Justice Department Recovers Billions from False Claims Act Cases in Fiscal Year 2016
Year in Review
2016 turned out to be a very productive year for the government when it comes to settlements and judgments from civil cases involving fraud and False Claims Act allegations. Indeed, according to Principal Deputy Assistant Attorney General Benjamin C. Mizer, head of the Justice Department’s Civil Division, the amount of money the US recovered during the 2016 fiscal year is the highest annual recovery it has made in the history of the False Claims Act. That figure is $4.7 billion for the 2016 fiscal year ending September 30, 2016. “Americans across the country are healthier, enjoy a better quality of life, and are safer because of our continuing success in protecting taxpayer funds from misuse,” said Mizer back in December of this year.
Of the monies recovered, $2.5 billion came from the health care industry. In many of these cases, the government recovered millions of dollars for state Medicaid programs as well. This is the seventh straight year the Department of Justice’s civil health care fraud recoveries have exceeded $2 billion. Recoveries made in the financial industry accounted for another $1.7 billion in the 2016 fiscal year. (Many of the false claims cases involved incidences of alleged mortgage fraud.) The False Claims Act – amended by Congress to increase incentives for whistleblowers to file suits against those who are accused of defrauding the government – is the primary civil remedy for redressing false claims violations. The Act covers the areas of health care, defense and national security, food safety and inspection, federally insured loans and mortgages, etc. The government awarded the whistleblowers $519 million during the 2016 fiscal year.
Health Care Fraud
The Department of Justice recovered $19.3 billion in health care fraud claims from January 2009 to the end of the 2016 fiscal year. The monies recovered in these cases restored assets to programs such as Medicare, Medicaid and TRICARE, the health care program for service members and their families. The largest of these recoveries – $1.2 billion – came from the drug and medical device industries with drug manufacturers Wyeth and Pfizer, inc. paying $784.6 million to resolve false claims and fraud allegations involving two of its drugs. Wyeth alone paid $413.2 million to the federal government and $371.4 million to state Medicaid programs.
Housing and Mortgage Fraud
The Justice department recovered more than $7 billion in housing and mortgage claims from 2009 to 2016 including $1.6 billion in settlements and judgments it took in just this past year. The most notable settlements involved Wells Fargo for $1.2 billion and Freedom Mortgage Corp. for $113 million. Wells Fargo was accused of originating and endorsing ineligible loans for FHA insurance. This increased the bank’s mortgage profits at the expense of taxpayers.
Other Fraud Recoveries
The government made recoveries in other areas apart from the health care and mortgage sectors. One example is its recovery of $82.6 million in False Claims Act violations from BP Exploration and Production Inc. (BP). The case involved the April 2010 Deepwater Horizon/Macondo Well explosion and oil spill in the Gulf of Mexico. The government alleged that BP provided false reports about its “safe drilling margin” that concealed its improper drilling.
Individuals Held Accountable
The government’s efforts to deter and redress fraud committed against it did not just snare corporations. It also held many individuals accountable as well. This was per a September 9, 2015 memo issued by the Department of Justice. Individuals working for Institute of Cardiovascular Excellence (ICE), Dynasplint Systems Inc., Orbit Medical Inc as well as several other institutions and companies were personally held liable for false claims act violations as well as other crimes and were forced to also pay millions in restitution.
Recoveries in Whistleblower Suits
Another outcome of the government’s crackdown on fraud and abuse has been the increase in the amount of money paid to whistleblowers in these cases. “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.” All in all, it has been an excellent year for the government when it comes to prosecuting cases of fraud. If you know of abuse that has been committed against the government or one of its agencies you are encouraged to report it and to contact a qui tam attorney. A Qui tam lawyer can advise you in such matters and will work to protect your rights under the law.