False Claims Act Recoveries Exceed $5.6B for Fiscal Year 2021

The United States Department of Justice (DOJ) recently announced that it obtained more than $5.6 billion in settlements and judgments from False Claims Act cases during the fiscal year ending September 30, 2021. Of the $5.6 billion, more than $1.6 billion arose from lawsuits brought by whistleblowers under the qui tam provisions of the False Claims Act. Indeed, in just the last year, the government paid out $237 million to individuals who exposed false and fraudulent claims by filing such actions.

The $5.6 billion in recoveries marks the second largest annual total in False Claims Act history, and the largest since 2014. Recoveries made under the False Claims Act now total more than $70 billion since 1986, when Congress substantially strengthened the statute’s whistleblower provisions.

Of the more than $5.6 billion in settlements and judgments reported by DOJ this past fiscal year, more than $5 billion relate to matters that involved the healthcare industry, including drug and medical device manufacturers, managed care providers, hospitals, pharmacies, hospice organizations, laboratories, and physicians.

Additional False Claims Act recoveries involved a wide array of non-healthcare-related fraud, including government contract fraud; fraud related to COVID-19 relief programs; violations of cybersecurity requirements by government contractors; procurement and grant fraud; and tariff and customs evasion.

Significant False Claims Act successes in FY2021, as highlighted by DOJ, addressed a broad spectrum of misconduct, including:

The Opioid Epidemic: The Indivior companies agreed to pay $209.3 million to the federal government as part of a $600 million global settlement to resolve potential criminal and civil liability. DOJ claimed that the companies, among other things, promoted the opioid-addiction-treatment drug Suboxone to physicians who wrote prescriptions that were not for medically accepted indications and also diverted the prescriptions they wrote. In addition, DOJ alleged that the Indivior companies made false and misleading claims that Suboxone sublingual film was less susceptible to diversion and abuse and to accidental pediatric exposure than other buprenorphine products.

The Medicare Advantage Program (Medicare Part C): Sutter Health, a California-based healthcare services provider, paid $90 million to resolve allegations that it knowingly submitted unsupported diagnosis codes for certain patient encounters, resulting in inflated payments to be made to Medicare Advantage Plans and Sutter Health.

Unlawful Kickbacks: Mail-order diabetic testing supply company Arriva Medical LLC and its parent, Alere Inc., agreed to pay $160 million to settle allegations that Arriva paid kickbacks to Medicare beneficiaries by providing them “free” or “no cost” diabetic testing glucometers and by routinely waiving or not making reasonable efforts to collect their copayments for glucometers and diabetic testing supplies.

Unnecessary Medical Services: Apria Healthcare LLC paid $40.5 million to resolve allegations that it submitted false claims for the rental of costly non-invasive ventilators to federal healthcare program beneficiaries who did not need the devices or were not using them.

Procurement Fraud: Navistar Defense LLC paid $50 million to resolve allegations that it fraudulently induced the U.S. Marine Corps to enter into a contract modification at inflated prices for a suspension system for armored vehicles known as Mine-Resistant Ambush Protected vehicles.

COVID-Related Fraud: These recoveries involved improper payments under the Paycheck Protection Program (PPP), which was enacted to provide loans guaranteed by the U.S. Small Business Administration (SBA) to eligible small businesses for payroll, rent, utility payments, and other business-related costs. For example, DOJ pursued businesses that improperly received multiple PPP loans or used PPP funds to pay impermissible expenses, such as personal, non-company-related expenses.

Other Fraud Recoveries: Guild Mortgage Company paid $24.9 million to resolve allegations that it failed to maintain quality control programs to prevent and correct underwriting deficiencies and to self-report materially deficient loans insured by the Federal Housing Administration. Oil and natural gas exploration and production company Devon Energy Corp. paid $6.15 million to resolve allegations that it underpaid and underreported royalties for natural gas from federal lands that it leased for the production of natural gas in Wyoming and New Mexico.

To read DOJ’s press release and for more examples of how False Claims Act recoveries this past year have saved American tax dollars CLICK HERE.