By the Numbers: Trends in 2023 False Claims Act Recoveries

On February 22, 2024, the US Department of Justice (DOJ) announced that the government and whistleblowers were party to 543 False Claims Act (FCA) settlements and judgments—the highest ever—with recoveries of more than $2.68 billion for the fiscal year (which ended September 30, 2023). FCA recoveries now total more than $75 billion since the law was significantly reformed in 1986.  

Using quantitative analysis, we break down what the latest FCA statistics show about where enforcement efforts are focused, from a historic emphasis on healthcare to new developments in cybersecurity, along with key recoveries in the aerospace and defense industry.   

Fighting Fraud with the FCA 

As acting Associate Attorney General Benjamin Mizer explained, “The False Claims Act remains one of our most important tools for rooting out fraud, ensuring that public funds are spent properly, and safeguarding critical government programs.” 

The FCA imposes penalties and treble damages on those who knowingly and falsely claim money from or fail to pay money owed to the US government. Importantly, the FCA allows for qui tam actions—where whistleblowers file lawsuits on behalf of the government and receive a portion of the recovery—which are key factors explaining the surge in both claims and recoveries over the last two decades. 

Last year saw approximately 1,200 FCA claims, for example, with the majority brought by whistleblowers (graph 1). Most of the dollar recoveries also stemmed from qui tam actions (graph 2). 

Expanded Enforcement Efforts: COVID and Cybersecurity Claims Increase  

The majority of FCA recoveries typically stem from the healthcare industry, a trend that held steady last year, with over $1.8 billion in recoveries related to matters involving hospitals, physicians, laboratories, pharmacies, managed care providers, and long-term acute care facilities (see HHS recoveries in graph 3).  

Pandemic-related actions have continued to grow as regulators and whistleblowers pursue action associated with COVID-19 relief programs, which may total over $200 billion in fraud over the course of the pandemic. 

Last year’s efforts also saw cybersecurity claims continue to grow following the DOJ’s Civil Cyber-Fraud Initiative, launched in 2021. The initiative aims to combat emerging threats and reimburse the government for losses resulting from poor performance by contractors and grant recipients, with a focus on those that: 

• Endanger US information, systems, or secrets due to substandard cyber products or services 
• Misrepresent cybersecurity contract practices or commitments 
• Knowingly fail to monitor and report breaches 

The DOJ likely will keep a focus on these areas in the years ahead as the agency broadens enforcement efforts and tackles new avenues for fraud. 

Major Recoveries in Procurement Fraud 

Fraud involving goods and services related to government contracts and procurements, including for the military, is another major area of focus for FCA actions. In fact, Department of Defense-related FCA recoveries totaled more than $500 million last year, greater than the last five years combined (graph 3).    

FY2023 saw one of the largest procurement settlements ever: Booz Allen Hamilton Holding Corporation paid $377 million to resolve claims regarding improperly billed government contracts that included costs incurred from other nongovernmental contracts, as well as failure to disclose the company’s method used to account for costs. The company allegedly obtained reimbursement from the federal government for the costs of nongovernmental activities that provided no benefit to the United States. 

Other notable aerospace and defense companies agreed to pay penalties last year. For example, a manufacturer of communications equipment for military systems agreed to pay $21.8 million to resolve allegations that it improperly duplicated costs in contract proposals for military equipment. Additionally, The Boeing Company agreed to pay $8.1 million in connection with US Navy contracts to manufacture the V-22 Osprey aircraft.  

Avoiding the FCA Spotlight 

With settlements and judgments on the rise, companies in the federal government’s orbit should ensure they’re following best practices to avoid enforcement actions under the FCA. From implementing effective documentation and training to ensuring fraud prevention policies and whistleblower procedures are in place, taking proactive steps now can prevent costly remedies in the future.