Currently, there is a serious backlog in the corporate fraud cases that are being evaluated by the U.S. Justice Department. More than 900 cases alleging that government contractors and drug makers have defrauded taxpayers out of billions of dollars are on the back burner. This backlog has built up over the past decade because the government’s lawyers can’t keep pace with the sharp increase in claims brought by whistle-blowers. The issue is drawing renewed interest among lawmakers and nonprofit groups because many of the cases involve the wars in Iraq and Afghanistan, rising health-care payouts, and privatization of government functions — all of which offer tremendous opportunities for some in Corporate America to swindle taxpayers.
Since 2001, almost 400 civil cases have been filed each year by employees charging that their companies defrauded the government. Cases in the backlog represent a lot of money being left on the table, according to Patrick Burns, who is with Taxpayers Against Fraud. This is a group that advocates for the Justice Department to receive more funding to support cases by whistle-blowers and their lawyers. As expected, there is strong opposition to providing more funding coming from government contractors and the Bush Administration.
Whistleblower lawsuits have been good for taxpayers and bad for wrongdoers in Corporate America. In recent years, verdicts and settlements have returned nearly $13 billion of ill-gotten gain to the U.S. government. At issue in most of the cases is whether companies knowingly sold defective products or overcharged federal agencies for items sold at home or offered to U.S. troops overseas. Under the False Claims Act, workers who file lawsuits alleging such schemes cannot discuss them or even disclose their existence until the Justice Department decides whether to step in. By its own account, the 75-lawyer unit in Washington that reviews the sensitive lawsuits is overloaded and understaffed. As a result, only about 100 cases a year are actually investigated by the legal team, working out of the commercial litigation branch of the Justice Department’s civil division. As has been widely reported, there has been a massive amount of fraud by government contractors in Iraq and Afghanistan. Many of these contractors have close ties to the Bush Administration. That could explain why the administration has fought efforts to investigate and prosecute corporations that are cheating the government.
It’s well documented that fraud has cost U.S. taxpayers tens of billions of dollars and that the False Claims Act is an important tool to bring the cheaters to justice. This Act must be utilized in order to recover the ill-gotten gain from the cheaters. Deputy Assistant Attorney General Michael Hertz told Congress recently that “the number and increased complexity of the fraud schemes presented to the department, combined with the volume of cases now under review, certainly present challenges.” Among the largest recoveries in false-claims cases to date are:
The vast majority of the cases currently under review, more than 500 cases, involve the health-care and pharmaceutical industries and often involve Medicare and Medicaid funds. Our firm’s involvement in the Medicaid fraud cases has convinced me that many in Corporate America actually believe cheating the government is acceptable. Their game plan is when they finally get caught, just pay the money back and then go about their merry way.
Source: Washington Post
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