False Claims Act Statistical Year in Review | FCA 2022 Investigation & Lawsuit Trends False Claims Act Statistical Year in Review

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by Mintz’s Health Care Enforcement Defense practice group which reports on qui tam FCA cases, other government enforcement actions, and significant regulatory developments from the past year.

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Kevin M. McGinty

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False Claims Act Statistical Year in Review —A Study in Contrasts

2022 Statistics Review

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A year-end review of False Claims Act (FCA) case activity in 2022 reveals substantial growth in overall FCA enforcement activity, coupled with a decline in health care-related cases. These trends appear in both the annual statistical report published by the Department of Justice (DOJ) (for the federal fiscal year ended September 30, 2022), and in the health care related qui tam litigation activity for calendar year 2022 tracked in Mintz’s internal Health Care Qui Tam Database (the Mintz Database). While the number of health care related FCA cases remains high, the 2022 statistics for filed and unsealed cases continue a six-year trend in declining health care FCA case volume. Even so, health care-related FCA volume remains high and shows no signs of meaningfully declining in the foreseeable future.

2022 Data Shows Health Care Cases in Decline Even as Overall Filings Are Increasing

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Karen S. Lovitch

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Brian P. Dunphy

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In 2022, both overall filings and government-instituted cases increased. The full history of FCA case filing activity since 1987 tells a mostly familiar story. Over time, the volume of FCA case filings grew mostly as a function of significant increases in qui tam filings brought by whistleblowers (known as relators) on behalf of the government. In 2022, as in all years since the mid-1990s, a substantial majority of FCA case filings were brought as qui tam actions (shown in the light teal trend line).

// Analysis of DOJ Case Filing Data

read here

Our Analysis

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Department of Justice (DOJ)

Qui Tam

qui tam

In 2022, both overall filings and government-instituted cases increased.

qui tam

At the same time, DOJ’s statistics reveal a sharp four-year increase in FCA cases brought by the government. This increase in government-initiated enforcement activity offset a decline in qui tam filings over that same period. Insofar as it spans the Trump and Biden Administrations, shifting political priorities cannot explain this trend. On an institutional basis, DOJ has become more aggressive in pursuing FCA cases.

Pandemic relief cases appear to drive case volume increase. Over the past two years, a significant part of that growth appears to be attributable to cases concerning pandemic relief fraud. The government’s breakdown of case filings supports this inference, DOJ sorts the reported cases by HHS (the Department of Health and Human Services, which captures health care FCA cases), DOD (Department of Defense), and Other. Comparing case activity for fiscal years 2021 and 2022, HHS activity declined, and DOD activity increased slightly while Other activity grew substantially. As the following table shows, the additional non-HHS or -DOD cases in fiscal year 2022 account for the vast majority of the year-over-year increase in case filings.

Pandemic relief cases appear to drive case volume increase.

Note in particular that the number of government-instituted cases in the Other category (the highlighted cells in the table) more than doubled from 2021 to 2022, revealing a significant increase in enforcement activity not involving health care or defense procurement fraud. These figures, coupled with DOJ pronouncements focusing on pandemic relief fraud, reveal a huge commitment of resources to those types of cases.

Health care volume, while still high, continues to decline. The figures in red—showing declines in government and qui tam HHS cases—speak to a longer-term trend in health care FCA case volume. That trend is shown in the following chart, which graphs the overall trend in FCA case activity against the activity for health care related cases only.

Health care volume, while still high, continues to decline.

qui tam

As this chart shows, health care related FCA case filings peaked in 2016, and have been declining since then. An overall increase in government enforcement has offset the amount of the decline, but declining health care qui tam filings have dragged down the overall number of health care cases since 2016.

qui tam

// Analysis of Unsealed Cases in the Mintz Database

Unsealed health care case volume also has been declining. What the DOJ database shows for filed cases is also true of unsealed cases captured in the Mintz Database. According to the Mintz Database, 202 health qui tam care cases were unsealed in 2022, compared to 225 unsealed health care cases in 2021 and 287 unsealed cases in 2020. Here again, lest the significance of that decline be overstated, the total number of unsealed cases remains high.

Unsealed health care case volume also has been declining.

Government intervention rate remains within historical range.

qui tam

Government intervention rate remains within historical range. One thing that has not declined is the rate at which the government intervenes in unsealed cases, as tracked in the Mintz Database. While isolated years may see intervention rates as high as 30%, in most years the rate of intervention ranges between 20% and 25%. The 2022 intervention rate of 25% falls squarely within that normal range.

