False Claims Act Recovery

DOJ recovers $4.7 Billion through the False Claims Act

The Department of Justice announced that for 2016 there were over $4.7 billion in recoveries under the federal False Claims Act. The amount of the recoveries is the third highest in history. The payments were achieved through either settlements or judgements in civil actions in the health care industry, housing and mortgage fraud, the financial sector and other industries.

The main reason for the large recoveries is that the False Claims Act now has whistleblower payment provisions which allow whistleblowers to receive 10 to 30 % of the settlement or judgment depending on how helpful their disclosures were. In 1986, the law was amended to include the whistleblower action for a broad range of fraudulent activity.

In 2016, over 700 qui tam actions were filed. In these actions, $2.9 billion was recovered. Significantly, $519 million was paid to the whistleblowers for their courageous disclosure of wrongs by companies and individuals.

The $4.7 billion figure reflects only the federal amount. Additional sums were also recovered in state Medicaid claims. The recoveries help government programs such as Medicare, Medicaid, and TRICARE. TRICARE is the medical program for military service members and their families.

In health care alone, $2.5 billion was obtained from drug companies, companies that make medical devices, nursing homes, laboratories, and physicians. Some of the larges recoveries came against drug manufacturers Wyeth and Pfizer, Inc. These two companies paid $784.6 million for claims that Wyeth reported false prices on two of its drugs. The government claimed that Wyeth (which was taken over by Pfizer) failed to disclose to hospitals that they were eligible for steep discounts because Medicaid was supposed to have the same discounts as the best commercial customers.

In another recovery, Novartis Pharmaceutical Corp. paid $390 million to the DOJ for alleged kickbacks – that it gave some pharmacies rewards for recommending its drug Exjade, an iron chelation medication and Myfordic, a drug used for kidney transplant patients.

Other health claims involved submission of expenses for unnecessary testing and for services that were not reasonable or not provided by skilled professionals