The Justice Department announced in December that it recovered $3.8 billion in settlements and judgments from civil cases involving fraud against the government during the 2013 fiscal year. This dollar amount is the second largest annual recovery under the False Claims Act, surpassed only by last year’s nearly $5 billion in recoveries. This is second highest amount in the history of the False Claims Act, and brings total recoveries under the Act to $17 billion since January 2009. As in previous years, the largest recoveries are related to health care fraud, which reached $2.6 billion. Procurement fraud, related primarily to defense contracts, accounted for another $890 million.
The False Claims Act is the government’s primary civil remedy to address false claims for government funds and property under government contracts, including national security and defense contracts, as well as under government programs as varied as Medicare, veterans benefits, federally insured loans and mortgages, transportations and research grants, agricultural supports, school lunches, and disaster assistance.
In 1986, Congress strengthened the Act by amending it to increase incentives for whistleblowers to file lawsuits on behalf of the government, which has led to more investigations and greater recoveries. Most false claims cases are filed under the Act’s whistleblower, or qui tam, provisions, which allow private citizens to file lawsuits alleging false claims on behalf of the government. If the government prevails in the action, the whistleblower receives up to 30 percent of the recovery. Recoveries in qui tam cases during FY 2013 totaled $2.9 billion, with individual whistleblowers recovering $345 million.
In the area of health care fraud, $1.8 billion of the $2.6 billion recovered were from false claims for drugs and medical devices under federally insured health programs such as Medicare, Medicaid, TRICARE and FEHBP. The Justice Department recovered an additional $443 million for state Medicaid programs. Interestingly, Alabama was not eligible to participate in this recovery because, unlike the majority of states including our neighbors Florida, Georgia and Tennessee, we do not have a state False Claims Act. The majority of health care fraud recoveries involved allegations that pharmaceutical manufacturers improperly promoted their drugs for uses not approved by the Food and Drug Administration (FDA) – a practice known as “off-label” marketing. Lawyers in the Consumer Fraud Section at Beasley Allen are currently litigating several off-label marketing cases under the False Claims Act.
In the area of Procurement Fraud, the Justice Department recently announced it will join a False Claims Act suit filed by Beasley Allen lawyers on behalf of Blake Percival, alleging that U.S. Investigations Services (USIS) routinely failed to complete background investigations on applicants for sensitive federal jobs. Percival, former director of fieldwork services at USIS, alleges that the company defrauded the government by forwarding files to the Office of Personnel Management (OPM) that, in many cases, had not been investigated at all. The practice, known as “dumping,” was aimed at maximizing revenue because USIS is paid about $1,900 for every investigative report submitted to OPM before the next-to-last day of the month, and just 75 percent of the amount thereafter. Percival was fired when he refused to order his employees to continue the “dumping” practice.
USIS, which has worked for OPM since 1996, has come under scrutiny because it did the background checks both for Edward Snowden, the former National Security Agency contractor who leaked details of classified programs to the media, and Aaron Alexis, a former Navy reservist who gunned down a dozen people at the Washington Navy Yard last fall before being killed by police.
Lawyers in the Consumer Fraud Section at Beasley Allen continue to investigate, file, and litigate whistleblower cases under the False Claims Act. They are also taking cases under state law in states that have whistleblower statues. For further information, call 800-898-2034 and ask for either Larry Golston (Larry.Golston@BeasleyAllen.com), Lance Gould (Lance.Gould@BeasleyAllen.com), Archie Grubb (Archie.Grubb@BeasleyAllen.com), or Andrew Brashier (Andrew.Brashier@BeasleyAllen.com). Each of these lawyers is actively involved in the whistleblower litigation.
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