drive harder bargains. It could be that DOJ is focusing more on individual defendants with shallower pockets, and so we are finally seeing numbers reflective of the Yates Memo's directive toward individual enforcement (we will in a future post check to see if there are individual defendant recoveries that might explain this trend). Another possibility—one we hesitate to even raise—is whether we have missed something; however, we checked and rechecked the publicly available data and remain confident that, even if we are off, it could not be enough to explain the big swing. We will know more in December when DOJ releases its official statistics for the year. In the meantime, we will spend the next several weeks dissecting the data we have, taking a closer look at industries and trends. We also hope to launch a new feature before the end of October that will make our data available to readers at a case-by-case level. If you spot something you think we are overlooking that could account for this down year, we hope you'll let us know.

Qui Notes is not all that disappointed that DOJ and Relators are putting in apparently the same work, but for less pay.

© Arnold & Porter Kaye Scholer LLP 2018 All Rights Reserved. This blog post is intended to be a general summary of the law and does not constitute legal advice. You should consult with counsel to determine applicable legal requirements in a specific fact situation.