The Department of Justice (DOJ) recently announced that in fiscal year (FY) 2024 it recovered over $2.9 billion in False Claims Act (FCA) cases. This represents a slight increase over what the government recovered in FY 2022 ($2.2 billion) and FY 2023 ($2.7 billion). The key takeaway from the government’s announcement is the record number of new qui tam cases – nearly 1,000 – filed by relators (whistleblowers). That means that on average, whistleblowers filed close to four new FCA cases every day that courts were open. The statistics also show the continued importance of the government’s intervention decisions. Less than 8% of recoveries came from cases when the government opted not to intervene after its investigation, which contributed to a significant decline in whistleblower awards despite a small increase in total recoveries.
The DOJ also reported that it was party to 558 FCA settlements and judgments, just shy of last year’s record of 566 recoveries.
DOJ Maintains Focus on Health Care Fraud While Continuing Attention on Other Sectors
As expected, most recoveries came from the health care sector. The health care industry paid over $1.67 billion to the DOJ. Those recoveries were collected from a broad array of industry participants. The government highlighted enforcement activities related to Medicare Advantage, unnecessary or substandard care, the opioid epidemic, and alleged kickbacks. The DOJ also highlighted key recoveries in other areas such as military procurement, pandemic relief, and cybersecurity.
Decrease in Declined Case Recovery Highlights Significance of DOJ Intervention
Of the $2.9 billion in recoveries in FY 2024, a majority came from intervened and DOJ-filed cases. Recoveries in declined cases fell to $217 million, well below the record $1.2 billion in FY 2022 and on a continuing decline from $466 million in FY 2023. Accordingly, whistleblower share awards fell despite the increase in overall recoveries. This disparity suggests that DOJ intervention is becoming increasingly critical to recovery.
FCA Enforcement Poised to Continue Trending Upward
The FY 2024 statistics and sustained focus on non-health-care sectors signal the DOJ’s continued commitment to aggressively enforce the FCA in the coming year and beyond. Amid persistent scrutiny from the DOJ, companies should continue to prioritize their FCA compliance efforts, diligently investigate internal whistleblower complaints, and remain attentive to guidance from regulators.
New Developments in FY 2025
Developments to watch for in FY 2025 include a renewed focus on constitutional challenges to the FCA’s qui tam provision and the potential expansion of FCA liability theories in non-health-care sectors that are the focus of the Trump Administration.
Increase in constitutional challenges to the FCA’s qui tam provision
Courts historically upheld the FCA from attacks that the qui tam provisions violated the Constitution’s Appointments Clause. That started to change in 2023 when three Supreme Court justices joined an opinion questioning whether whistleblower-driven qui tams are “inconsistent with Article II.” Then in September 2024, a federal district court in Florida took up these concerns and held that the qui tam provisions impermissibly vest whistleblowers with the power of federal officers without appropriate executive appointment. While that decision is on appeal, defendants in other FCA cases have asserted similar constitutional challenges. Some of these have been denied on procedural grounds, and others are still being reviewed. All the defendants in declined FCA cases should consider promptly challenging the constitutionality of the qui tam provisions.
Liability for federal contractors continuing DEI programming
On the first day of his second term, President Trump issued an Executive Order eliminating diversity, equity, and inclusion (DEI) programs within the federal government and prohibiting the federal government from encouraging federal contractors and subcontractors to engage in DEI workforce balancing. Among other things, the Executive Order requires federal agencies to include in every contract or grant award a term requiring the counterparty or grant recipient to agree that its compliance with all applicable federal antidiscrimination laws is a material condition of payment and to certify that it does not operate any programs promoting DEI “that violate any applicable Federal anti-discrimination laws.” This means that there could be FCA liability for federal contractors who continue to operate DEI programs that, arguably, violate existing antidiscrimination laws, despite making such certifications.
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If you have any questions, or would like additional information, please contact one of the attorneys on our False Claims Act team.