The U.S. Department of Justice (DOJ) has announced that it recovered more than $3.5 billion in fiscal year 2015 as a result of claims filed under the False Claims Act (FCA). This was the fourth year running where the DOJ has recovered more than $3.5 billion under the FCA. To date the total amount recovered since January 2009 is $26.4 billion.
As we have previously written, the FCA provides an avenue for the government to bring civil charges against those who attempt to defraud the government. It’s a way to return money to taxpayers. Most false claims actions are filed under the Act’s whistleblower, or qui tam, provisions that allow individuals to file lawsuits alleging false claims on behalf of the government. If the government prevails in the action, the whistleblower, also known as the relator, receives from 15 percent to 30 percent of the recovery.
The main sources of FCA claims in FY2015 were in the areas of Health Care Fraud, Housing and Mortgage Fraud, and Government Contracts. According to the DOJ report:
• Of the $3.5 billion recovered last year, $1.9 billion came from companies and individuals in the health care industry for allegedly providing unnecessary or inadequate care, paying kickbacks to health care providers to induce the use of certain goods and services, or overcharging for goods and services paid for by Medicare, Medicaid, and other federal health care programs. The $1.9 billion reflects federal losses only. In many of these cases, the department was instrumental in recovering additional millions of dollars for consumers and state Medicaid programs.
• Settlements and judgments in cases alleging false claims for payment under government contracts totaled $1.1 billion in fiscal year 2015, bringing procurement fraud totals to nearly $4 billion from January 2009 to the end of the fiscal year. The government depends on contractors to feed, clothe, and equip our troops for combat; for the military aircraft, ships, and weapons systems that keep our nation secure; as well as to provide everything that is needed to fund myriad programs at home.
• The DOJ recovered $5 billion in housing and mortgage fraud from January 2009 to the end of fiscal year 2015, including this past year’s recoveries of $365 million. These recoveries are part of the broader enforcement efforts by President Obama’s Financial Fraud Enforcement Task Force. President Obama established the interagency task force in 2009, to wage an aggressive, coordinated, and proactive effort to investigate and prosecute financial crimes.
In addition to these categories, the DOJ made additional fraud recoveries in a variety of other federal programs, including the insurance industry, for-profit education companies, and lenders working with small businesses and minority owned businesses through programs like Trouble Asset Relief Program (TARP) and the Small Business Association (SBA). The DOJ also followed through on its promise to hold individuals – not just corporations – accountable for fraud, waste, abuse and other wrongdoing that took place on their watch. It issued a number of indictments as a result of this initiative and is pursuing criminal and civil charges against these corporate leaders.
The FCA was strengthened in 1986 as amendments were added that increased incentives for whistleblowers to file suit. As stated above, these incentives include 15 to 30 percent of the funds recovered. In FY2015, $597 million was paid to individuals who brought qui tam claims. These incentives – rewards – have helped the government to:
• detect more fraud;
• insure money intended for important purposes, such as health care, is properly spent on furthering those purposes; and
• deter other companies and hospitals from committing the same fraud.
There were 638 whistleblower lawsuits filed under the qui tam provisions of the False Claims Act in 2015. As a result of whistleblower lawsuits, between January 2009 to the end of the FY2015 the government recovered $19.4 billion in settlements and judgments, and paid whistleblower awards totaling $3 billion. Principal Deputy Assistant Attorney General Benjamin C. Mizer, head of the Justice Department’s Civil Division, had this to say:
The False Claims Act has again proven to be the government’s most effective civil tool to ferret out fraud and return billions to taxpayer-funded programs. The recoveries announced today help preserve the integrity of vital government programs that provide health care to the elderly and low income families, ensure our national security and defense, and enable countless Americans to purchase homes. The department’s lawyers and staff, together with our law enforcement partners in federal and state governments, work tirelessly and often overcome daunting challenges to achieve these successes on behalf of the taxpayers.
Source: U.S. Department of Justice
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