Law360 (February 1, 2022, 8:00 PM EST) — The U.S. Department of Justice announced Tuesday that it had secured roughly $5.6 billion in False Claims Act recoveries in 2021, its second-highest FCA haul ever, on the back of billions of dollars in settlements related to the opioid epidemic.
The more than $5.6 billion in FCA judgments and settlements in fiscal year 2021 was up significantly from the $2.2 billion recovered in 2020, and was the most since the record $6.2 billion recovered in 2014, according to the DOJ.
“Ensuring that citizens’ tax dollars are protected from fraud and abuse is among the department’s top priorities,” acting Assistant U.S. Attorney General Brian M. Boynton said in a statement. “The False Claims Act is one of the most important tools available to the department both to deter and to hold accountable those who seek to misuse public funds.”
Continuing a trend that began in 1997 — except for 2014’s record recovery, built on massive settlements related to the previous decade’s housing and mortgage crisis — health care and life sciences companies once again accounted for the majority of FCA recoveries in 2021, with more than $5 billion in related settlements and judgments, the DOJ said.
More than half of that $5 billion stemmed from an October 2020 agreement with Purdue Pharma LP, the manufacturer of notorious opioid OxyContin, intended to resolve the company’s criminal and civil liability over its alleged promotion of the drug to providers it knew were writing “unsafe, ineffective, and medically unnecessary” prescriptions, the DOJ said.
The DOJ reached a $2.8 billion FCA settlement as part of that agreement, in the form of an unsecured claim in the company’s bankruptcy, although the issue is still under litigation after a district court in December overturned a bankruptcy court’s confirmation of Purdue’s plan of reorganization, the department noted.
The DOJ also secured a separate $225 million FCA settlement with the Sackler family, the founders and owners of Purdue, as well as another $209.3 million FCA settlement related to the opioid crisis, part of a broader $600 million deal with Indivior PLC related to the alleged false marketing of addiction treatment Suboxone.
Other health care-related FCA priorities in fiscal year 2021 included a growing number of lawsuits and investigations involving Medicare’s managed care program, Medicare Advantage, and plan operators and providers who “make their patients appear sicker than they actually were,” part of a broader trend of fighting against the government being billed for unnecessary medical services, the DOJ said.
Fighting unlawful kickbacks, which had been a prominent issue in 2020, was also a significant contributor to FCA recoveries, according to the DOJ, most notably in a $160 million settlement with diabetic testing supply company Arriva Medical LLC and its parent Alere Inc., resolving claims related to Arriva providing Medicare beneficiaries with “free” glucometers and routinely waiving copayment for testing supplies.
Procurement fraud, once the bedrock of the FCA before health care-related issues came to dominate recoveries, appeared to be a relatively small part of overall recoveries in 2021, with Navistar Defense LLC’s $50 million settlement over allegations it fraudulently induced the Marine Corps to pay inflated prices for armored vehicle components the largest procurement-related recovery cited by the DOJ.
The wave of FCA recoveries from fraud related to COVID-19 that experts expect to hit eventually, stemming from what the DOJ noted was “historic levels of emergency funding” approved by Congress, had also largely yet to materialize by the end of fiscal year 2021, according to the department.
The DOJ said it is working to “identify, monitor and investigate” misuse of that funding, but its specific examples were all low-value recoveries, such as an owner of a jet charter company who paid just over $287,000 to settle claims that he diverted a Paycheck Protection Program loan to pay for personal expenses.
The DOJ did not release its annual statistical sheet, which includes more granular details about new FCA cases and recoveries each year, on Tuesday, and did not immediately respond to a related inquiry.
But the department said whistleblowers had filed 598 FCA suits in 2021, down from 672 in 2020, marking the lowest number of qui tam suits filed since 2010. Recoveries from suits originally filed by whistleblowers were more than $1.6 billion in 2021, the DOJ said, roughly similar to 2020.
By Daniel Wilson
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