On February 16, 2023, the Federal Bar Association (FBA) kicked off its sixth annual Qui Tam Conference with its customary “Year in Review” panel, which spotlighted the key False Claims Act (FCA) decisions and developments from 2022. Consistent with the annual press release and FCA recovery statistics issued by the U.S. Department of Justice (DOJ) earlier this month, the panel made clear that despite lower recoveries, 2022 was a busy and important year for FCA enforcement.
For the fiscal year ending September 30, 2022, total FCA recoveries surpassed $2.2 billion. Although this number represented a drop of more than 50% from 2021 when FCA recoveries exceeded $5.7 billion due to several high-profile settlements, 2022 saw a record amount of FCA enforcement activity, with 948 new FCA matters initiated, and 351 settlements and judgments under the FCA: the second-highest number recorded in a single year.
A few notable takeaways from the 2022 FCA recovery statistics:
- Qui tams remain largest driver: More than $1.9 billion of the total 2022 FCA recoveries (approximately 89%) resulted from qui tam actions, i.e., those initiated by a “whistleblower” rather than by the government itself.
- Health care remains largest target: More than $1.7 billion of the total 2022 FCA recoveries (approximately 80%) resulted from health care cases.
- Declined cases outpace intervened cases: More than $1.1 billion of the total 2022 FCA recoveries (approximately 50%) resulted from qui tam actions where the DOJ declined to intervene, marking 2022 as the first time in history that declined qui tam actions outpaced intervened qui tam actions in FCA recoveries.
- Non-qui tams are on the rise: Since roughly 2011, the number of new qui tam actions filed annually has hovered between 600-750. The FY 2022 statistics held true: although total new qui tam actions saw a drop off from 676 in 2020 to 598 in 2021, 2022 saw new qui tam actions climb to 652. However, the number of non-qui tam actions has steadily increased in the last three years, with a sharp jump in 2022. DOJ initiated 261 FCA cases in 2020 and 212 in 2021; that number popped up to 296 in 2022, the highest since 1993. Otherwise, that number had not broken 200 in the last 20 years.
The FBA’s Qui Tam Conference is known for highlighting the most current and relevant information in the FCA world, and sets itself apart with panels representing the defense side, relator’s side, and government’s side, yielding well-rounded perspectives, lively debate, and even some good-natured fun.
This year’s conference was no different. The panel discussions focused on recent and anticipated Supreme Court activity, controversy surrounding Rule 9(b)’s pleading standards, the application of the FCA beyond U.S. borders, customs fraud under the FCA, and, of course, pandemic-related fraud. Other panels touched on ethical challenges that arise at every stage of a qui tam case, new dangers to navigate with respect to mediating and/or settling FCA cases, considerations related to FCA appeals, and techniques for interviewing potential whistleblowers.
Special guests included Senator Chuck Grassley (R-Iowa), a longtime champion of the FCA, who promised to reintroduce legislation to strengthen the statute. Senator Grassley introduced legislation last year, the 2021 False Claims Amendments Act, which did not make it to the Senate floor. The second round of keynote speakers included Michael C. Galdo, Acting Director for COVID-19 Fraud Enforcement, U.S. Department of Justice, and Jamie Ann Yavelberg, Director, Fraud Section, Commercial Litigation Branch, Civil Division, U.S. Department of Justice. Topics addressed during their remarks focused on cooperation credit, trends related to COVID-19 fraud, and the use of data analytics when initiating or evaluating FCA cases. Finally, the conference closed out with a “View from the Bench” with Hon. Jed S. Rakoff, Senior U.S. District Judge, U.S. District Court, Southern District of New York, and Hon. Freda L. Wolfson (ret.), Partner, Lowenstein Sandler LLP; former U.S. District Judge (New Jersey).
While there’s plenty to explore and debate when it comes to the FCA, one thing is clear: There’s plenty more to come. Please do not hesitate to reach out to the authors of this post or your regular Reed Smith contact if you have any questions about the FCA or the conference. Several of the authors attended the two-day conference, and partner Kate Seikaly is the vice chair of the FBA’s Qui Tam Section.