Friday, December 22, 2017

Justice Department Recovered $3.7 Billion in 2017 In Fraud Cases Against the Government

The Department of Justice just released its report on recoveries under the False Claims Act (FCA) for fiscal year 2017. The Department reported that it had obtained more than $3.7 billion in settlements and judgments from civil cases involving fraud and false claims against the Government.

As in prior years, the bulk of these recoveries were related to health care fraud ($2.5 billion) of which $900 million came from the drug and medical device industry. Recoveries related to DoD contracts totaled a far distant $219 million. Recoveries in the "all other" category (i.e. all Agencies other than HHS and DoD) totaled $1 billion. A lot of the recoveries under the "all other" category related to housing and mortgage fraud.

In the category of "procurement fraud" which transcends HHS, DoD, and all other, the report listed major recoveries including (i) food services in Kuwait and Iraq, (ii) failure to follow safety standards at a Department of Energy facility, and (iii) overcharging on a GSA contract by not offering the Government most favored customer treatment.

Here's an interesting aspect of the report. Nearly 93 percent ($3.4 of the $3.7 billion) of the recoveries were a result of whistleblower reporting and those whistleblowers share of the recoveries totaled $393 million. That works out to about 11.5 percent of recoveries going to the whistleblowers (well, whistleblowers and their attorneys, we suppose). It seems like that without the beefed up Qui Tam provisions incorporated into the FCA back in 1986, the Government wouldn't have too much success in combating fraud. But it also indicates that while companies can easily hide fraud from the Government, its much harder to hide fraud from employees. Employees seem to know what's going on and the hope of a big payday provides the incentive to report instances of alleged fraud.

You can read a press release of the DOJ report here. The article includes links to more detailed information and data as well.

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