False Claims Act Recoveries Reach Record High in Fiscal Year 2024, Healthcare Fraud Remains a Top Priority
The U.S. Department of Justice (DOJ) announced on January 15, 2025, that settlements and judgments under the False Claims Act (FCA) surpassed $2.9 billion in fiscal year (FY) 2024, marking a new high. This substantial sum underscores the government’s unwavering commitment to combating fraud against federal programs, with healthcare fraud continuing to dominate the landscape. A staggering 979 qui tam lawsuits were filed by whistleblowers, the highest number ever recorded in a single year, showcasing the vital role whistleblowers play in uncovering fraudulent activities. Of the total recoveries, over $2.4 billion originated from whistleblower lawsuits, representing approximately 83% of all FCA recoveries in FY 2024. This highlights the effectiveness of the qui tam provisions of the FCA in incentivizing individuals with inside knowledge to come forward and report fraudulent schemes.
The healthcare industry remained the primary target of FCA enforcement actions, accounting for over $1.67 billion (58%) of the total recoveries. While this represents a slight decrease compared to FY 2023, where healthcare-related recoveries reached $1.8 billion (68%), it nonetheless signifies the persistent vulnerability of the healthcare sector to fraudulent practices. The range of defendants involved underscores the pervasiveness of the issue, encompassing managed care providers, hospitals, clinics, pharmacies, pharmaceutical companies, laboratories, and individual physicians. This emphasizes the need for robust compliance programs across all segments of the healthcare industry. The DOJ’s focused attention on healthcare fraud reflects its dedication to safeguarding taxpayer dollars and ensuring the integrity of federal healthcare programs.
The DOJ emphasized its enforcement priorities for FY 2024, highlighting areas such as the opioid epidemic, unnecessary or substandard care, Medicare Advantage fraud, unlawful kickbacks, Stark Law violations, and COVID-19 related fraud. Several significant settlements illustrate the government’s pursuit of these priorities. In one notable case, a bankrupt pharmaceutical company faced a $475.6 million claim for allegedly marketing an opioid drug to high-volume prescribers, including those known to prescribe the drug for unapproved uses. This reflects the ongoing battle against the opioid crisis and the government’s determination to hold accountable those who contribute to it.
Other key examples include a healthcare system and affiliated skilled nursing facilities agreeing to a $21.3 million settlement for allegedly billing for unreasonable, unnecessary, or unperformed therapy services. This highlights the scrutiny applied to billing practices and the importance of accurate documentation. In the realm of Medicare Advantage, a primary care chain paid $60 million to resolve allegations of paying kickbacks to insurance agents for patient referrals, illustrating the government’s focus on combating improper inducements in Medicare Advantage plans. Furthermore, a biopharmaceutical research service provider settled for over $5 million over alleged commission payments to marketers for referring laboratory orders, demonstrating the government’s vigilance against kickback schemes in the lab services sector. Finally, a Georgia laboratory owner and his clinical laboratory paid $14.3 million for allegedly paying kickbacks to sales representatives to promote respiratory pathogen panel tests when senior communities only required COVID-19 tests, showcasing the government’s efforts to prevent fraud related to COVID-19 testing.
The DOJ also reported other significant healthcare fraud enforcement actions, including a multimillion-dollar settlement with a national pharmacy chain for allegedly failing to report drug rebates to Medicare. This case underscores the importance of accurate reporting and compliance with rebate requirements for pharmacies participating in federal healthcare programs. The continued emphasis on healthcare fraud reinforces the government’s commitment to protect the integrity of federal healthcare programs and ensure that beneficiaries receive appropriate care.
The record-breaking number of qui tam lawsuits filed in FY 2024 demonstrates the crucial role whistleblowers play in uncovering fraudulent activities. This surge suggests a growing awareness of the FCA and its potential rewards for individuals who come forward with information about fraud against the government. The significant proportion of recoveries stemming from whistleblower lawsuits further emphasizes the effectiveness of the qui tam provisions in incentivizing individuals with inside knowledge to report wrongdoing. This trend underlines the importance for healthcare entities to establish robust compliance programs that encourage internal reporting and address potential vulnerabilities before they escalate into FCA investigations.
To mitigate potential FCA liability, healthcare entities should prioritize compliance reviews of policies and practices related to the government’s enforcement priorities. This includes rigorous oversight of billing practices, marketing activities, relationships with referral sources, and compliance with regulations regarding kickbacks, Stark Law, and the reporting of drug rebates. Regular audits and internal monitoring systems can help identify potential vulnerabilities and prevent fraudulent conduct. Furthermore, fostering a culture of compliance that encourages employees to report suspected fraud can help organizations detect and address issues early on, mitigating potential liability and protecting the organization’s reputation. The information contained in this article provides a comprehensive overview of the key developments in FCA enforcement in FY 2024 and offers valuable insights for healthcare entities seeking to strengthen their compliance programs and avoid entanglement in costly investigations and settlements.