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Whistleblowers Help The Department Of Justice Recover More Than $4.7 Billion From False Claims Act (Fca) Cases In Fiscal Year 2016

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  • Posted on: Dec 23 2016

On December 14, 2016, the Department of Justice (“DOJ”) announced that it “obtained more than $4.7 billion in settlements and judgments from civil cases involving fraud and false claims against the government” in the fiscal year ended September 30, 2016. This amount represents “the third highest annual recovery in False Claims Act history, bringing the fiscal year average to nearly $4 billion since fiscal year 2009, and the total recovery during that period to $31.3 billion.”

According to the DOJ, more than one-half of the recoveries (i.e., $2.5 billion of the $4.7 billion) came from the health care industry, including drug companies, medical device companies, hospitals, nursing homes, laboratories, and physicians.  The DOJ did not, however, include in the total recoveries for state Medicaid programs, although the Department was “instrumental” in obtaining those monies. For the seventh consecutive year, the DOJ has recovered in excess of $2 billion due to whistleblower information about health care fraud.

“The next largest recoveries came from the financial industry in the wake of the housing and mortgage fraud crisis.”  The government recovered “nearly $1.7 billion in fiscal year 2016” from “[s]ettlements and judgments in cases alleging false claims in connection with federally insured residential mortgages.” This amount is “the second highest annual recovery in this area.”

Recoveries in Whistleblower Suits

The FCA prohibits businesses and individuals from defrauding the government by knowingly presenting, or causing to be presented, a false claim for payment or approval. The FCA rewards whistleblowers who successfully recover funds on behalf of the government. In 1986, Congress strengthened the FCA by increasing the incentives for whistleblowers to file lawsuits alleging false claims on behalf of the government.

The FCA has proven to be one of the most effective laws used to recover taxpayer money fraudulently taken from the government. In fiscal year 2016, whistleblowers filed 702 qui tam lawsuits; the DOJ “recovered $2.9 billion in these and earlier filed suits” during the fiscal year.  Whistleblowers received $519 million from the government during the same period.

Since 1986, “[t]he number of lawsuits filed under the qui tam provisions of the [FCA] has grown significantly.” Since 2009, this growth has been even more dramatic, leading to an increase in recoveries.  “From January 2009 to the end of fiscal year 2016, the government recovered nearly $24 billion in settlements and judgments related to qui tam suits and paid more than $4 billion in whistleblower awards during the same period.”

“The qui tam provisions provide a valuable incentive to industry insiders who are uniquely positioned to expose fraud and false claims to come forward despite the risk to their careers,” said Principal Deputy Assistant Attorney General Mizer.  “This takes courage, for which they are justly rewarded under the Act.”

Takeaway:

This success of this year’s recoveries demonstrates the importance of whistleblowers in the government’s fight against fraud and false claims. Indeed, whistleblowers are vital to the process and its overall success – approximately $53.1 billion has been recovered since the 1986 amendments. Senator Chuck Grassley, who authored those amendments, underscored this point in response to the DOJ’s announcement: “For those who doubt the value of whistleblowers and the False Claims Act, when it comes to fraud against the government, I’d say at least $53 billion, and counting.”

There is not, and will not be, a shortage of people who try to defraud the government. Given the success of the government’s efforts during fiscal year 2016, it is more than likely the DOJ will continue to root out fraud and abuse in fiscal year 2017 by using information obtained from whistleblowers and whistleblower lawsuits. As such, the FCA will remain, as Senator Grassley observed, “the single most effective tool to recovering taxpayer dollars lost to fraudsters who exploit the government.”  The FCA works, and the recoveries prove it.

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