Member Article

The U.S. Department of Justice (DOJ) Fraud Section released its 2021 annual report earlier this month, and the numbers show that the DOJ continues to ramp up enforcement despite ongoing logistical challenges presented by the COVID-19 pandemic. The annual report reflects only prosecutions handled by the DOJ’s Fraud Section itself (not all federal prosecutions handled by individual U.S. Attorney’s Offices) but still serves as a key indicator of the government’s top enforcement priorities.

Fraud Section prosecutors obtained 329 individual convictions in 2021, an increase of more than 50 percent from the 213 individual convictions in 2020 and markedly higher than even the 256 secured in 2019. The number of convictions following trial also nearly doubled, from 16 in 2020 to 30 in 2021. Corporate resolutions, however, dipped significantly year-over-year, from 13 resolutions totaling approximately $9 billion in 2020 to eight resolutions totaling approximately $3 billion in 2021. While these numbers are likely to reflect some degree of a genuine shift toward prioritizing individual prosecutions, the DOJ’s public messaging in recent months has signaled an aggressive stance toward corporate enforcement as well. Thus, corporate resolutions are likely to see an uptick in 2022 and beyond.

The healthcare industry continues to dominate enforcement actions. In September 2021, the DOJ’s Health Care Fraud Unit, in collaboration with the FBI, DEA, and other federal agencies, coordinated a National Health Care Fraud Enforcement Action that resulted in criminal charges against 138 defendants and alleged losses of $1.4 billion. This number includes a staggering $1.1 billion in alleged telemedicine fraud, with the remainder stemming primarily from COVID-19 fraud, addiction-treatment facility fraud, and illegal opioid distribution. The DOJ also increased staffing on its National Rapid Response Strike Force in 2021 to be able to respond swiftly and flexibly to “rapidly emerging healthcare fraud schemes.” Healthcare fraud enforcement shows no signs of slowing down in 2022.

Foreign Corrupt Practices Act (FCPA) corporate resolutions were down significantly in 2021, totaling only $649 million compared with $7.85 billion in 2020. However, individual prosecutions held steady, at 26 in 2021 compared with 28 in 2020. FCPA actions seem poised for a resurgence in 2022 as restrictions on international travel and in-person investigation ease worldwide.

The Market Integrity and Major Frauds Unit accounted for six of the eight corporate resolutions in 2021, totaling approximately $2.82 billion and up from $1.08 billion in 2020. The bulk of this amount stems from a $2.5 billion resolution with Boeing arising from fraud in responding to the Federal Aviation Administration’s evaluation of its 737 MAX aircraft. Other significant resolutions include $22.3 million from Avanos Medical, Inc. in an action over misbranded medical gowns and $33.6 million from Balfour Beatty Communities relating to fraud in obtaining payments for privatized U.S. military housing. On the individual side, 2021 saw notable prosecutions of COVID-19 relief fund fraud and cryptocurrency fraud, with losses of more than $70 million.

As these statistics reflect, the DOJ’s Fraud Section has returned to pre-pandemic levels of enforcement overall, with the healthcare industry leading the way. We expect that DOJ will continue to prioritize enforcement in telemedicine, COVID-19 relief, and addiction treatment, and continue to partner with other federal agencies to combat the opioid epidemic. We expect financial fraud and FCPA enforcement actions to increase in 2022 as the pandemic wanes and travel and commerce return to 2019 levels. Although 2021 saw a distinct emphasis on individual prosecutions, the Biden Administration has also put companies on notice of a more stringent approach to corporate compliance in 2022.

For more information about government investigations or corporate compliance, please contact Jonathan Feld (312-627-5680 or [email protected] ), Jason Ross (214-462-6417 or [email protected] ), Becky James (210-554-5527 or [email protected] ), Lisa Burnett (213-457-1809 or [email protected] ), or your Dykema relationship attorney.