Thursday, December 15, 2016

Government Recovers $4.7 Billion in False Claims Settlements in Fiscal Year 2016

The Department of Justice announced that during fiscal year 2016 (ending September 30, 2016) it obtained more than $ 4.7 billion in settlements and judgments from civil cases involving fraud and false claims against the Government. This represents the third highest recovery since fiscal year 2009 and brings the total amount recovered during that period to $ 31.3 billion.

Government contracting was not the major culprit in these recoveries. Of the $4.7 billion recovered, more than half ($2.5 billion) came from the health care industry including drug companies, medical device companies, hospitals, nursing homes, laboratories, and physicians. Justice pointed out that the $2.5 billion represented only the Federal portion of losses. Significant additional recoveries were recovered by state medicaid programs.

After the health care industry, the next largest recoveries came from the financial industry, notably involving housing and mortgage fraud. Settlements and judgments in cases alleging false claims in connection with federally insured residential mortgages totaled nearly $1.7 billion.

Together, the health care and financial industries accounted for $4.2 of the $4.7 billion (89 percent) in recoveries.

Justice reported that most false claims actions are filed by whistleblowers under the qui tam provisions of the False Claims Act. When the Government prevails in the action, the whistleblower, also known as the relator, receives up to 30 percent of the recovery. In Fiscal Year 2006, whistleblowers filed 702 qui tam suits, averaging 13.5 new cases per week. $2.9 billion of the $4.7 billion in recoveries were the result of whistleblower suits. During Fiscal Year 2016, whistleblowers collected a total of $519 million.

Although small by comparison to health care and financial industry fraud, the Justice Department pursued a variety of procurement fraud matters. Justice specifically called out L-3 Communications who paid the Government $25.6 million for defective holographic weapon sites sold to Homeland Security and the FBI.

Read more about Justice's recoveries here.

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