Hospitals, doctors, and pharmacies continue to be the most frequently sued entities. For unsealed cases in the Mintz Database, the list of most frequently sued defendants in health care qui tam actions unsealed in 2022 holds few surprises:

Hospitals, doctors, and pharmacies continue to be the most frequently sued entities.

qui tam

As is true every year, the central role of hospitals and physicians in our health care system results in more FCA cases being filed against them than against any other type of defendant. The importance of the pharmacy sector is evident from the high volume of cases against pharmacies, pharmacists, and pharmaceutical manufacturers, but may also reflect a continuing focus on opioid enforcement activity, a trend that we discussed in EnforceMintz: Health Care Enforcement Year In Review & 2023 Outlook. The graying of the American population manifests itself in the growing frequency of cases involving skilled nursing facilities. This trend is also contributing to the frequency of cases naming home health care providers and hospices, both of which have been creeping up the ranks in every year we have been tracking this data.

Whistleblowers are overwhelmingly current or former employees. Meanwhile, the typical qui tam relator continues to be an employee. Current and former employees are always the most common source of whistleblower lawsuits. This fact continued to be true for cases tracked in the Mintz Database in 2022.

Whistleblowers are overwhelmingly current or former employees.

qui tam

The diversity of non-employee relator types is somewhat interesting, including the fact that this year (as in many years) at least one relator was a compliance officer. But the main takeaway here is the same as always: employee relations are critically important for mitigating qui tam risk. Health care companies should, among other things, maintain a robust compliance structure to respond to employee concerns, and a strong human resources function to ensure that employee discipline and termination decisions are well-grounded and are executed with firmness and respect.

qui tam

// Analysis of DOJ Case Recovery Data

After a banner year for FCA recoveries in 2021, DOJ reported a significant decline in recoveries in 2022, with total recoveries falling from $5.1 billion to just under $1.8 billion.

In both years, however, a single case accounted for a large portion of the amounts recovered. In 2021, the enormous non-qui tam recovery—almost $3.6 billion—was primarily attributable to the $2.8 billion Purdue Pharma opioid settlement. Likewise in 2022, the Biogen settlement accounted for $843 million of the $950 million in qui tam recoveries in 2022. The following chart illustrates the shares of each year’s recovery attributable to those mega-settlements.

qui tam

When Purdue and Biogen are removed from the recovery figures from 2021 and 2022, respectively, the recovery amounts are more modest and more in line with prior years’ results.

// The Bottom Line: Health Care FCA Cases Are Down, But Certainly Not Out

As we first documented over seven years ago, the explosion in total FCA litigation since the early 1990s was almost entirely attributable to a steep increase in health care-related qui tam cases. Does the recent six year decline in health care cases augur a significant reversal of that trend? Will health care cases go the way of defense-related cases, and cease to be a material portion of overall FCA activity? This seems unlikely. With hundreds of new health care cases being filed every year, there is no shortage of activity in the pipeline.

As we first documented over seven years ago,

projected to exceed $1.5 trillion in FY 2023 alone

particularly with growing numbers of retiring Baby Boomers promising to add to that total in coming years.

Even with that six-year decline in health care FCA case filings, the volume of health care cases remains high. Focusing just on the last ten years, health care case volume has remained relatively flat, with current volume still in excess of case volume from 2012. Health care providers and other industry participants continue to face a large volume of new case filings.

The sheer size of federal health care spending—projected to exceed $1.5 trillion in FY 2023 alone— suggests small likelihood of that activity abating, particularly with growing numbers of retiring Baby Boomers promising to add to that total in coming years. As the past year’s explosion of pandemic relief cases illustrates, FCA litigation follows the money. So long as the government continues to spend trillions of dollars on health care there will continue to be a robust volume of health care-related FCA litigation.

the annual statistical report published by the

Read EnforceMintz - Health Care Enforcement Year In Review & 2023 Outlook,

Read EnforceMintz — Health Care Enforcement Year In Review & 2023 Outlook,

Large settlements in Purdue ($2.8B) and Biogen ($843.8M) drive recovery totals in 2021 and 2022

While overall volume is up, health care qui tam volume continues six year decline

a trend that we discussed in

qui tam

a trend that we discussed in EnforceMintz: Health Care Enforcement Year in Review & 2023 Outlook.

statistical report published by the

(Click chart to view full size)

False Claims Act Statistical Year in Review — A Study in Contrasts

EnforceMintz

(Click chart to view full size)

discussed in

Enforcement Year in Review & 2023

Outlook.

(Click chart to view full size)

trillion in FY 2023 alone

Project Analyst in the firm’s Boston office.

Emily Ndiokho

Contributors

Project Analyst in the firm’s Boston office.

Giselle Mota

author

Project Analyst in the firm’s Boston office.