Holiday Cheers and Jeers as DOJ Releases FY2018 Official Stats

On December 21, 2018, the Department of Justice released its annual FCA statistics to reveal a bottom line recovery of $2.88 billion for FY2018. That amount is heavily weighted towards the healthcare industry, with a full $2.5 billion of it derived from Health & Human Services matters, only $107 million from Department of Defense cases, and $259 million from the various industries comprising the "Other" category. The big picture dollars and cents have been further broken down here.

These figures are striking for a number of reasons. First and foremost, FY2018 is not just a down year for DOJ—in fact, it represents the single lowest recovery amount since the Affordable Care Act amendments that went into effect March 2010. FY2009, the last fiscal year to predate the ACA amendments, was the last time that FCA recoveries dipped below $3 billion (until now). Those amendments, which aided relators facing potential public disclosure bar dismissal and strengthened the links between healthcare violations and FCA liability, served as a shot in the arm for FCA enforcement when they debuted. But based on the last two years, the upward trend that took off with the ACA has stalled for reasons that have yet to reveal themselves fully.

The second key takeaway is that DOJ was only able to post these mediocre numbers by the skin of its teeth. Based on the DOJ press release and bottom line statistics, it might look at first blush as though at least the Healthcare numbers remained respectable at $2.5 billion (and to be fair, this is $400 million more than last year's Healthcare total). But in order to reach that figure, DOJ counts two recoveries announced on October 1—technically, the first day of FY2019. Careful Qui Notes readers may recall our coverage of these two settlements, as well as another (non-Healthcare) October 1 recovery, which cumulatively added just under $852 million to the "FY2018" stats. Without these late-reported recoveries, DOJ would have clocked in at only the $1.9 billion total exactly as we predicted back in October, and Healthcare would have plummeted to $1.65 billion for FY2018 (from $2.1 billion in FY2017). In other words, a full third of DOJ's Healthcare recoveries are derived from two single recoveries that came in just as the ball was dropping on the fiscal year. In contrast, the remaining two thirds of the posted recoveries are distributed across 149 separate cases resolved throughout the entire year (by our count, at any rate).

Now, regardless of the reporting date, the actual dates of those recoveries may well have fallen squarely on the FY2018 side of the date line. But the proximity of these major recoveries to DOJ's deadline begs the question of whether the Department is simply borrowing from Peter to pay Paul. It is true that historically the month of September is witness to increased enforcement activity, presumably as DOJ hustles to make its best showing as the fiscal year draws to a close. But DOJ pulling in a third of its money in literally the last days of the period is unprecedented.

Only time will reveal if this year's tactic pays off in the end, or if FY2019 is left holding a bag that's $852 million short. In the meantime, we will be working through the new DOJ numbers to bring our own tracker into alignment—which, once complete, will drop the FY2019 recoveries to date from $1.5 billion to a paltry $657 million.

For a more detailed look at the DOJ numbers, check out our breakdown here, and be sure to stay tuned to Qui Notes as we enter the new year, look back on the first quarter of FY2019 and consider additional implications of DOJ's FY2018 performance.

© 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.