First-Half FY2023 FCA Recoveries Point To Continuation of FY2022 Trends
The end of March marked the halfway point in the federal government’s fiscal year, and it looks like the government may continue last year’s trend of decreasing False Claims Act (FCA) recoveries. By our count, as of March 31, FCA recoveries totaled $603.4 million, which equates to a $1.2 billion projection for the full fiscal year. That would be a drop-off of about $1 billion—or roughly 50%—compared to DOJ’s FCA recoveries in FY2022. That is notable because FY2022 was already a low year for DOJ, with its smallest aggregate FCA recoveries since 2009.
This decline appears to be the result of DOJ getting smaller recoveries, rather than fewer recoveries. At the midway point in FY2022, DOJ had notched 129 FCA recoveries, and that number has barely budged in the first six months of FY2023, to 122. But a year ago, those 129 recoveries had translated to $1.2 billion, roughly double this year’s current total. The difference appears to stem from the lack of any “blockbuster” recoveries—that is, recoveries in excess of $100 million—so far this year. As Qui Notes readers know, those big ticket recoveries drive DOJ’s annual statistics. For example, in the early days of FY2022, DOJ announced a settlement with three generic pharmaceutical manufacturers totaling $417 million. This year, on the other hand, DOJ’s largest recovery has been $69 million, which came in a settlement with a Michigan hospital system related to alleged violations of the Anti-Kickback Statute.
In other ways, the mid-year statistics tell a similar story to the full-year FY2022 numbers. As we’ve written previously, we have seen an uptick in cases brought directly by DOJ. We now seem to be seeing the results of that in the recoveries; the first half of FY2023 saw 67 recoveries in non-qui tam suits, more than half of all recoveries thus far. The industry breakdown also continues last year’s trends including that about $20 million, or about 4%, of recoveries have been outside the health care industry. Last year, this number was also about 3%. One notable trend, which we previewed in our analysis of DOJ’s release of the FY2022 statistics, is the increasing share taken up by the “Other” industry category, which reflects non-health care, non-defense cases. So far this year, that category is running neck-and-neck with defense, at $9 million compared to the defense category’s $10 million. Diving deeper into the healthcare recoveries, the vast majority (about $370 million) have come from providers, with about $60 million from device manufacturers, and smaller sums from pharmaceutical firms and other players in the healthcare industry.
While these numbers point to another down year for DOJ, the Department has a tendency to backload many of its biggest recoveries, so the second half of FY2023 could look significantly different than the first. Continue to check Qui Notes for important updates on individual matters and broader enforcement trends.
© 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.