On February 1, 2022, the U.S. Department of Justice (DOJ) reported its False Claims Act (FCA) statistics for fiscal year (FY) 2021. DOJ reported more than $5.6 billion was recovered from both settlements and judgments in 2021. This is the second largest amount recorded and the largest since 2014. However, this reported number comes with a sizable asterisk.
Specifically, DOJ’s tally includes a $2.8 billion “unsubordinated, general unsecured bankruptcy claim” from opioid drugmaker Purdue Pharma. As discussed in this episode of Fraud In America, the government is likely to see only pennies on the dollar for this claim. Given the uncertainty of this bankruptcy claim, we review last year’s numbers based on money actually recovered by the government. So, in FY2021, False Claims Act judgments and settlements returned $2.8 billion to the government, which is below the 10-year average of $3.7 billion.
Over 58% of all actual recoveries—amounting to $1.6 billion—came from whistleblower-initiated, or qui tam, actions. Once again, the vast majority (80%) of the total actual recoveries came from the health care and life science industries.
New Government Filings Spotlight Rampant Health Care Fraud
Health care fraud seems to have metastasized during the COVID-19 pandemic. Indeed, 2021 saw the second largest number of new government-initiated FCA healthcare matters filed in a single year. However, new whistleblower filings were at a ten-year low in 2021, with only 388 new healthcare cases and 210 cases involving all other industries. Not surprisingly, with our country increasing expenditures to battle the spread of COVID, healthcare fraud was the primary focus of the new cases, representing 61% of all new cases filed in 2021.
Areas of Focus
Health care-related recoveries in 2021 came from various industry players, including drug and medical device manufacturers, managed care providers, hospitals, pharmacies, hospice organizations, laboratories, and physicians. Once again, the most significant recoveries came from cases alleging illegal kickbacks. However, cases alleging unnecessary or worthless medical services represented a growing percentage of the health care-related recoveries.
These matters included allegations of unnecessary heart surgeries, implantation of defective heart devices, and unreasonable rehabilitation therapy services for seniors. FY 2021 health care recoveries also included cases alleging COVID fraud, electronic health records fraud, as well as cases concerning inflated payments under the Medicare Advantage Program.
Diagnosis of 2021
DOJ’s statistics for FY 2021 evidence the important role whistleblowers play in protecting government dollars. Despite what others may say, the government does not have unlimited resources to identify and expose fraud schemes. Our nation needs insiders to unmask fraud buried behind seemingly innocuous transactions.
During the pandemic, it is even more important for whistleblowers to step forward and expose bad actors in the health care and life sciences industries. Even in the best of times, these industries have consistently represented the vast majority of FCA recoveries.