On February 1, 2022, the U.S. Department of Justice (DOJ) announced that it had recovered more than $5.6 billion in Fiscal Year (FY) 2021 settlements and judgments from civil cases involving fraud and the False Claims Act (FCA). This total represents the second-largest government haul for such matters ever and the largest recovery since FY 2014. The over $5.6 billion also far outpaces DOJ’s approximately $2.25 billion in FY 2020 recoveries. The announcement showcases DOJ’s heightened focus on fraud in government contracting and reinforces the FCA’s status as the government’s strongest weapon for combatting fraud.

Here, along with our assessments and predictions for 2022, are six key takeaways from DOJ’s announcement:

  1. New Matters Dropped from FY 2020, But It Is Too Early to Consider It a Trend
    In addition to fiscal year monetary recoveries, the government also tracks the number of new matters initiated each fiscal year, both by DOJ itself (such as those originating out of audits, reports from contracting officers, inspector general investigations, or informal fraud hotline calls) and by whistleblowers (also known as “relators”) through qui tam litigation. In FY 2021, the government initiated 203 of its own new matters, as compared to 259 in FY 2020. The number of government-initiated matters was nevertheless the second highest since 1995. Whistleblower-initiated matters dropped from 675 in FY 2020 to 598 in FY 2021, the lowest number since 2010.

    We do not anticipate that the reduction between FY 2020 and FY 2021 is a sign that DOJ or relators will initiate fewer matters going forward. To the contrary, all indications from the government are that the number of investigations and new matters will increase in the future. As discussed below, the government has increased its focus on procurement fraud and government contractors; it has created a new Civil Cyber-Fraud Initiative, and COVID-19 fraud investigations are still in their relative infancy. We expect to see an increase in investigations and new matters overall, particularly in those areas, in FY 2022 and beyond.

  2. Whistleblower Recoveries Dropped Sharply
    When a relator initiates a qui tam matter under the FCA, they do so in the name of the government, meaning the proceeds of the litigation, if any, will be paid to the government. However, as an incentive for reporting fraud to the government, the relator is entitled to receive a share of the eventual recovery: generally between 15% and 25% of the government’s total recovery if the government intervenes in the litigation, and generally between 25% and 30% of the government’s total recovery if the government declines to intervene. The ability of a relator to share in the ultimate FCA recovery is a strong incentive for whistleblowers to initiate qui tam litigation.

    In FY 2021, relator-share recoveries dropped to $238 million, as compared to over $324 million in FY 2020. The FY 2021 relator recoveries are the lowest total since 2008. In turn, the FY 2020 numbers were a reduction from FY 2019 ($366 million) and, until now, had been the lowest recoveries since 2009. Numbers like this appear to be evidence of a continuing trend where the government relies increasingly on its internal audit procedures and inspector general investigations, and less on whistleblowers, to identify potential fraud against the government.

  3. Healthcare Fraud Made Up the Overwhelming Majority of the Recoveries
    Year after year, the largest contributor to the government’s fraud and FCA recoveries is the healthcare industry, and FY 2021 was no different. Healthcare fraud recoveries made up more than $5 billion (almost 90%) of the more than $5.6 billion in total recoveries during FY 2021. Healthcare recoveries included settlements with opioid manufacturers, companies accused of fraud in the Medicare Advantage program, and healthcare providers alleged to have received illegal kickbacks or to have provided unnecessary medical services. We expect healthcare fraud to continue to have the greatest impact on the government’s fraud and FCA recoveries moving forward.

  4. The Government Has Increased Its Attention on Procurement Fraud
    Although the government does not specifically announce the amount of recoveries obtained in matters involving procurement fraud, DOJ’s annual report put particular focus on government contractors. The announcement identified a number of settlements and judgments that occurred in FY 2021. These matters included allegations against various contractors that falsified pricing data; made material misrepresentations about sales practices during contract negotiations; charged the government more than private sector clients for products and services; provided goods and services that did not comply with contract requirements; used unqualified labor; supplied substandard quality products; misrepresented compliance with the U.S. Small Business Administration’s (SBA) set-aside qualifications for small business contracts; and provided kickbacks to prime contractors, among other things.

    The government’s heavy focus on procurement fraud is also borne out by anecdotal evidence and direct discussions with various Assistant United States Attorneys over the course of the past year. In addition to the alleged FCA violations mentioned above, DOJ has taken a particular interest in contractors’ compliance with the SBA mentor-protégé joint venture requirements and the performance of work requirements, such as the work distribution between small business prime contractors and their subcontractors.

    With this in mind, we anticipate an increase in audits, investigations, and litigation against government contractors under the FCA in FY 2022 and beyond, particularly against companies operating in the SBA’s set-aside programs and competing for set-aside contracts.

  5. The Government’s Civil Cyber-Fraud Initiative Is a New Path for FCA Claims
    Legal insiders and government contractors have been anticipating for years that, eventually, cybersecurity issues would play a significant role in FCA investigations and litigation. Over the last few years, the first cybersecurity FCA litigation matters have started to make news, particularly as new cybersecurity standards have been issued for companies doing business with the federal government.

    On October 6, 2021, after the end of FY 2021, DOJ announced the creation of the agency’s Civil Cyber-Fraud Initiative, which will use the FCA to combat new and emerging cyber threats. In its February 1, 2022, announcement, DOJ explained that it “will pursue misrepresentations by companies in connection with the government’s acquisition of information technology, software, cloud-based storage and related services designed to protect highly-sensitive government information from cybersecurity threats and compromises.” We expect that the Civil Cyber-Fraud Initiative will result in a marked increase in audits and investigations against government contractors over the next several years, including in FY 2022.

  6. COVID-19 Fraud Claims Are Just Getting Started
    Another primary focus of the government’s attention during FY 2021 was fraud specific to the COVID-19 pandemic. As the SBA Inspector General reported to Congress, the Paycheck Protection Program (PPP) and Economic Injury Disaster Loan (EIDL), created under the Coronavirus Aid, Relief, and Economic Security Act, were particularly vulnerable to fraud. This was borne out in DOJ’s annual announcement.

    Among the fraud claims resolved by DOJ in FY 2021 were claims that companies improperly received multiple PPP loans, companies used PPP loan money to pay for ineligible expenses, and company executives utilized company PPP loans for personal expenses. In a press release in early 2021, DOJ also announced that it had resolved through settlement claims that a company made material misrepresentations in order to obtain a PPP loan for which it was not eligible. The government announced similar resolutions consistently throughout the year.

    We expect government audits and investigations of PPP and EIDL loan recipients to increase significantly in FY 2022, including against companies that received $2 million or less in PPP funds. The SBA has recently increased its focus on auditing PPP and EIDL loan recipients, and it is almost inevitable that COVID-19 fraud investigations will play a large role in FY 2022.

As evidenced by DOJ’s annual statistical report, the government is keenly focused on rooting out fraud, no matter the industry or size of the company involved. Government contractors in particular must be cognizant of the risks and potential liabilities the FCA presents when doing business with the federal government. And, they should pay close attention to the issues raised in DOJ’s report, which highlight topics of particular focus for the government in FY 2022 and beyond.


To assist government contractors and related companies in understanding the FCA and avoiding FCA liability, PilieroMazza is hosting a webinar with further discussion of the FY 2021 FCA cases and emerging trends for 2022. Register here to learn more.

If you have questions about how your business may be susceptible to an FCA investigation or claim, please contact Matt Feinberg or Jackie Unger, the authors of this blog, or another member of PilieroMazza’s False Claims Act or Audits & Investigations practice groups.