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DOJ Announces Another Banner Year For False Claims Act Recoveries -- Whistleblowers Continue to Lead the Charge

Posted  December 4, 2015

By the C|C Whistleblower Lawyer Team

Yesterday, to much fanfare, the Department of Justice announced it had obtained more than $3.5 billion in False Claims Act (FCA) recoveries for its fiscal year 2015.  It is the fourth year in a row the $3.5 billion mark has been crossed, and brings to more than $26 billion the total FCA recoveries the government has obtained since 2009.  And once again, as the DOJ made clear in its press release on the 2015 tally, it is the whistleblowers who paved the way.  They filed 638 qui tam suits last year which led to $2.8 billion in recoveries, or roughly 80 percent of the government’s total takeaway.  See DOJ Press Release.

Here is the rough breakdown of the government’s recoveries and some of the key corporate culprits:

Healthcare.  $1.9 billion of the $3.5 billion kitty came from companies and individuals in the health care industry for allegedly providing unnecessary or inadequate care, paying kickbacks to induce the use of certain goods and services, or overcharging Medicare, Medicaid, and other federal health care programs.  This total does not include the additional amounts the DOJ recovered for consumers and state Medicaid programs.  Two of the biggest healthcare hits came from leading dialysis services provider DaVita Healthcare Partners for (i) knowingly generating and billing for unnecessary waste in administering the drugs Zemplar and Venofer to dialysis patients ($450M), and (ii) paying kickbacks to physicians to induce patient referrals to its clinics ($350M).  Several settlements involved violations of the Stark Law which prohibits certain financial relationships between hospitals and doctors that could improperly influence patient referrals.  This past year’s list of hospitals settling Stark challenges included Adventist Health System ($115M); North Broward Hospital District ($69.5M); and Columbus Regional Healthcare System ($25M).

Government Contracts.  $1.1 billion came from government contractors for allegedly overcharging the government or failing to comply with key contractual terms.  Lockheed Martin ($27.5M), DRS Technical Services ($13.7M), VMware Inc. and Carahsoft Technology ($75.5M), Iron Mountain Companies ($44.5M) and U.S. Investigations Services ($30M) were among the government’s biggest targets.

Housing and Mortgage Fraud.  $365 million came from mortgage and housing related fraud.  Notable recoveries this past year included a $212.5 million settlement with First Tennessee Bank for originating and endorsing mortgages (through its First Horizon Home Loans subsidiary) for federal insurance by the Federal Housing Administration that did not meet eligibility requirements.  In August 2008, First Tennessee sold First Horizon to MetLife which admitted similar misconduct for which it paid $123.5 million.

Other Frauds.  Although health care, government contract and mortgage fraud dominated the enforcements space this past year, the DOJ pursued fraud “wherever it is found in federal programs.”  Included among the additional recoveries the government highlighted are Fireman’s Fund Insurance Company ($44M) for allegedly issuing federally reinsured crop insurance policies that were ineligible for federal reinsurance; Education Affiliates ($13M) for allegedly falsifying student qualifications to the Department of Education for student aid; and Air Ideal Inc. ($250,000) for allegedly falsely certifying it qualified for preferences given to small businesses located in a Historically Underutilized Business Zone.  The government highlighted these and other recoveries to “illustrate the diversity of cases pursued by the department and the department’s quest to root out fraud and false claims against the government wherever it may be found.”

But what is perhaps most notable about the government’s broadcast of its 2015 FCA successes is the attention and recognition it gave to the whistleblowers who led the charge.  The government highlighted that the vast majority of FCA recoveries this past year were spawned by whistleblowers, and that the whistleblowers collectively received $597 million in rewards for their efforts.  In the words of DOJ Civil Division Chief, Principal Deputy Assistant Attorney General Benjamin Mizer, these whistleblowers are “courageous men and women who come forward to blow the whistle on fraud they are often uniquely positioned to expose.”

So hats off to the whistleblowers for another banner year in helping the government ferret out and recover for fraud on the public fisc.  And hats off to the DOJ for giving thanks to the whistleblowers and recognizing their critical role in protecting all of us, or more pointedly, “preserving the integrity of vital government programs that provide health care to the elderly and low income families, ensure our national security and defense, and enable countless Americans to purchase homes.”

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