False Claims Recoveries Top $3 Billion in 2010

The Obama Administration is making good on its promise to crackdown on fraud against the government generally, and public healthcare programs in particular, according to the latest False Claims Act recovery statistics.

The Department of Justice collected $3 billion in civil settlements and judgments in cases involving fraud against the government in fiscal 2010, marking the second largest annual recovery of civil fraud claims. Most of that came from healthcare fraud recoveries, which DoJ said set a record of $2.5 billion for the fiscal year ended Sept. 30.

The 2010 figures bring the total tally for recoveries under the FCA since it was amended in 1986 to allow private citizens to file qui tam lawsuits on the government's behalf to more than $27 billion.

Most ($2.3 billion) of the $3 billion in recoveries in 2010 came from cases brought to the government by whistleblowers under the False Claims Act's qui tam provisions. Under the law, qui tam relators can get 15 to 30 percent of the proceeds of a successful suit. The government awarded a total of $385 million to qui tam relators for fiscal year 2010.

The total $5.4 billion in False Claims Act recoveries since January 2009 eclipsed any previous two-year period in DoJ history. That period also set a two-year record for FCA healthcare fraud enforcement efforts of $4.6 billion.

The major healthcare recoveries in 2010 included a record $2.3 billion settlement with Pfizer Inc., which saw $669 million recovered under the federal False Claims Act, and a $108 million settlement with The Health Alliance of Greater Cincinnati and one of its former member hospitals.

The largest False Claims Act recoveries came from the pharmaceutical and medical device industries, which accounted for $1.6 billion in settlements, DoJ reported. That included the $669 million from Pfizer, $302 million from AstraZeneca, and $192.7 from Novartis Pharmaceutical Corp.

The huge recoveries follow sweeping changes to the FCA since 2009 that significantly broadened its scope and made it easier for qui tam relators to bring whistleblower lawsuits. For instance, the 2009 Fraud Enforcement and Recovery Act expanded the universe of companies subject to False Claims Act liability and increased the penalties for failing to return an overpayment to the government. The Affordable Care Act passed in April of this year further amended the Act to significantly narrow its public disclosure provision.

Meanwhile, the government has been bolstering the resources it devotes to combating fraud. In May 2009 DoJ and the Department of Health and Human Services formed the Health Care Fraud Prevention and Enforcement Action Team, known as HEAT, to crackdown on fraud against government programs like Medicare and Medicaid. Last November, the Obama administration created the Financial Fraud Enforcement Task Force to root out financial fraud schemes, including mortgage fraud, procurement fraud, and fraud involving economic stimulus funds.