DOJ’s FY23 FCA Stats Show Bounce Back From Last Year’s Low With Record Number of Cases Initiated by DOJ

On February 22, the Department of Justice (DOJ) released its annual False Claims Act (FCA) statistics for Fiscal Year 2023. The government’s take from FCA cases increased by roughly half a billion dollars — more than 20% — over FY22, but still remains below the US$3 billion mark that DOJ regularly eclipsed in the 2010s. DOJ’s announced total of US$2,689,447,914 tracks closely with our estimate of US$2.7 billion based on the data that was publicly available immediately following the end of the fiscal year. 

One notable trend in this year’s statistics is that the proportion of healthcare-related recoveries continues to decrease. Roughly one-third of DOJ’s recoveries came outside the healthcare industry, a substantial increase over last year, where about 20% of recoveries were non-healthcare-related. Slicing the numbers a different way, of the roughly US$500 million increase in recoveries this year as compared to last year, healthcare recoveries increased by about US$100 million, while recoveries in other industries increased by about US$400 million. 

To be sure, healthcare enforcement remains DOJ’s FCA bread and butter. DOJ’s press release highlighted the breadth of healthcare-related FCA enforcement, from allegations of using improper diagnosis codes to overbill Medicare, to Anti-Kickback Statute violations, to delivering care so substandard as to be considered “worthless.” DOJ also indicated, as it has in recent public statements, that Medicare Advantage will remain a priority enforcement area moving forward.

Outside the healthcare realm, DOJ reported just over US$500 million in recoveries related to Department of Defense (DOD) contracts and US$255 million related to non-healthcare, non-defense cases. Although DOJ’s much-hyped civil cyber fraud initiative did not result in significant recoveries this year — DOJ’s press release noted two recoveries under this initiative, totaling about US$4.3 million — Qui Notes readers will be well aware that there has been a significant uptick in enforcement activity in this space. And given that FCA matters can take some time to resolve, it is likely that we will begin to see increased litigation activity, and potentially recoveries, in the cybersecurity area now that the initiative is into its third year.

Though FY23 was not particularly notable in terms of total dollars recovered, DOJ did set a record for the number of recoveries, notching 543 separate recoveries. This appears to be due to DOJ’s resolution of numerous, low-dollar value matters related to the Paycheck Protection Program (PPP). In fact, 270 of DOJ’s FY23 resolutions — just shy of half its total for the year — were pandemic-related, netting a total recovery of US$48.3 million, or about $179,000 per matter. The remaining 273 matters resulted in total recoveries of over US$2.6 billion, for an average of US$9.67 million per matter.

FCA enforcement shows no signs of slowing down (unless, of course, the FCA’s qui tam provisions are held unconstitutional, but that’s a topic for another day). More than 1,200 new FCA matters were initiated in FY23 — including 712 qui tam suits filed by relators and 500 suits or investigations initiated by DOJ itself — making this the first year with more than 1,000 combined new matters. The number of DOJ-initiated matters blows prior records out of the water. To put that number in perspective, DOJ had never previously eclipsed 340 DOJ-initiated matters in a single year — and the previous record was in 1987, the first year after the 1986 amendments that led to an explosion of qui tam actions. The chart below shows the dramatic uptick in DOJ-initiated matters in recent years, compared to the number of qui tams, which has stayed relatively steady. 

The continued increase in DOJ-initiated matters is consistent with DOJ’s recent public statements emphasizing its increased reliance on data analytics, particularly with respect to enforcement against healthcare providers. In addition, Principal Deputy Assistant Attorney General Brian Boynton announced last Thursday that DOJ issued 1,504 Civil Investigative Demands in FY23, the most ever in a single year. Accordingly, this year’s modest recovery numbers should not be mistaken for a downturn in FCA enforcement efforts, but rather a short-term dip (quite possibly resulting from pandemic-related litigation slowdowns) that shows signs of reversing.

We here at Qui Notes will continue to monitor, and report back on, whatever happens next in the FCA world.

© Arnold & Porter Kaye Scholer LLP 2024 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.