In the Fiscal Year ending September 30, 2022, settlements and judgments under the False Claims Act exceeded $2.2 billion. That $2.2 billion total can be broken down into 351 settlements and judgments, the second-highest number of settlements and judgments in a single year. Using the settlements as a rear-view mirror can serve to better understand current government focuses, including fraud in pandemic relief programs and alleged violations of cybersecurity requirements in government contracts and grants.
Health Care Fraud
Of the $2.2 billion in settlements and judgments, more than $1.7 billion was in connection to matters involving the health care industry, including various drug and medical device manufacturers, durable medical equipment companies, home health and managed care providers, hospitals, pharmacies, hospice organizations, and physicians. Importantly, the $1.7 billion figure only reflects recoveries stemming from a federal loss; many cases involved recovering additional amounts for state Medicaid programs. This means that total Fiscal Year 2022 recoveries – state and federal – from the False Claims Act was in excess of $1.7 billion.
Medicaid
One of the settlements in Fiscal Year 2022 was the settlement between Mallinckrodt ARD LLC (f/k/a Questcor Pharmaceuticals) and the United States for $260 million over allegations that the company knowingly underpaid rebates to the Medicaid program by designating its H.P. Acthar Gel as a “new drug” as of 2013 instead of a preexisting drug for which Mallinckrodt had raised the price of in years prior. The DOJ had also alleged that Mallinckrodt knowingly used a foundation as a conduit to pay copay subsidies (illegal kickbacks) so that it could market the drug as “free” to doctors and patients all the while the company was raising the price of the drug.
Unnecessary Services and Substandard Care
Another settlement in 2022 was a $22.7 million settlement with Providence Health & Services Washington. Providence allegedly billed federal health care programs for medically unnecessary neurosurgeries and at one hospital, neurosurgeons were paid based on a productivity metric, incentivizing them to perform more complex surgeries. As part of that settlement, Providence admitted that some of its medical personnel raised concerns about two specific neurosurgeons who were endangering patient safety and performing surgery on candidates who were not appropriate for surgery.
Anti-Kickback
2022 saw many new Anti-Kickback claims as well as resolutions to older alleged violations of the Anti-Kickback Statute and the Stark Law. One of the largest False Claims Act recoveries was the nearly $900 million settlement with Biogen. Biogen paid $843 million to the federal government and nearly $57 million to fifteen states to resolve allegations that the company offered and paid kickbacks – via speaker honoraria, speaker training fees, consulting fees, and meals – to physicians who spoke at or attended Biogen programs focused on the company’s multiple sclerosis drugs, Avonex, Tysabri, and Tecfidera.
The Importance of Whistleblowers
Of the $2.2 billion recovered by the government in Fiscal Year 2022, a whopping $1.9 billion came from lawsuits that were filed under the qui tam provisions of the False Claims Act. The government paid more than $488 million to the whistleblowers for their shares of the settlements and judgments.
In 2022, 652 qui tam cases were filed, averaging 50 new cases each month. “We are grateful for the hard work and courage of those private citizens who bring evidence of fraud to the Department’s attention, often putting at risk their careers and reputations,” said Principal Deputy Assistant Attorney General Brian M. Boynton. “Our ability to protect citizens and taxpayer funds continues to benefit greatly from their actions.”
“Protecting taxpayer dollars by preventing fraud and abuse is a critical priority for the Department of Justice,” said Principal Deputy Assistant Attorney General Boynton. “The large number of settlements and judgments this past year demonstrates that the False Claims Act remains one of the most important tools for ensuring that public funds are spent properly and advance the public interest.”
This $2.2 billion is less than half of the more than $5.7 billion the DOJ settled/received judgments for Fiscal Year 2021. The 2021 figures represent the second largest amount recorded, and the largest since 2014.