The US Department of Justice Civil Division released its False Claims Act (FCA) recovery statistics for Fiscal Year 2016 on December 13, 2016, announcing that it had recovered $4.76 billion. This represents an increase of almost 26 percent over FY2015 recoveries. Approximately 54 percent of the FCA recoveries in FY2016 arose out of proceedings on behalf of the Department of Health and Human Services.
The total dollar amount of healthcare-related FCA recoveries has remained relatively constant since 2010, but the proportion of health cases has declined relative to other industries. From 2010 through 2013, health industry settlements comprised at least 80 percent of all FCA recoveries in three out of those four years. Since that time, the DOJ has continued to allocate a similar level of resources to health industry enforcement while also expanding its efforts in other industries. For example, since 2012, the DOJ has experienced several large FCA recoveries from financial industry proceedings.
Continuing healthcare focus
This does not mean that health industry enforcement is waning. These statistics only reflect recoveries by the DOJ Civil Division as a result of FCA proceedings, and 96 percent of those recoveries are attributable to qui tam suits. Many other enforcement and recovery initiatives continue to increase alongside the Civil Division's efforts.
For example, health enforcement activities are often collectively reported under the rubric of the Health Care Fraud and Abuse Control program (HCFAC), which is comprised of CMS program integrity divisions, FBI investigators, the Health and Human Services Office of Inspector General (OIG) , and the DOJ Criminal Division. Its activities include criminal investigations and prosecutions, civil litigation and FCA proceedings, administrative audits and investigations, and other program integrity measures designed to prevent, detect, and recover improper payments.
CMS reports a three-year average return on investment from HCFAC and Affordable Care Act funding of 14:1 in its Medicare Integrity Program and 7.7:1 from HCFAC law enforcement activities. It also projects that HCFAC efforts result in the avoidance of improper payments at a rate of 2:1. CMS expects those cost avoidance savings will continue to increase through FY2018.
The cost avoidance successes may be attributable to the government's recent emphasis on preventive measures. It is much less costly and time-consuming to prevent improper payments than to attempt a retroactive recovery of identified overpayments. Tighter controls on provider enrollment, mandatory pre-payment claim reviews, moratoria, and new reimbursement models have expanded as part of a concerted effort toward prevention.
Governmental programs that turn a profit for public funds are rare, and they tend to receive ongoing funding and support. It is reasonable to expect that the HCFAC agencies will continue to receive modest annual budget increases for the foreseeable future and that existing enforcement programs will perpetuate.
Moreover, it is advisable to expect that qui tam litigation will continue to increase. The health industry has attracted participants from other industries who may not have been familiar with the regulatory environment and the resources necessary to remain in compliance. This creates a ripe environment for whistleblowers to identify and capitalize on regulatory lapses.
Healthcare fraud and abuse enforcement has been a priority of the Obama Administration, and key provisions of the Affordable Care Act authorized more stringent enforcement measures. However, the incoming Trump Administration may alter previous governmental priorities in ways that are difficult to predict as new officials arrive and develop and implement their own policy objectives.
Because there is a Republican President, and both houses of Congress have Republican majorities, Congress now has an opportunity to significantly amend or repeal the Affordable Care Act (ACA). But in the Senate, this opportunity will still be subject to filibuster threats from the Democratic minority. Although the new Administration has not yet disclosed its key objectives with respect to healthcare, the HHS Secretary nominee, Congressman Tom Price (R-GA), a surgeon, has historically called for changes in the ACA If confirmed by the Senate, the new White House is expected to support many of his legislative and administrative recommendations.
With respect to FCA litigation, the DOJ Civil Division has continued to refine its theories of recovery and has recently prevailed in several key issues. Most notably, the Escobar opinion resolved a split in the federal circuits to recognize the implied certification theory of liability if the certification was material to the issue of payment. The DOJ has prevailed in its allegations that physician compensation in excess of the physician's collections for personally-performed services may create FCA liability. The government also obtained favorable legal opinions on establishing liability and damages by the use of statistical sampling and extrapolation.
Many of these rulings have broad implications, and the government is well poised to capitalize on its successes both within and beyond the health industry.
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 From $3.785 billion in FY2015 to $4.761 billion in FY2016.