False Claims Act Litigation and Implications for D&O and Professional Liability Insurers

The Federal False Claims Act -- 31 U.S.C. §§ 3729-3733 (the ''FCA'') permits private plaintiffs to pursue claims on behalf of, and sometimes with the intervention of, the U.S. Department of Justice (''DOJ''), against those presenting fraudulent claims for payment to the government. In recent years, FCA suits and the associated penalties are on the rise. In 2016 alone, over 800 new FCA cases were filed (the second-highest number to date), the DOJ recovered $4.7 billion, and penalties were doubled. Key industries historically affected by these suits include: healthcare (Medicare/Medicaid billing issues), education (student loans/grants), banking (mortgages and government-funded lending programs), and government defense contracts. However, these claims can involve any organization receiving payment for goods or services provided to the government. Noteworthy settlements and recoveries in 2016 include a $513 million payment by a hospital network, a $145 million payment by