Another Banner Year for Recovery Under the False Claims Act

According to a press release from the Department of Justice, in fiscal year 2013, the government recovered $3.8 billion in settlements and judgments involving the False Claims Act. This is the second-largest annual recovery in history and brings total recoveries under the False Claims Act since January 2009 (when the act was significantly amended) to $17 billion. Additionally, the number of qui tam (or whistleblower) cases increased to 752 in 2013, which was 100 more than in fiscal year 2012. Recoveries in qui tam cases this year totaled $2.9 billion, with whistleblowers recovering $345 million.

The largest area of recovery was in the health care sector, which amounted to $2.6 billion of the total funds recovered. And this is the fourth straight year the government has recovered more than $2 billion annually in these types of cases. The press release notes that the success is due in part to the creation of the Health Care Fraud Prevention and Enforcement Action Team, which worked to increase coordination between criminal and civil health care fraud enforcement. The cases in this area involved improper “off-label” marketing, the manufacture and distribution of adulterated drugs, and illegal kickbacks.

Procurement fraud also accounted for a large share of this year’s recovery – $890 million. The cases in this area included the making of false statements in negotiating a contract with the government as well as failure to disclose material information to government contracting agencies, causing the agencies to pay higher prices.

As evidenced by the press release, the government is continuing to rely on cases brought under the False Claims Act – and the whistleblowers who bring them – to recover significant amounts of ill-gotten gains for taxpayers, and the emphasis on health care and procurement fraud target sectors of the economy rife with complex and stringent statutory and regulatory requirements. Individuals who work in these fields should continue to be on the lookout for fraud and should consider consulting with an attorney about any irregularities or questions they may have.

The press release is available here.

Reetupama (Reena) Dutta is a senior associate in the Business Litigation Practice at Hodgson Russ LLP. You can reach her at rdutta@hodgsonruss.com.

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