Over $1.34 Billion in Recoveries Under False Claims Act
Federal Government Recovers $1.34 Billion Under False Claims Act
From a Story in the American Assocation of Justice
Marcia Coyle
11-12-2008
The federal government has secured $1.34 billion in settlements and judgments in the fiscal year ending on Sept. 30, 2008, pursuing allegations of fraud under the federal False Claims Act, with the largest share coming from health care lawsuits.
The fiscal year recoveries bring the amount of total recoveries since 1986 amendments to the act to more than $21 billion.
The Department of Justice reported that almost 78 percent of this year’s recoveries are associated with suits initiated by private citizens (known as “relators”) under the False Claims Act’s qui tam provisions. These provisions authorize relators to file suit on behalf of the United States against those who have falsely or fraudulently claimed federal funds. Such cases, according to the department, run the gamut of federally funded programs from Medicare and Medicaid to defense procurement contracts, disaster assistance loans and agricultural subsidies. Persons who knowingly make false claims for federal funds are liable for three times the government’s loss plus a civil penalty of $5,500 to $11,000 for each claim.
Relators recover 15 to 25 percent of the proceeds of a successful suit if the United States intervenes in the qui tam action, and up to 30 percent if the government declines and the relator pursues the action alone. In fiscal year 2008, relators were awarded $198 million. (This figure does not include relator shares awarded after Sept. 30, 2008.)
Health care continued to account for the lion’s share of fraud settlements and judgments — $1.12 billion. This number includes both qui tam claims and those initiated by the United States. The Department of Health and Human Services reaped the biggest recoveries, largely attributable to its Medicare program and the federal/state Medicaid program that funds health care for the needy. Recoveries were also made by the Office of Personnel Management which administers the Federal Employees Health Benefits Program, the Department of Defense for its TRICARE insurance program, the Department of Veterans Affairs and others.
The largest health care recoveries came from pharmaceutical companies and related entities. Settlements with Cephalon Inc.; Merck & Co.; and CVS Caremark Corp. accounted for more than $640 million. In addition to federal recoveries, these pharmaceutical fraud cases returned $430 million to state Medicaid programs.
The department also collected $133 million in defense procurement fraud. Defense contract recoveries included a $53 million settlement with Pratt & Whitney, a division of United Technologies Corp., and PCC Airfoils LLC, a subsidiary of Precision Castparts Corp. The settlement resolved allegations that Pratt & Whitney and PCC Airfoils knowingly submitted false claims to the Air Force for defective turbine blades sold to the government to retrofit the F100-PW-220 engines in F-16 and F-15 aircraft. This case was pursued as part of a National Procurement Fraud initiative, launched in October 2006, to promote the early detection, identification, prevention and prosecution of procurement fraud.
Assistant Attorney General Gregory G. Katsas paid tribute to Sen. Charles Grassley , R- Iowa, and Rep. Howard L. Berman, D-Calif., who sponsored the 1986 amendments to the False Claims Act that strengthened the government’s primary weapon to fight government fraud. “Without this important legislation strengthening the Act and, in particular, the qui tam provisions which encourage private citizens to uncover government fraud, such recoveries would not have been possible,” he said.
