With Big Third Quarter (and Even Bigger Beginning to Q4), DOJ Fast Approaching Total FCA Recoveries from FY2018

The third quarter of FY2019 was the biggest yet this fiscal year, continuing DOJ's incremental bounce-back in False Claims Act recoveries from FY2018, when annual FCA recoveries hit the lowest point since the Affordable Care Act amendments went into effect in March 2010. By our calculation, DOJ recovered nearly $684 million from 56 settlements and two judgments in FY2019 Q3. That's up from $589 million last quarter and more than double what DOJ recovered during the same period in FY2018.

As usual, the Q3 numbers were driven mainly by a handful of large recoveries—mostly from the pharmaceutical industry. The largest was a $195 million settlement out of the Central District of California involving alleged kickbacks and unlawful marketing practices of fentanyl spray. The District of Massachusetts saw the next three highest recoveries (collectively totaling nearly $210 million), all related to the alleged use of independent foundations to pay Medicare copays.

The third quarter of FY2019 also brings a return of a phenomenon we saw in Q1: suits brought directly by DOJ accounted for more than half (barely—52%) of the total dollars recovered. Similarly, the majority of recoveries (35 of 58) were from DOJ-initiated suits. Given that qui tam suits historically have been responsible for the lion's share of dollars recovered, these trends are worth keeping an eye on.

In terms of which industries were paying in Q3, outside of the healthcare industry (which was responsible for more than 85% of the dollars recovered), we saw an unusually high number of recoveries from the IT services industry. Nearly 5% of the total recoveries came from information technology service providers, including a $21.6 million settlement with a data warehouse provider, and a $14.8 million settlement related to services provided in connection with a healthcare exchange.

While this uptick in Q3 recoveries continued DOJ's gradual bounce-back from its poor showing in FY2018, what really gave DOJ a boost was an early Q4 $500 million settlement related to the marketing of an opioid addiction treatment drug. As of the date of writing (which includes a full month of Q4), DOJ has recovered $2.46 billion, fast approaching its FY2018 total of $2.88 billion. We at Qui Notes will let you know if and when DOJ surpasses last year's numbers.

© Arnold & Porter Kaye Scholer LLP 2019 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.