By Qui Notes’ Reckoning, DOJ’s FY 2023 Stats Increase Over Paltry FY 2022 — Though There Is Still a Long Way To Go In Comparison To Prior Years

As we do each year, your friends at Qui Notes have mined our own False Claims Act (FCA) statistics to give our readers a “sneak peek” before the “official” government stats are released. It appears that FCA recoveries have ticked up from last year’s low, boosted by several nine-figure settlements in the second half of the fiscal year. Even so, FY 2023 ranks among Department of Justice’s (DOJ) lowest-yielding years since 2009, so perhaps there was not so much for the DOJ and relators to celebrate after all.

Before we begin in earnest, we offer our usual disclaimers. Our statistics are based on our tracking of publicly-released judgments and settlements and may therefore be underinclusive. Moreover, we have found that DOJ often calculates recoveries differently than we (for example, by apportioning global resolutions of civil-criminal-administrative investigations in ways difficult to fathom). For more information on our statistics, see here.

Now for the good part. For FY 2023, our count shows DOJ and relators obtained approximately US$2.7 billion, a US$500 million increase from last year’s total. Though on a percentage basis, the US$500 million marks a hefty increase, it all the same is a small jump from a low floor. As we previously reported, FY 2022 was the lowest in terms of FCA judgments and settlements since we began tracking. Indeed, from 2010 to 2019, DOJ and relators together yielded more than US$3 billion per year (including the narrowly-missed mark in 2018, just US$15 million short). Since 2020, DOJ has come in below US$3 billion in three of the last four fiscal years (2023 being no exception).

To be sure, US$2.7 billion is nothing to sneeze at. Of the 255 recoveries we identified in FY 2023, five were in excess of US$100 million: three healthcare recoveries, one in the defense arena, and one for a non-defense procurement matter. The largest, at over US$487 million, represents a judgment entered after a jury found that a provider of ophthalmic products had violated the Anti-Kickback Statute resulting in the submission of 64,575 false claims to Medicare. This verdict (which is still awaiting the resolution of post-judgment motions and a potential appeal) was a major contributor to DOJ’s US$1.92 billion worth of healthcare-related recoveries.

One notable trend is an increase in the share of non-healthcare settlements and judgments. This year’s statistics suggest that more than one in every four dollars was from either the “Defense” category or the “Other” category — twice as large as just four years ago, when healthcare accounted for 87% of recoveries. There were a few high-dollar non-health care settlements that contributed to this total, as well as a series of smaller COVID-related cases, including several regarding alleged misuse of Payment Protection Program funds.

As for the Civil Cyber Fraud Initiative, announced with great fanfare two years ago, the cyber-related settlements collectively were fairly paltry (only two totaling less than US$5 million). However, as our readers well know, there is a significant time lag between when qui tams are filed or DOJ investigations begun and any resulting settlement or judgment. Most likely there are many cases in the pipeline that have not yet become public.

Looking ahead, in the early days of FY 2024 DOJ has already notched a notable recovery, reaching a settlement worth more than US$85 million with a manufacturer of cardiac devices, resolving allegations of violations of the Anti-Kickback Statute. Although this settlement likely is a holdover from FY 2023 that somehow missed the deadline, DOJ is nonetheless off to a strong start.

As always, we will issue an update when the DOJ releases its own stats, likely early next calendar year (explaining what either DOJ or we got right or wrong). We will also continue to follow key issues, including the impact of the Schutte decision on FCA scienter and the continued litigation over the constitutionality of the FCA’s qui tam provisions sparked by Justice Thomas’ dissent in Polansky. And, of course, we will continue to update our statistics in real time as new settlements and judgments are announced. Please, as always, stay tuned.

© Arnold & Porter Kaye Scholer LLP 2023 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.