The False Claims Act and Health Care: 2020 Recoveries and 2021 Outlook

False Claims Act¹ (FCA) civil fraud recoveries in Fiscal Year (FY) 2020 dropped over US$850 million when compared to those in FY 2019. While the more than US$2.2 billion in recoveries in FY 2020 continued a general downward trend in FCA civil fraud recoveries since 2016,² the past year’s recovery total was likely affected negatively by the global COVID-19 pandemic, which caused government enforcement delays ranging from curtailed in-person meetings/interviews to extended timelines for responses to civil investigative demands and settlements. The FY 2020 recoveries also do not represent significant actual or pending recoveries totaling over US$3.3 billion, which were not realized prior to the close of FY 2020.³ Given these large, pending recoveries and the nation’s potential emergence from the pandemic during the course of 2021, it is highly likely that FY 2020 will be an outlier, while FY 2021 may prove to be an exceptionally high year in terms of FCA recoveries.

As in years past, the lion’s share of the government’s FY 2020 civil fraud-related recoveries came in health care, which accounted for approximately 83 percent of recoveries.⁴ The largest recoveries in FY 2020 came from the pharmaceutical industry.⁵ The government also demonstrated a continued commitment in FY 2020 to targeting alleged fraud involving electronic medical records vendors,⁶ genetic testing laboratories and companies,⁷ schemes to bill federal health care programs for medically unnecessary services,⁸ and compensation arrangements between hospitals and employed physicians.⁹ The government was particularly focused on medical device manufacturers and durable medical equipment manufacturers in both its FCA and related kickback investigations in FY 2020.¹⁰ As in FY 2019, the government demonstrated in FY 2020 a continued willingness to pursue FCA actions against individuals operating in the health care industry, including physicians, as a means of achieving wider deterrence and establishing accountability for alleged corporate misconduct.¹¹

In the past year, health care experienced what certainly felt like fundamental shifts across the industry due to the COVID-19 pandemic, as demonstrated by, among other things, the precipitous expansion of telehealth services,¹² the broad application of blanket waivers to providers navigating the pandemic, and the extensive impact of government aid programs on health care. In considering these shifts and other trends from FY 2020, three areas appear particularly positioned for increased relator and government enforcement activities and/or FCA caselaw development in FY 2021: (1) enforcement efforts targeting recipients of Provider Relief Fund (PRF) funding under the Coronavirus Aid, Relief, and Economic Security (CARES) Act; (2) the role of sub-regulatory guidance in FCA actions; and (3) scrutiny of private equity firms and their investments in health care entities. This article analyzes FCA activity in FY 2020 by the numbers, and considers how those numbers might shift in FY 2021 as a result of the latter emerging areas and governmental priorities in health care fraud enforcement.

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