Qui Notes
October 21, 2019

Recoveries in Fiscal Year '19 Fall Just Short of Last Year's Total Despite Large Q4 Recoveries

Qui Notes: Unlocking the False Claims Act

The final quarter of the federal government's fiscal year 2019 (FY2019) was the most successful of the year for the Department of Justice (DOJ) in terms of False Claims Act (FCA) recoveries, with DOJ netting nearly $742 million from 46 settlements in Q4. However, this amount falls well short of the $1.4 billion DOJ recovered in this same period last year and was not enough to push this fiscal year's total over last year's recoveries. By our count, DOJ collected $2.68 billion in FY2019, $200 million less than its FY2018 recoveries and the lowest amount recovered since 2009.

More so than any other quarter in FY2019, Q4 recoveries were driven by a single, blockbuster settlement. In early July, DOJ announced its largest recovery to date in a case concerning an opioid drug—a $1.4 billion settlement out of the Western District of Virginia that resolved parallel civil and criminal investigations pertaining to the marketing of an opioid addiction drug. Under the $700 million civil settlement, DOJ recovered $500 million for the federal government (with $200 million reserved for the participating states). The next largest recovery in Q4 was an approximately $96 million settlement out of the Northern District of Georgia in a case relating to physician kickbacks paid to induce prescriptions. Combined, the $596 million recovered under these two settlements—both in the pharmaceuticals industry—accounts for 80% of the total dollars recovered last quarter.

Amount Recovered by Industry Q4 FY2019

Recoveries in the healthcare industry alone ($677 million) accounted for 91.3% of all recoveries in Q4, the highest single-quarter percentage for healthcare recoveries in FY2019. Pharmaceutical-related recoveries were the driving force behind this healthcare recovery spike, driven largely by the two settlements described above. Provider-related recoveries totaled $22 million, while medical device and supply-related cases brought in an additional $18 million.

The defense industry saw the second-highest FCA recovery amount last quarter, with more than $38 million recovered. For the fiscal year, DOJ recovered more than $237 million from the defense industry, nearly $100 million more than its defense-related FCA recoveries in FY2018. Defense industry recovery amounts also increased, on a per-recovery basis, by nearly 40% from FY2018.

Notably, the total number of recoveries last quarter was down both quarter-over-quarter (46 in Q4 of FY2019 vs. 58 in Q3 of FY2019) and year-over-year (46 in Q4 of FY2019 vs. 57 in Q4 of FY2018). As a result, the year-over-year deficit in recoveries between FY2018 and FY2019 widened, as FY2019 closed with 18 fewer recoveries (194) than FY2018 (212).

With another federal government fiscal year in the books, we at Qui Notes plan to take a deeper dive into these and other emerging trends, which we plan to publish in the coming weeks. Check back here soon for more insights from our team.

© 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.

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