Top Ten Federal False Claims Act Recoveries of 2018

The federal False Claims Act, under which whistleblowers can bring claims to report fraud and misconduct in government contracts and programs, is the foundation of the Department of Justice’s fraud recovery and the U.S. whistleblower reward system.  In 2018, the U.S. recovered over $2 billion from defendants who sought to cheat the system.

The top FCA settlements for calendar year 2018, based on the amount of the total recoveries, are listed below, with links to more information about each of the cases.

1. Amerisource Bergen – In October, DOJ announced a $625 million settlement with Amerisource Bergen, resolving allegations that the drug wholesaler removed cancer drugs from the original vials, then repackaged and sold the drugs as pre-filled syringes. The pharma fraud scheme allowed the company to create additional doses and double bill for the same vial of drug. The settlement also resolved charges the drug company paid kickbacks to induce doctors to buy the pre-filled syringes.  Three of the four whistleblowers who brought the case forward were not employees of the company, but rather other professionals — pharmacy workers and physicians — who were exposed to the alleged misconduct in the regular course of their work.
2. Actelion — In another pharmaceutical fraud case Actelion agreed in December to pay $360 million to resolve allegations that it violated the Anti-Kickback Statute by indirectly paying drug copays for thousands of Medicare patients, thereby unlawfully inducing them to purchase its drugs for pulmonary arterial hypertension. It did so by donating to a 501(c)(3) nonprofit organization, which in turn used those funds to pay Medicare copays for Actelion drugs.
3. Healthcare Partners — DaVita entity Healthcare Partners Holdings LLC agreed in October to pay $270 million to settle charges the physician group directed its physicians to use inappropriate diagnosis coding standards, inflating the risk adjustment payments it received from the Medicare Advantage program.
4. Health Management Associates, Inc. — The Florida-based hospital chain known as HMA (now owned by Community Health Systems, Inc.) reached a $260 million settlement in September, resolving charges that it  defrauded federal healthcare programs by billing outpatient services as costlier inpatient services, overcharging on emergency department fees, and paying kickbacks to doctors.
5. South Korea fuel bid rigging — In November, DOJ announced that three South Korean companies, SK Energy Co. Ltd., GS Caltex Corporation, and Hanjin Transportation Co. Ltd., would pay over $236 million to resolve charges that they conspired to rig bids to inflate the cost of fuel supplied to U.S. military facilities in South Korea.  The settlement included an $82 million criminal fine and a $154 million civil settlement resolving both antitrust claims and an FCA action brought by a whistleblower represented by Constantine Cannon.
6. Deloitte & Touche — In March, the accounting and consulting firm agreed to pay $149.5 million to resolve claims that it performed inadequate audits of Taylor, Bean & Whitaker Mortgage Corp. from 2002 to 2008, thereby concealing fraudulent conduct by TBW and TBW’s true financial condition.  As a result, TBW continued to issue FHA and HUD secured loans for which the U.S. would become liable on default.
7. William Beaumont Hospitals — In August, Detroit-based hospital system William Beaumont Hospital settled Anti-Kickback and Stark Law claims with the federal government and the state of Michigan for a combined $84.5 million. From 2004 to 2012, the hospital allegedly secured referrals for patients insured by federal healthcare programs by improperly compensating eight physicians at rates above fair market value and providing office space at below-market rates.
8. Prime Healthcare — In August, Prime Healthcare Services, its CEO Dr. Prem Reddy, and several affiliated entities, agreed to a $65 million settlement to resolve allegations that 14 of its California hospitals admitted patients who could have been treated in a less expensive outpatient setting and falsely upcoded patient diagnoses to increase payments from the government.
9. Toyobo — Toyobo Co. of Japan and Toyobo U.S.A. agreed to pay $66 million to resolve claims under the False Claims Act that they sold defective Zylon fiber used in bulletproof vests the United States purchased for law enforcement agencies. The case was initiated by a whistleblower, Aaron Westrick, who was reported to receive $5.8 million.
10. Northrup Grumman Systems –In November, the defense contractor agreed to pay $31.65 million to resolve allegations that it overstated employee hours on two government contracts related to battlefield communications services for the United States Air Force in the Middle East.  Northrup voluntarily disclosed the wrongful conduct to the government in February 2013 and, according to the settlement, cooperated in the government investigation.

Read More:

• False Claims Act
• Healthcare and Pharmaceutical Fraud
• Government Contract Fraud
• DOJ FCA Enforcement Actions
• Related Post:  Healthcare Whistleblowers Continue as Backbone of DOJ Recoveries: A Look at DOJ’s 2018 Fraud and FCA Statistics (covers Fiscal Year through September 2018).
• See all of our Top Ten Lists

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