Department of Justice Recovers $3 Billion in False Claims Cases in Fiscal Year 2010

WASHINGTON - The Department of Justice secured $3 billion in civil settlements and judgments in cases involving fraud against the government in the fiscal year ending Sept. 30, 2010, Tony West, Assistant Attorney General for the Civil Division, announced today. This includes $2.5 billion in health care fraud recoveries—the largest in history—and represents the second largest annual recovery of civil fraud claims. Moreover, amounts recovered under the False Claims Act since January 2009 have eclipsed any previous two-year period with $5.4 billion in taxpayer dollars returned to federal programs and the Treasury. Recoveries since 1986, when Congress substantially strengthened the civil False Claims Act, now total more than $27 billion.

"Under Attorney General Eric Holder’s leadership, our aggressive pursuit of fraud under the False Claims Act has resulted in the largest two-year recovery of taxpayer dollars in the history of the Justice Department," Assistant Attorney General West said. "Nowhere is this more apparent than in our success in fighting health care fraud. Since January 2009, the Civil Division, together with the U.S. Attorneys’ offices, commenced more health care fraud investigations, secured larger fines and judgments, and recovered more taxpayer dollars lost to health care fraud than in any other two-year period."

Fighting fraud committed against public health care programs is a top priority for the Obama Administration. On May 20, 2009, Attorney General Eric Holder and Kathleen Sebelius, Secretary of the Department of Health and Human Services (HHS), announced the creation of a new interagency task force, the Health Care Fraud Prevention and Enforcement Action Team (HEAT), to increase coordination and optimize criminal and civil enforcement. These efforts not only protect the Medicare Trust Fund for seniors and the Medicaid program for the country’s neediest citizens, they also result in higher quality health care at a more reasonable price.

The record health care fraud civil recoveries of $2.5 billion announced today made up 83 percent of the year’s total civil fraud recoveries. HHS reaped the biggest recoveries, largely attributable to its Medicare and Medicaid programs. Recoveries were also made by the Office of Personnel Management, which administers the Federal Employees Health Benefits Program, the Department of Defense for its TRICARE insurance program and the Department of Veterans Affairs, among others.

Assistant Attorney General West noted that since January 2009, the Civil Division, together with the U.S. Attorneys’ offices, set a two-year record for health care fraud enforcement efforts, recovering $4.6 billion in taxpayer funds under the False Claims Act from health care providers and others in the industry, and securing 25 criminal convictions as well as more than $3 billion in fines, forfeitures, restitution and disgorgement under the Food, Drug and Cosmetic Act (FDCA).

The False Claims Act cases successfully resolved this year not only included payment schemes implicating federal health care programs, but also wartime and other government procurement contracts; grants for small businesses, bullet-proof vests for law enforcement, and other purposes; federally insured mortgages; federal and Indian mineral leases; and many other federal programs.

Assistant Attorney General West commended the substantial efforts of the Civil Division’s career attorneys, the U.S. Attorneys’ Offices, and the federal and state agencies that investigate and support False Claims Act prosecutions, remarking that "their dedication and the cooperation we enjoy allow us to bring all of our resources to bear in combating fraud against both the federal and state governments."

Most of the cases resulting in recoveries were brought to the government by whistleblowers under the False Claims Act, the federal government’s primary weapon in the battle against fraud. In 1986, Senator Charles Grassley and Representative Howard Berman led successful efforts in Congress to amend the False Claims Act to revise the statute’s qui tam (or whistleblower) provisions, which encourage whistleblowers to come forward with allegations of fraud. Assistant Attorney General West paid tribute to the 1986 amendments’ sponsors, saying: "Without their foresight, these recoveries would not have been possible." He also expressed his gratitude to Senator Patrick J. Leahy, Chairman of the Senate’s Judiciary Committee, and to Senator Grassley and Representative Berman for their support of the Fraud Enforcement and Recovery Act of 2009, which made additional improvements to the False Claims Act and other fraud statutes.

Of the $3 billion in settlements and judgments obtained in fiscal year 2010, over $2.3 billion was recovered in lawsuits filed under the False Claims Act’s qui tam provisions. Under these provisions, whistleblowers (known as "relators") – many of whom face considerable personal risk in coming forward with allegations of fraud –are entitled to recover between 15 and 30 percent of the proceeds of a successful suit. In fiscal year 2010, relators were awarded $385 million. Since 1986, when the qui tam provisions were strengthened by Congress, recoveries in qui tam cases have exceeded $18 billion, and relators have obtained more than $2.8 billion in awards.

Assistant Attorney General West also applauded Congress’ passage this past year of the Affordable Care Act (ACA), which included additional provisions to aid the Government in redressing fraud on the nation’s health care system, and to promote incentives for whistleblowers to disclose fraud to the government. Among many other changes, the ACA amended the False Claims Act’s public disclosure provision and strengthened the provisions of the federal health care Anti-Kickback Statute.

Fiscal year 2010 also saw records for several types of health care fraud. A $2.3 billion settlement with Pfizer Inc. marked the largest health care fraud settlement in history. The $2.3 billion includes $669 million recovered under the federal False Claims Act, $1.3 billion in criminal fines and forfeitures, and $331 million in recoveries for state Medicaid programs and the District of Columbia. (These latter two amounts are not included in the total health care fraud recoveries announced today, which are limited to the federal government’s civil recoveries.) In addition, a $108 million settlement with The Health Alliance of Greater Cincinnati and one of its former member hospitals, The Christ Hospital, was the largest ever under the health care Anti-Kickback Statute for the conduct of a single hospital.

The largest fiscal year 2010 False Claims Act recoveries came from the pharmaceutical and medical device industries, which accounted for $1.6 billion in settlements, including the $669 million from Pfizer Inc., $302 million from AstraZeneca, and $192.7 from Novartis Pharmaceutical Corporation.

In addition to the civil health care fraud recoveries under the False Claims Act, the Civil Division’s Office of Consumer Litigation (OCL) brings civil and criminal actions for violations of the FDCA. Together with their partners in the U.S. Attorneys’ Offices around the country, OCL pursues such matters as the unlawful marketing of drugs and devices, fraud on the FDA, and the distribution of adulterated products. In fiscal year 2010, those efforts yielded more than $1.8 billion in criminal fines, forfeitures, restitution and disgorgement, the largest health care-related amount under the FDCA in department history. Since January 2009, OCL has successfully pursued cases resulting in 25 criminal convictions and more than $3 billion in fines, forfeitures, restitution and disgorgement.

In addition, the Civil Division continues to play a leading role in the Financial Fraud Enforcement Task Force, created last November by President Obama to improve the federal government’s efforts to investigate and redress consumer and financial fraud. The Civil Division, in conjunction with its partners on the task force, is aggressively pursuing all manner of financial fraud schemes, including mortgage fraud, non-war related procurement fraud, and fraud involving the Troubled Asset Relief Program, the American Recovery and Reinvestment Act and other economic stimulus funds. False Claims Act recoveries in these cases accounted for 11 percent of fiscal year 2010 recoveries, with $327.2 million in settlements and judgments.

The Civil Division also pursues fraud claims related to contracts in support of the wars in Iraq and Afghanistan. During fiscal year 2010, the Civil Division recovered $10.6 million in these cases. To date, settlements and judgments in procurement fraud cases involving the wars in Southwest Asia total $137.2 million. Of this amount, $114.7 million has been recovered since January 2009.