Top Ten False Claims Act Recoveries in 2023

It was another big year for DOJ enforcement under the False Claims Act, the government’s primary fraud-fighting tool. As usual, most of the recoveries were in the healthcare space with seven of the Top-10 involving various schemes to defraud Medicare and Medicaid.

Several of these Top-10 recoveries involved enforcement actions targeting violations of the Anti-Kickback Statute and Stark Law, which prohibit medical providers from paying or receiving kickbacks and from entering into certain kinds of financial relationships. This is a perennial enforcement priority for DOJ. Also among the Top-10 was a recovery in another DOJ enforcement favorite — fraud in the Medicare Advantage Program (Medicare Part C), where the government pays private health insurance companies to provide health insurance benefits to individual beneficiaries under a managed care model.

While healthcare recoveries dominated the Top 10, two of the five largest recoveries involved government contracting fraud. Historically, that is the most common area of fraud enforcement after healthcare fraud. It is also what prompted the enactment of the statute in the first place more than 160 years ago — to go after war profiteers trying to dupe the Union Army during the Civil War with lame mules and munitions made of sawdust.

Unsurprisingly, all but one of the Top-10 recoveries stemmed from actions filed by whistleblowers under the qui tam provisions of the False Claims Act which authorize whistleblowers to sue on behalf of the government those committing fraud against the government. Over the past several decades, the government has recovered tens of billions of dollars under the False Claims Act, with the vast majority of those recoveries originated by whistleblowers.

This past year’s False Claims Act recoveries adds billions more to the government fisc. Here is our listing of the Top-10 False Claims Act recoveries for 2023, which alone totaled nearly $1.8 billion. And once again, Constantine Cannon made the Top-10 listing with its representation of the whistleblowers in both the KBR and Cigna matters, taking the Number 4 and 5 spots below.

1 – Precision Lens ($490M). A federal court in Minnesota ordered Precision Lens and its owner Paul Ehlen to pay $487 million following a jury’s finding they violated the False Claims Act and Anti-Kickback Statute by paying kickbacks to ophthalmic surgeons to induce their use of the company’s products in cataract surgeries reimbursed by Medicare. Roughly $131 million of that amount was for damages (trebled under the statute) with the remaining $359 million from statutory penalties. The allegations originated in a whistleblower lawsuit filed by Kipp Fesenmaier, a former employee of Sightpath Medical, a company that sells cataract surgery and LASIK services, and was a previous defendant in the matter.

2 – Booz Allen ($377M).  The Virginia-based consulting and engineering contractor agreed to pay roughly $377 million to settle charges it violated the False Claims Act by improperly billing the government for costs that should have been billed to its commercial and international contracts.  The allegations originated in a whistleblower lawsuit filed by former Booz Allen employee Sarah Feinberg.

3 – Community Health Network ($345M).  The Indiana-based health network agreed to pay $345 million to settle charges it violated the False Claims Act and Stark Law by billing Medicare for certain services referred by physicians with whom the hospital system had a financial relationship.  The allegations originated in a whistleblower lawsuit filed by Community Health’s former Chief Financial and Chief Operating Officer Thomas Fischer.

4 – Cigna Group ($172M).  The Connecticut-based insurer agreed to pay roughly $172 million to settle charges it violated the False Claims Act by submitting inflated diagnosis codes for its Medicare Advantage Plan enrollees to increase its reimbursement payments from Medicare.  Some of the allegations originated in a whistleblower lawsuit filed by Robert Cutler, a former owner of a vendor retained by Cigna to conduct home visits.

5 – KBR ($109M). The Texas-based government contractor agreed to pay roughly $109 million to settle charges it violated the False Claims Act in its US Army supply contract in Iraq by
routinely ordering new materials when excess quantities of the same items were sitting in KBR warehouses in Iraq. The allegations originated in a whistleblower lawsuit filed by former KBR employees Geoffrey Howard and Zella Hemphill Anderson. The government did not join this lawsuit, leaving the whistleblower to pursue the action on its own as it is entitled to do under the statute.

6 – Covenant Healthcare ($69M).  The Michigan-based regional hospital system and two physicians agreed to pay roughly $69 million to settle charges they violated the False Claims Act, Anti-Kickback Statute, and Stark Law by billing Medicare and Medicaid for claims tainted by kickbacks and improper financial relationships with eight referring physicians and a physician-owned investment group.  The allegations originated with a whistleblower lawsuit filed by Dr. Stacy Goldsholl.

7 – CenCal Health ($68M).  The county organized health system that contracts for health care services under California’s Medicaid program and three health care providers agreed to pay $68 million to settle charges they violated the False Claims Act by improperly billing California’s Medicaid program (Medi-Cal) under the Patient Protection and Affordable Care Act’s Medicaid Adult Expansion program.  The allegations originated in a whistleblower lawsuit filed by CenCal’s former medical director Julio Bordas.

8 – Nostrum Laboratories ($50M).  Nostrum and its founder and CEO, Nirmal Mulye, agreed to pay up to $50 million to settle charges they violated the False Claims Act by underpaying Medicaid rebates due for Nostrum’s drug Nitrofurantoin Oral Suspension (Nitro OS).  The Medicaid Drug Rebate Program requires manufacturers to pay inflation-based rebates for drugs, and is designed to insulate the Medicaid program from drug price increases that outpace inflation.

9 – Individual Vascular Surgeon ($43.4M).  Michigan vascular surgeon Vasso Godiali agreed to pay up to $43.4 million to settle charges he violated the False Claims Act by billing Medicare and Medicaid for vascular procedures he did not perform and falsifying patient records to support the fraudulent billings.  He also was sentenced to 80 months in prison and ordered to pay $19.5 million in restitution.  The allegations originated in a whistleblower lawsuit filed by Innovative Solutions Consulting.

10 – GCI Communications ($40M).  The Alaska-based telecommunications provider agreed to pay roughly $40 million to settle charges it violated the False Claims Act by inflating its prices and violating Federal Communications Commission (FCC) competitive bidding regulations in connection with the company’s participation in the FCC’s Rural Health Care Program.  The program is designed to assist rural health care providers with their telecommunications needs.  The allegations originated in a whistleblower lawsuit filed by the company’s former Director of Business Administration Robert Taylor.

If you have information relating to potential fraud against the government and would like to speak to an experienced member of the Constantine Cannon whistleblower lawyer team, please don’t hesitate to contact us for a free and confidential consultation.  Maybe you can be the whistleblower who leads the government to the next big False Claims Act success.

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