As calendars turn to 2019, the first quarter of FY2019 is already in the books—and this fiscal year is shaping up far better for DOJ than FY2018. By our count, DOJ recovered more than $665 million in the first quarter of FY2019 from 49 individual FCA settlements—an increase of over $107 million from the first quarter of FY2018 and over $160 million from the first quarter of FY2017. This marks the biggest first quarter for FCA enforcement since the banner year of FY2016, when DOJ recovered nearly $1.5 billion in the first quarter alone.
Breaking down the FY2019 first quarter recoveries, a single recovery of $360 million out of the District of Massachusetts accounts for more than half of the total dollars recovered. The vast majority of recoveries (39) were $8 million or less and more than a third were $1 million or less. The distribution of recoveries by industry is generally consistent with the trends we have seen over the past few years, with the overwhelming majority coming from the healthcare industry. DOJ recovered more than $463 million from healthcare industry defendants through 31 individual recoveries, accounting for nearly 70 percent of the total amount recovered during the first quarter of FY2019. Defense industry recoveries came in a distant second at 24 percent of the total dollars recovered, with nearly $161 million from 9 individual recoveries. The remaining $42 million (approximately 6 percent of the total) came from 10 individual recoveries involving the construction, education, mortgage, and shipping and logistics industries.
The first quarter numbers are particularly noteworthy in two respects. First, FY2019 has seen a significant uptick in recoveries from the defense industry. With $161 million in defense industry recoveries in the first quarter of FY2019, DOJ has already eclipsed the entire amount it recovered from the defense industry in FY2018 ($108 million) and is fast approaching its total FY2017 recoveries ($220 million). Unsurprisingly, with such a significant increase in the total dollars recovered, the average dollars per recovery nearly doubled from $10.7 million per action to $17.9 million per action—driven primarily by a pair of November 2018 settlements out of the Southern District of Ohio. Second, in a rather dramatic break from recent history, cases brought by DOJ itself accounted for nearly two-thirds of the total amount recovered ($442 million) in the first quarter of FY2019, with only a third ($223 million) coming from qui tam cases. By contrast, of the $2.9 billion in total FCA recoveries for FY2018, only 27 percent came from cases brought by DOJ itself. And in FY2017, that figure was only 8 percent. In fact, in the FY2019 first quarter alone, DOJ has recovered nearly double the total amount it recovered for DOJ-initiated cases in all of FY2017.
Of course, one quarter does not a year make. And some first quarter trends look less rosy for DOJ. For example, recoveries in cases involving healthcare providers averaged just $2.3 million, down significantly from the $10.4 million average recovery in healthcare provider cases in the admittedly down year of FY2018.
We at Qui Notes will continue to monitor recoveries as they pour in. Stay tuned for updates.
The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.
