DOJ’s 2021 FCA Report Shows Huge Year for Direct File Health Care Cases

The U.S. Department of Justice, Civil Division (DOJ), just released its annual report on False Claims Act (FCA) settlements and judgments. In fiscal year 2021, DOJ obtained $5.6 billion in settlements and judgments from “civil cases involving fraud and false claims” against the federal government. This result — it’s not really a recovery — is DOJ’s second best year ever, surpassed only by 2014’s $6.59 billion, and a 150% increase over the $2.252 billion in settlements and judgments in 2020. DOJ’s 2021 statistics reveal four interesting points that companies should know about.

1. Direct File Recoveries Without Whistleblowers Are up 600%

First, cases brought directly by DOJ without a whistleblower or “qui tam” suit, i.e., “direct file” cases, accounted for $3.984 billion of the $5.6 billion. That is a 629.9% increase over the $545 million attributed to direct file cases last year. The number of direct file cases, 203, was down from last year’s 253 cases, but last year saw the highest number of direct file cases since 1994, making this year’s number the third highest number of direct file cases in 26 years.

2. Most FCA Cases Include Health Care Fraud Claims

Second, health care fraud FCA cases continue to predominate. 86.67% of FCA settlements and judgments were related to health care, which came out to $5.066 billion. Of this amount, $3.59 billion were direct file health care cases. That is not a surprise: $3.234 billion in recoveries came from three health care-related settlements:

• • $209.3 million from Indivior related to the alleged unlawful promotion of the addiction treatment drug Suboxone
  • $2.8 billion from Purdue Pharma relating to the promotion of opioid drugs to health care providers that it allegedly knew were prescribing opioids for uses that were unsafe, ineffective and medically unnecessary
  • $225 million from members of the Sackler family who purportedly approved an unlawful marketing program for OxyContin while serving as board members for Purdue

These three settlements account for 57.2% of the overall $5.6 billion recovered.

Other notable health care fraud-related settlements beyond the opioid-related settlements were in the areas of Medicaid Part C/Advantage Programs. Defendant Sutter Health, for example, settled an FCA suit for $90 million in which it was alleged that Sutter Health submitted unsupported diagnosis codes for patient encounters resulting in inflated payments to the Medicare Advantage Plan.

There were also notable FCA cases relating to Anti-Kickback Statute violations, including a $160 million settlement with a mail-order diabetic testing supply company, Arriva Medical LLC, and its parent, Alere, Inc. that allegedly provided free or no cost diabetic testing glucometers and routinely waived or did not collect copayments.

In the category of allegedly billing for unnecessary medical services, Apria Healthcare LLC entered a $40.5 million settlement to resolve allegations that it submitted false claims for rental of costly non-invasive ventilators to patients who did not need the devices or were not using them.

3. FCA Qui Tam Suits and Settlements at More than 10-Year Low

Third and most interesting, FCA qui tam suits and settlements are down . . . again. In 2021, the settlements and judgments for qui tam suits, both those in which DOJ intervened and in which the relator prosecuted alone, were at their lowest amount since 2008: $1.666 billion. Qui tam recoveries where DOJ intervened in the matter were $1.186 billion, which was also the lowest since 2008. Relators filed only 598 qui tams last year, the lowest since 2010. Of that 598, 388 were health care qui tams, the lowest since 2009. Confirming that it was not a banner year for whistleblower or “relator” counsel was that realtors only received $238 million in qui tam awards –again, the lowest since 2008. That amount was a 26.6% decrease from the prior year.

4. Relators Secured Solid FCA Recoveries and Record Number of Non-Health Care Qui Tam Filings

Finally, for whistleblower counsel, there were a few bright spots. In cases in which the DOJ did not intervene, relators obtained FCA settlements and judgments for $479 million, the best since 2017 and the third best year since 1987. 94.3% or $452 million of those recoveries were in health care. In the “other” category, a catchall that excludes health care and Department of Defense-related cases, filing numbers were up: 183 qui tams filed, the second highest ever behind the 201 qui tams filed in 2014.

Thus, it was a banner year for DOJ’s Civil Fraud unit overall, but a disappointing year for qui tams, both filings and recoveries, when compared with past years.

Please contact A. Brian Albritton or any member of Phelps’ Health Care team if you have questions or need compliance advice and guidance.