The More Things Change, the More They Stay the Same: Analyzing Recoveries by Circuit for FY 2017
We’re back with the third installment of our series analyzing FCA statistics for DOJ FY 2017, this time taking a closer look at recoveries by circuit. After our prior posts describing the steep drop in recoveries overall from last year, it may not come as a surprise to LLB readers that the geographic analysis has changed a fair bit in the last year. Only one of the leaders from DOJ FY 2016 is still at the top in DOJ FY 2017: the Eleventh Circuit. Indeed, the Eleventh Circuit, which ranked third last year with $808 million across 100 recoveries, came out in front in DOJ FY 2017 with the DOJ raking in just over $1 billion across 26 recoveries. This means that the number of cases brought to conclusion in 2017 dropped 74% from the previous year, but DOJ’s payout increased by just over 24%. Does this signal a smarter, more targeted civil fraud bar in the Eleventh Circuit, or is this mathematical windfall simply a fluke? Impossible to say definitively, but it is worth noting that over a third of this year’s Eleventh Circuit total was recovered from just one matter (the Shire Pharmaceuticals LLC medical device case we blogged about last week) and another third is derived from a CMC II Judgment (though that judgment is currently stayed pending appeal).
The Ninth Circuit took second place in total dollars recovered this year, posting up $543.98 million, but just like the rest of the map, it too dropped in terms of the number of recoveries as compared to last year. In 2016, the Ninth Circuit pulled in $198.45 million over 26 recoveries but
this year raked in over twice as much from only 23. Pharmaceutical defendants paid approximately half (49.8%) of the Ninth Circuit’s total, with $259.3 million of the $270.8 million paid by Celgene Corporation in one significant settlement. An additional 25% of the total was paid by energy sector defendants. This circuit
notably was home to the $125 million Bechtel National Inc. and URS Energy & Construction Inc. settlement, which resolved allegations that Bechtel and URS falsely represented and charged the Department of Energy for deficient goods and services at a nuclear waste and treatment facility.
In third was the First Circuit with $510.64 million recovered across only 12 recoveries. As with the Eleventh and Ninth Circuits, a single large settlement was key to the First Circuit’s high recovery total. The recovery, from Mylan Inc., accounted for 91% of the First
Biggest Losers of DOJ FY 2017
Two high recovery circuits from DOJ FY 2016 took a nose dive in DOJ FY 2017. The Second Circuit, which had the highest total of dollars recovered in DOJ FY 2016 with $1.77 billion, only collected $385.42 million in DOJ FY 2017. The primary reason for this huge decline was the lack
of the blockbuster $1.2 billion Wells Fargo settlement, which accounted for approximately 68% of the Second Circuit’s total in DOJ FY 2016. Similarly, the Third Circuit saw a large drop in total dollars recovered from $479.57 million over 23 recoveries in DOJ FY 2016 to $86.65 million across 21 recoveries in DOJ
FY 2017. The Third Circuit did receive a $267.3 million recovery from Olympus Corporation that accounted for 55% of the Third Circuit’s total. However, the Third Circuit also had 16 recoveries of $1 million or more, which accounts for its higher total.
Consistency is Key
Although there has been a lot of change from DOJ FY 2016 to DOJ FY 2017 one thing remains the same: singular large settlements make or break total recoveries for a circuit. This no-trend trend makes geographic prognostication difficult from year to year, given that all of the
big winners from the past two fiscal years had benefited from at least one large recovery. Conversely, large dips in recoveries from DOJ FY 2016 to DOJ FY 2017 could generally be attributed to the lack of a large recovery in that circuit. Based on evidence from the past two years, this pattern seems likely to persist
in the future.
Note: This post was revised on November 30, 2017 to reflect corrections in statistical
data regarding the CMC II judgment out of the Eleventh Circuit.