The U.S. Department of Justice (“DOJ”) recently announced that in fiscal year 2024 (“FY2024”), settlements and judgments under the False Claims Act (“FCA”) exceeded $2.9 billion. Over $2.4 billion of such settlements and judgments stemmed from lawsuits filed under the FCA’s qui tam provisions.
Brief History of the FCA
Initially enacted in 1863, the FCA was created to target fraud committed against the federal government. In 1986, Congress amended the FCA to increase whistleblower incentives. As a result of the 1986 amendments, which strengthened penalties and expanded liability for fraud against the United States, there has been an increase in qui tam actions – and 2024 was no exception. There were over 979 qui tam actions filed in fiscal year 2024, breaking the 2013 record for the highest number of such actions filed in a single year.
DOJ Enforcement Priorities Under the FCA
According to DOJ, the results of FY2024 highlight DOJ’s enforcement priorities in multiple areas including healthcare, the opioid epidemic, pandemic relief programs, and violations of cybersecurity requirements in government contracts and grants.
Healthcare Fraud Settlements and Judgments
Of the over $2.9 billion FCA settlements and judgments in FY2024, $1.67 billion were related to fraud in the healthcare industry. DOJ focused heavily on targeting healthcare providers, pharmaceutical companies, and pharmacies that played a role in the opioid crisis. One of the most notable healthcare-related FCA settlements was made with Endo Health Solutions Inc. (“EHSI”), which is now in bankruptcy. The settlement resolves losses that federal healthcare programs suffered due to EHSI’s aggressive opioid scheme. Within the settlement, EHSI agreed that the United States has an allowed, unsubordinated, general unsecured claim of $475.6 million in bankruptcy.
Another $345 million came from the settlement with Community Health Network Inc. The settlement resolves allegations that Community Health Network Inc. submitted Medicare claims for services that were referred in violation of the Stark Law. According to the allegations, the Community Health Network Inc. compensated physician groups at rates significantly above fair market value and also awarded bonuses to physicians based on the volume of their referrals.
An additional $4.7 million settlement came from allegations against Dr. Gregory Gerber. The settlement resolved allegations that Dr. Gregory Gerber, an Ohio-area physician, unlawfully provided opioid prescriptions without a legitimate medical basis and received kickback payments from a drug manufacturer.
Pandemic Fraud Settlements and Judgments
During FY2024, DOJ also focused heavily on pandemic-related fraud. DOJ obtained more than 250 FCA settlements and judgments concerning such fraud, totaling more than $250 million. Of the $250 million, $120 million stemmed from a settlement involving Kabbage Inc. The settlement resolves allegations that Kabbage Inc. submitted and caused to submit thousands of false claims for Paycheck Protection Program loan forgiveness, and further inflated such loans, which caused the Small Business Administration to guarantee and forgive loans in amounts greater than what borrows were eligible to receive.
The Future of the FCA
While a recent federal court decision poses some challenges for the FCA’s future, proposed members of the new administration have indicated support for the FCA. In her recent confirmation hearing, U.S. Senate Judiciary Chairman Charles Grassley pressed Attorney General nominee Pamela Jo Bondi, on her position regarding the FCA. Bondi testified that she recognizes the importance of FCA’s whistleblower provisions and that she would continue to enforce and defend the FCA. In addition, she committed to funding and properly staffing the prosecution of FCA cases. For now, it appears that the changing of administrations will not affect the aggressive enforcement of citizen-led anti-fraud enforcement actions.
