Jonathan Cone

Less than a week before most people departed for December holidays, the Department of Justice posted to its website its annual summary of False Claims Act matters and recoveries.  Among other data points, the FY 2012 summary reports the number of new FCA “matters” that were filed or opened, both by qui tam relators and the government, the amount of money that the government recovered through settlements and judgment during the year, and the amount of money recovered that went to qui tam relators.  In a series of posts, I’m going to examine what these statistics reveal about FCA enforcement trends.

The FCA–Better Than Apple, Inc. Stock

Lawyers love to talk about the “exponential growth” in FCA cases-especially plaintiff and defense lawyers.  But a look at the number of new cases filed each year shows that this is more than just malarkey: the number of new FCA cases is rising, and rising fast.  This illustration maps the number of new FCA matters, defined as “newly received referrals, investigations, and qui tam actions” since 2000.

 

As shown, the number of new matters has doubled in the past ten years (2002 to 2012).  FCA enforcement is trending up.  But what industries are being targeted?  The DOJ summary further breaks-down these statistics by industry.

As the following illustration shows, new FCA matters are predominately being initiated in the healthcare and non-Department of Defense (DoD) contexts.  This is not to say that there is less of a focus of DoD procurements, which seems to have remained consistent over the past decade, but that the government and qui tam relators are using the FCA to target new industries.

Although the DOJ summary does not indicate what federal agency procurements are covered by the “Other” category, it would include GSA Schedule contracts and contracts with various executive agencies, such as the Department of Homeland Security, the Department of Labor, Department of State, and the Department of Housing and Urban Development, among others.  This should be a red flag for companies receiving federal funds that do not consider themselves to be a ‘traditional’ government contractor – educational institutions and other grant recipients, for example – that the FCA is no longer focused solely on defense contractors and healthcare fraud.