According to data released by the Department of Justice, whistleblowers helped return over $3 billion to the government through the False Claims Act in fiscal year 2014 and were awarded over $435 million for providing information of fraud against federally-funded programs.
NEW YORK, New York, April 7, 2015 – Each year the U.S. Department of Justice releases statistics on the prior year’s False Claims Act cases. The False Claims Act remains the government’s primary tool to protect taxpayer-funded programs from fraudulent claims. A key component of the False Claims Act is its qui tam provision, which allows a whistleblower to file an action on behalf of the government and receive between 15 and 30 percent of the government’s recovery as a reward for alerting the government about the fraud.
The Department of Justice released its False Claims Act data for fiscal year 2014 in November. By all accounts, 2014 was a blockbuster year for False Claims Act. Defendants in False Claims Act cases paid approximately $5.7 billion to resolve allegations that they defrauded government programs. This was the highest amount on record since the DOJ began tracking these recoveries in 1987. Almost $3 billion of this amount was recovered in cases that were initiated by whistleblowers. As a result, whistleblowers were awarded over $435 million in 2014—the second highest amount on record.
Like prior years, fraud against the government’s healthcare programs—primarily Medicare and Medicaid—remained the largest source of recoveries in cases filed by whistleblowers. In one of the largest settlements on record, Johnson and Johnson and its subsidiaries agreed to pay over a billion dollars to settle off-label marketing and kickback allegations related to the prescription drugs prescription drugs Risperdal, Invega and Natrecor. In a separate settlement, Omnicare agreed to pay $116 million to resolve allegations that it entered into kickback arrangements with skilled nursing facilities ensure Omnicare was selected as the facilities pharmacy provider.
The hospital industry also paid hundreds of millions to settle health care fraud claims. For example, Community Health Services, Inc.—a for-profit hospital owner—agreed to pay $98 million for allegedly admitting Medicare and Medicaid patients that should have been treated on an outpatient basis. Halifax Hospital Medical Center agreed to pay $85 million to resolve allegations that it paid illegal compensation to physicians in violation of the Stark Laws.
Fraud against the government’s mortgage programs has also become a major source of False Claims Act recoveries in the wake of the mortgage crisis. These programs include the FHA mortgage insurance program, mortgages that are purchased or backed by Government Sponsored Entities Fannie Mae or Freddie Mac, and the Making Home Affordable Programs (e.g., HAMP, HARP, and HAFA programs), which are aimed at helping homeowners avoid foreclosure. Banks and other entities that submit false information to these programs or implement schemes to manipulate borrower eligibility, may be subject to stiff penalties under the False Claims Act, including treble damages and per-claim penalties. In 2014, Mortgage fraud recoveries included $1.85 billion from Bank of America Corporation, $614 million from JPMorgan Chase, $428 million from SunTrust Mortgage Inc. and $200 million from U.S. Bank.
Considering that almost every residential mortgage is now backed or insured by a federal program, it is likely that mortgage fraud recoveries will continue to represent a large percentage of False Claims Act recoveries and whistleblower awards.
In addition to healthcare and mortgage fraud, government contract fraud and fraud related to the federal student aid programs also resulted in recoveries under the False Claims Act.
The DOJ’s press release included a special thanks to the whistleblowers that provided information to the government through the False Claims Act. A quote attributed to Acting Assistant Attorney General Joyce Branda reads “[w]e acknowledge the men and women who have come forward to blow the whistle on those who would commit fraud on our government programs.”
Individuals with evidence of fraud against any federally-funded program can contact the whistleblower attorneys at LK for a free and confidential consultation by calling 212-605-6200 or submitting an online inquiry on this website.