On December 21, 2018, the U.S. Department of Justice (DOJ) announced their recovery of more than $2.8 billion in settlements and judgments from civil cases involving fraud and false claims for fiscal year (FY) 2018.¹ While 2018 marks the ninth consecutive year in which healthcare fraud settlements exceeded $2 billion, this year’s amount was the lowest recovery since 2009.² Approximately $2.5 billion was recouped from the healthcare industry for federal losses alone, and included recoveries from drug and medical device companies, managed care providers, hospitals, pharmacies, hospice organizations, laboratories, and physicians.³ This figure, over 87% of the total recovery amount, far outstripped the $107.5 million recovered from defense contractor companies and the $259.6 million obtained from other industries such as banking.⁴ In addition to the $2.5 billion recovered for federal losses, the DOJ recovered millions of dollars for state and Medicaid programs for FY 2018.⁵ 

Once again this year, the greatest proportion of healthcare recoveries was obtained from the drug and medical device industry. One of the largest settlements within this sector involved AmerisourceBergen Corporation, which paid $625 million to resolve allegations that the company (and some of its subsidiaries) “sought to circumvent important safeguards intended to preserve the integrity of the nation’s drug supply and profit from the repackaging of certain drugs supplied to cancer-stricken patients.”⁶

Additionally, in two separate settlements, pharmaceutical company United Therapeutics Corporation paid $210 million, and drug manufacturer Pfizer paid approximately $23.85 million, to resolve allegations that they set up foundations to pay the copays of thousands of Medicare patients as a way to raise the prices of their drugs.⁷

Additional legal actions were brought by the DOJ against several other provider sectors within the healthcare industry during FY 2018, including Medicare Advantage Organizations (MAOs) and health systems, resulting in large recoupments. The most noteworthy of these actions included the $270 million settlement between the DOJ and HealthCare Partners Holdings (d/b/a DaVita Medical Holdings), to resolve liability for “providing inaccurate information that caused...[MAOs] to receive inflated Medicare payments.”⁸ The other most noteworthy action involved the Health Management Associates (HMA) settlement payment of over $216 million to resolve allegations, arising from eight separate whistleblower actions, that HMA hospitals (which are now owned by Community Health Systems) “knowingly billed government health care programs for inpatient services that should have been billed as outpatient or observation services, paid remuneration to physicians in return for patient referrals, and submitted inflated claims for emergency department facility fees.”⁹ One of HMA’s subsidiaries, Carlisle HMA, also pled guilty to conspiracy to commit healthcare fraud “arising from illegal conduct designed to aggressively increase admissions to the hospital,” which plea included a $35 million financial penalty.¹⁰

Of note, the DOJ’s press release included an additional section entitled, “Holding Individuals Accountable,” wherein it reviewed several cases in which the DOJ obtained substantial judgments from individuals, illustrating its continued commitment to the 2015 memorandum authored by then-Deputy Attorney General Sally Yates regarding holding individuals accountable for corporate wrongdoing (often referred to as the “Yates Memo”).¹¹

Money recovered by the DOJ through healthcare fraud enforcement is crucial in returning assets back to federally funded programs such as Medicare, Medicaid, and TRICARE.¹² According to the DOJ’s press release, the recoveries made in 2018 are “a message that fraud and dishonesty will not be tolerated,” and “the Department’s vigorous pursuit of health care fraud prevents billions more in losses by deterring those who might otherwise try to cheat the system for their own gain.”¹³

Since 1986, recoveries made under civil FCA suits total more than $59 billion.¹⁴ Over the past five years, there has been a significant number of FCA suits brought on by both whistleblowers (also known as qui tam lawsuits) and the DOJ, with 645 qui tam cases and 122 non qui tam cases initiated in FY 2018 alone (both of which numbers are substantially similar to FY 2017 figures).¹⁵  Despite the Trump Administration’s actions to deregulate the healthcare industry during the last two years, and the lower amount of monetary recoveries in FY 2018, the number of new cases in 2018 enforcing healthcare fraud and abuse laws appears to be on par with figures from previous years,¹⁶  suggesting that FCA enforcement will remain high going forward.