In the late 1990s, concerns were raised by the healthcare industry that the United States Justice Department was being overly aggressive with its use of the civil False Claims Act investigations and actions. In response, then-Deputy Attorney General Eric Holder circulated a memorandum to his Justice Department colleagues, providing “guidance” on the proper use of the False Claims Act in civil healthcare matters. Of particular note, Holder stressed that the False Claims Act should be reserved for egregious conduct of defrauding government healthcare programs.
Today, nearly two decades later, the Holder memorandum remains a guiding document for the Department and, by extension, the qui tam community. In practice, this means that the Justice Department and experienced qui tam counsel focus their efforts on healthcare fraud schemes that are specifically geared to illegally drain government healthcare dollars. Such schemes tend to be business-plan frauds, conjured up from the highest levels of some of the country’s largest healthcare providers. In turn, recent enforcement actions have involved, for example, large pharmaceutical and medical device manufacturers, and they were the source of some of the largest recoveries in recent years. By way of example, in fiscal year 2012, the federal government recovered nearly $2 billion in cases alleging false claims for pharmaceutical and medical devices under federally insured healthcare programs and, in addition, returned $745 million to state Medicaid programs. These cases include recoveries from GlaxoSmithKline LLC and Merck – two of the three top settlements of 2012.