The Justice Department announced that it secured a record $5.69 billion in settlements and judgments from civil cases involving fraud against the government in the fiscal year ending September 30, 2014 (“FY2014”). This marks the first time the Justice Department recovered more than $5 billion in these cases, bringing the total recoveries under the False Claims Act (“FCA”) to $22.75 billion since January 2009.
The FCA is a federal law prohibiting individuals and institutions from knowingly submitting or causing to be submitted, false or fraudulent claims to the federal government. Most FCA cases are filed under the FCA’s whistleblower, or qui tam, provisions, which allow private citizens to file lawsuits on behalf of the federal government. If they prevail, they can receive up to 30% of the recovery. Qui tam actions often are filed by current or former employees of the companies they accuse of making false claims. Of the $5.69 billion recovered by the Justice Department in FY2014, nearly $3 billion was related to qui tam lawsuits. During that period, $435 million was paid to individuals who brought qui tam claims.
The Justice Department reported that in FY2014, it recovered a record $3.1 billion from banks and other financial institutions involved in making false claims for federally insured mortgages and loans. The Justice Department cited several individual settlements for hundreds of millions of dollars involving major financial institutions.
Health care fraud also continued to account for a large percentage of the FCA recoveries, totaling $2.3 million of the FY2014 FCA recoveries. This marked the fifth straight year in which the Justice Department recovered more than $2 billion in health care fraud cases. The Justice Department attributes this high rate of recovery in part to the Health Care Fraud Prevention and Enforcement Action Team (“HEAT”), which is an interagency task force coordinating the efforts of the Justice Department and the Department of Health and Human Services.
The Justice Department noted that the pharmaceutical industry accounted for a substantial part of the $2.3 billion in health care fraud recoveries in FY2014. The Justice Department also cited large recoveries in cases involving hospitals and home health service providers.
While the lion’s share of the FY2014 FCA recoveries related to mortgage, housing and health care fraud, the Justice Department also stated that it continued to aggressively pursue fraud in government procurement and other federal programs, citing multiple eight-figure settlements.
It is clear that FCA claims remain a high priority for the Justice Department. In addition, for those companies involved in the health care industry, it is expected that HEAT will continue to aggressively pursue claims of health care fraud. In this environment of multi-million dollar recoveries by both the federal government and individuals filing qui tam actions, one of the most important steps a company can take is to work with counsel to develop and implement a robust compliance program.