Alert: DOJ Announces US$4.7 Billion in 2016 FCA Recoveries

On Wednesday, December 14, 2016, the US Department of Justice (DOJ) announced that it recovered over US$4.7 billion from civil False Claims Act (FCA) cases in fiscal year 2016, which ended on September 30. This amount, which includes both settlements and judgments, was the third highest annual recovery in FCA history, with US$31 billion recovered over the last eight fiscal years. The numbers show that healthcare cases continue to dominate the FCA docket, with US$2.6 billion in FY2016 recoveries, marking the seventh straight year that healthcare recoveries exceeded US$2 billion. Another US$1.7 billion came from recoveries in cases affecting the financial industry, while defense-related recoveries and new filings declined. 
 
The Big Picture. Of US$4.7 billion in total recoveries, US$2.9 billion (61%) came from qui tam cases filed by private relators, who pocketed almost US$520 million in awards. Relators filed 702 new qui tam cases—an average of almost two each day. 
 
The remaining US$1.9 billion in recoveries came from cases filed by DOJ itself, without an underlying qui tam complaint. This was the largest annual recovery ever for DOJ-filed actions.
 
Healthcare Cases Continue to Dominate Recoveries and New Filings. Nearly 55% of all FCA recoveries (US$2.6 billion) came from healthcare cases, mostly from qui tam cases (US$2.5 billion), with over US$450 million in relator awards. Just under half of all healthcare recoveries (US$1.2 billion) came from pharmaceutical and medical device cases, with another US$360 million from cases involving hospitals and outpatient clinics. 
 
Over two-thirds of all new FCA filings (570 of 845) were healthcare cases—the highest proportion ever. Of these new healthcare cases, 88% (501 of 570) were qui tam actions. But DOJ also filed 69 FCA healthcare cases on its own, the largest number ever.
 
Defense-Related Recoveries and New Filings Declined. Almost 3% of all recoveries (US$122 million) involved the Department of Defense. This was less than half of last year's US$283 million in defense-related recoveries. And only 39 new defense-related cases were filed in FY2016—the smallest number ever, and the lowest proportion of new FCA cases ever. 
 
Financial Cases Remain Substantial. The remaining 43% of all recoveries (US$2 billion) came from other cases, primarily involving allegations of housing and mortgage fraud (US$1.6 billion, much of which came from just a single settlement).
 
The Yates Memo. DOJ also identified a number of settlements and judgments involving individual defendants. In doing so, it touted the September 2015 memorandum issued by Deputy Attorney General Sally Quillian Yates, which prioritized holding individuals accountable for corporate wrongdoing. Assuming that the next presidential administration does not revise these priorities, the Yates Memo could lead to a noticeable increase in FCA filings against indemnified individuals. Unlike corporate entities, these individuals may often want their day in court, multiplying the number of FCA trials. In turn, this could drive DOJ's resource allocation and potentially slow the ability of DOJ's civil attorneys to move other cases along, which could lead to backlogs that delay the resolution of larger cases.