Federal False Claims Act Recoveries Are the Third Highest in History

The United States Department of Justice (“DOJ) reported that it obtained over $4.7 billion in civil settlements and judgments involving federal False Claims Act fraud and abuse claims against the government in 2016. This is the third highest yearly total since the False Claims Act was enacted during the Civil War to help deter fraud perpetrated by Union contractors. This brings the total False Claims Act recovery since federal fiscal year 2009 to $31.3 billion. The DOJ reports that recoveries from False Claims Act cases restore assets to federally funded programs like Medicare, Medicaid, and TRICARE – a health care program for service members and their families. 

Many False Claims Act cases originate with a whistleblower, often an employee of a business, who comes forward with evidence of wrongdoing by that business and eventually receives a portion of the amount recovered by the government.

Approximately $2.5 billion of the 2016 total recovery was from the healthcare industry. More specifically, $1.2 billion was recovered from the drug and medical device sector.  For example, drug manufacturers Wyeth and Pfizer Inc. paid approximately $784.6 billion for failing to report discounts available to hospitals as required by the government to make sure that “the Medicaid program enjoyed the same pricing benefits available to the company’s commercial customers[1] and for reporting fraudulent pricing on two drugs that treat acid reflux. 

The DOJ secured substantial recoveries against hospitals and outpatient clinics for roughly $360 million. Tenet Healthcare Corporation (“Tenet) paid $244.2 million to resolve allegations that four of its hospitals paid kickbacks in order to receive patient referrals.  Tenet also paid $123.7 million to state Medicaid programs, while two of its subsidiaries pleaded guilty to related charges amounting to a $145 million recovery for the DOJ.  

Millenium Health, in the medical laboratory segment of the health care industry, paid $260 million to settle allegations that it billed federal healthcare programs for unnecessary urine drug and genetic testing, as well as allegations that it gave free items to induce physicians to refer profitable lab tests in violation of the Anti-Kickback Statute and Stark Law.

Recoveries involving nursing homes and other skilled nursing facilities amounted to more than $160 million in 2016. 

 The DOJ has also held individuals, and not just corporations, accountable for corporate wrongdoing in compliance with the “Yates Memo issued on September 9, 2015.  As part of that effort, the DOJ collected $2 million from cardiologist Dr. Asad Qamar and his practice, the Institute of Cardiovascular Excellence (“ICE), to resolve allegations that he and his practice billed federal healthcare programs for medically unnecessary procedures, as well as paid kickbacks to patients by waiving Medicare copayments regardless of financial hardship.

[1] https://www.justice.gov/opa/pr/justice-department-recovers-over-47-billion-false-claims-act-cases-fiscal-year-2016

For more information about False Claims Act cases and recoveries, please contact David R. Ross, Esq. or Mary T. Connolly, Esq.

David R. Ross is a Shareholder of the firm. Prior to joining the firm, and under former Governors Pataki and Spitzer, Mr. Ross served as the Acting Medicaid Inspector General for New York State. He also served as General Counsel, Deputy Medicaid Inspector General and Director of Audits and Investigations for the Office of the Medicaid Inspector General. Prior to his service at the Office of the Medicaid Inspector General, Mr. Ross held several positions at the New York State Office of Alcoholism and Substance Abuse Services (OASAS), including Acting General Counsel, Deputy Counsel, and Associate Counsel. Mr. Ross handles False Claims Act cases, both for whistleblowers and for corporations who are being investigated by the government for allegedly filing false claims. He handled what is believed to be the largest False Claims Act whistleblower case in the history of the United States which sought treble damages of $66 billion plus per claim penalties. Mr. Ross also handles Medicaid compliance matters of all kinds, as well as both Medicare and Medicaid audits and investigations for providers of all types and sizes. He can be reached at (518) 462-5601 or via e-mail at dross@oalaw.com.

Mary T. Connolly is an Associate of the firm and contributed to this article.  Her primary practice areas include health law and litigation. She handles litigation, transactional, compliance, and regulatory matters for health care providers and trade associations. She can be reached at (518) 462-5601 or via e-mail at mconnolly@oalaw.com.