After dipping just below $3 billion the year before, federal False Claims Act (FCA) recoveries rebounded in Fiscal Year 2019 to just over $3 billion. More than 600 new qui tam suits were filed for the ninth year in a row, and government-initiated complaints rose from 123 to 146. As usual, healthcare cases accounted for the bulk of awards, at $2.6 billion. Cases against pharmaceutical companies made up nearly three-quarters of that total. The value of judgments and settlements in Department of Defense matters more than doubled, to more than $252 million, while the similar figure for cases involving neither healthcare nor defense dropped from $260 million to just under $200 million.
The Department of Justice (DOJ) issued a number of importance guidance documents in 2019—some codified in the Department’s Justice Manual—that can assist FCA defense counsel in negotiating with the Department. They concerned (i) the manner in which DOJ will reward defendants who cooperate during an FCA investigation; (ii) how DOJ will consider companies’ compliance programs when conducting an investigation, determining whether to bring charges, and negotiating plea or other agreements; (iii) how DOJ will evaluate a company’s claim that it cannot afford to pay criminal fines or monetary penalties as part of a corporate settlement; and (iv) how DOJ will consult with affected agencies before filing or intervening in an FCA action.
The Supreme Court held that the FCA’s extended limitations period is available to relators in qui tam cases even when the government declines to intervene. Lower courts continued to divide over the first-to-file bar, standards for determining the materiality of allegedly false claims, the standard of review for government motions dismiss under 31 U.S.C. § 3130(c)(2)(A), and the definition of protected conduct in retaliation claims.
WilmerHale’s comprehensive review of FCA developments surveys significant federal and state court decisions, settlements, and recently filed or unsealed complaints; legislative and regulatory changes at both the federal and state levels; changes in investigation and litigation strategy by relators, state attorneys general, and federal prosecutors; and proposals for reform of the FCA. By looking back over 2019, the report also provides an important guide to changes on the horizon for 2020.
Each month during 2020 we will continue our coverage with a report on a significant issue for companies facing FCA risk. Those will include novel theories being pressed by relators and the government, such as alleged patent fraud or violations of cybersecurity standards as bases for FCA liability; sector-specific trends, in healthcare, procurement, and higher education; collateral consequences of FCA exposure, including tax treatment of FCA settlements and exposure to shareholder litigation; and, of course, major decisions by the Supreme Court and the courts of appeals.
