On January 15, the Department of Justice (DOJ) reported that False Claims Act (FCA) recoveries for civil cases in fiscal year 2024 totaled approximately $2.9 billion, representing about a $200 million increase from 2023. And these numbers do not account for two major settlements that were reached shortly after the close of the fiscal year that would have added an additional $830 million to the total. Of the total recovered by DOJ in 2024, approximately $1.67 billion (58%) related to matters involving the health care sector. Although a lower percentage of these recoveries related to health care than prior years, the health care sector remains the primary industry under scrutiny.  

For the second year in a row, the total number of qui tam lawsuits increased, demonstrating continued fraud enforcement by the agency and an active environment for private whistleblowers. The 979 qui tam cases filed in 2024 is a new record, blowing past the prior record of 757 cases in 2013 and far exceeding last year’s total of 713. And while the number of government-initiated cases dropped from last year’s record pace, the 423 non qui tam cases filed in 2024 is an order of magnitude higher than any other year since 1986.

This increase in FCA activity comes at a time of uncertainty for the law. As Reed Smith covered last fall, a federal judge in Florida ruled that the qui tam provisions of the FCA violated the Appointments Clause of the Constitution by investing core executive powers into unappointed whistleblowers. That decision followed reasoning in a Supreme Court dissent and is on appeal to the U.S. Court of Appeals for the Eleventh Circuit. Incoming Attorney General Pam Bondi assured senators during her confirmation hearing that she would defend the constitutionality of the provisions.

Overall, DOJ’s announcement suggests that enforcement continues to rise and that the agency is expanding its review of suspected fraud, including the players involved.

Trends in Recoveries

In addition to the record number of qui tam cases filed, DOJ announced the second highest number of settlements and judgments in a single year since 1986. The number of recoveries in 2024 (558) was only eight short of the record number of recoveries in 2023 (566). Since amendments took effect almost 40 years ago encouraging whistleblowers to file FCA cases on behalf of the government, DOJ has recovered more than $78 billion through actions initiated by private whistleblowers and directly by the government.

Notably, a perceived rise in recoveries in 2022 resulting from non-intervened qui tam cases continues to remain an outlier, with 2024 non-intervened cases dropping to levels not seen since the beginning of the pandemic in 2020

Cooperation Credit

In its announcement, DOJ noted an increased effort to reward entities that cooperate during an investigation and take remedial measures. This comes after a 2023 update to DOJ’s Corporate Enforcement Policy providing greater incentives for cooperation in investigations.

An example in the 2024 recoveries is an April 2024 settlement with a company that managed and operated a nuclear weapons assembly plant in Texas. The settlement resolved allegations that technicians billed the government for time not worked. The company alerted the government to the possible fraud, took remedial measures, and cooperated during the investigation. As a result, DOJ gave the company credit in the settlement under its guidelines, reducing the ultimate recovery.

Private Equity in Health Care

Despite DOJ’s warnings in last year’s announcement, healthcare fraud claims in the private equity context were not significant in 2024. However, DOJ noted that recent healthcare fraud settlements are likely to draw the attention of private equity owners.

In particular, one of the cases cited by DOJ in its report involved an allegation that equity interests in a management services organization and corresponding investment returns provided to physicians were allegedly disguised kickbacks to physicians to induce referrals. There is no doubt that DOJ is looking closely at equity arrangements, both in relation to the Stark law and the Anti-Kickback Statute.

Opioid Epidemic

The fallout from the opioid epidemic continues to be a strong source of fraud recoveries in the health care space. In its release, DOJ detailed almost $490 million in recoveries related to opioid fraud. In addition, one of the cases included a $400 million unsecured bankruptcy claim.

Medicare Advantage

DOJ has stated that Medicare Part C, or Medicare Advantage (MA), is a focus for fraud enforcement. As noted in the DOJ announcement, MA is now the largest component of Medicare, both in terms of total federal dollars spent and in number of beneficiaries enrolled. As a result, DOJ sees fraud in MA as a critically important enforcement priority.

In its 2024 FCA announcement, DOJ highlighted an MA-related enforcement action resulting in almost $60 million in recoveries. The case involved allegations of kickbacks paid to third-party insurance agents in return for referrals. DOJ also indicated that it is continuing to litigate other alleged fraud enforcement actions from other MA plan operators.

Reed Smith closely tracks developments in FCA enforcement trends. If you have any questions about this or any other aspect of the FCA, please do not hesitate to reach out to the authors or to your contacts at Reed Smith.