Thursday, January 10, 2019

Justice Department Recovered $2.8 Billion under the False Claims Act in Fiscal Year 2018

Late last month, the Justice Department issued its annual report on recoveries under False Claims Act (FCA) cases during fiscal year 2018.  The amount of recoveries was impressive (nearly $2.8 billion) but no where near the $6.1 billion recovered in fiscal year 2014.

The preponderance of the recoveries (87 percent) related to what we can generically refer to as Health Care fraud. The largest of these recoveries came from the drug and medical device industry. For example, the Department recovered $625 million from a company that circumvented safeguards intended to preserve the integrity of the nation's drug supply by repackaging drugs supplied to cancer-stricken patients. In another case, a medical device manufacturer paid $33 million for selling a materially unreliable testing device that was intended to aid clinicians in the diagnosis of drug overdoses and other serious conditions.

Recoveries for procurement fraud paled in relation to health care fraud. The Department recovered only $107 million (only?). The most significant recovery was $66 million from a company selling defective fiber used in bullet proof vests. Another $20 million came from a company that over-billed the Navy by overstating the quantity of goods and services it delivered. The Department recovered $12 million from a company that misrepresented its status as a small business. We previously reported on these cases and many others on these pages.

Interestingly, most of the recoveries were the result of whistleblower actions (a.k.a. Qui Tam). Of that $2.9 billion recovered, $2.1 billion was the result of lawsuits filed by whistleblowers. The whistleblower payouts during the year totaled $301 million. We don't know how much of the payout went to whistleblowers and how much to their attorneys. We know of one case, years ago, where the attorneys took the preponderance of a whistleblower's payout.

The Justice Department report stated:
Whistleblowers have played a vital role in unmasking fraudulent schemes that might otherwise evade detection. The taxpayers owe a debt of gratitude to those who often put much on the line to expose such schemes.
You can read more about the Annual report and download related statistics here.

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