Whistleblowers and their counsel are as effective as ever—so why have qui tam recoveries fallen?
Every year, the United States Department of Justice (DOJ) releases its annual statistics on settlements and judgments under the False Claims Act. Behind these statistics are the hundreds of brave whistleblowers who have risked their careers and reputations to report fraud on the government—and who depend on the DOJ to investigate their allegations and prosecute the fraudsters.
In FY 2022, the DOJ reported $2.2 billion in settlements and judgments under the False Claims Act (FCA), demonstrating the law’s ongoing importance as an instrument in safeguarding taxpayer dollars. While this sum demonstrates the large scale of fraud in healthcare, defense, and other areas of government spending, it also reveals a disappointing trend in enforcement by the federal government.As the chart below shows, the government has been recovering less money through qui tam actions than it did several years ago. Although qui tam recoveries increased from $1.72 billion in FY 2021 to $1.96 billion in FY 2022, the recoveries in each of the past three fiscal years were lower than at any point since 2008.
As is typical, the lion’s share, over $1.7 billion, of the government’s 2022 FCA recoveries pertained to the healthcare industry. As the chart below shows, the dip in recoveries in qui tam cases alleging healthcare fraud correlates with the overall decline in qui tam recoveries:
The drop-off in recoveries is particularly troubling given that government spending has risen in this same period, ballooning from 2020 through 2022 due to the COVID-19 pandemic and economic recovery. The below chart shows qui tam recoveries as a percentage of all federal spending over the past ten fiscal years:
In recent years, whistleblower attorneys have demonstrated increased success in litigating cases where the government declines to intervene. Notably, last year, almost half of the government’s total FCA recovery came from just one healthcare case in which the government elected not to intervene—United States ex rel. Bawduniak v. Biogen Idec Inc., which settled for $900 million:
The decline in overall qui tam recoveries is noteworthy when viewed in conjunction with the number of new FCA cases filed by whistleblowers. In 2022, whistleblowers filed 652 qui tam suits—which is about average for the past ten years.
Federal spending continues to rise, whistleblowers continue to file qui tam cases, and DOJ and qui tam attorneys appear to be just as adept as ever at evaluating and litigating those cases. So why have qui tam recoveries stagnated?
The FCA is a robust law, but it only realizes its enforcement potential when the DOJ is fully staffed and financially supported. As Fraud by the Numbers has previously discussed, there are a limited number of DOJ lawyers assigned to False Claims Act enforcement. In other words, in a time of increased fraud, more resources could assist with enforcement.
Over the next month in Fraud by the Numbers, we will take a statistical view of the world of fraud to explore the strengths and weaknesses of FCA enforcement and the crucial role that whistleblowers play in protecting taxpayer funds.
Nicolas Mendoza is an Associate at Murphy Anderson PLLC
