False Claims Act Statistics Reveal Robust Enforcement

April 23, 2014
« Next Previous »

The Department of Justice recently released its enforcement statistics under the False Claim Act (FCA), the federal government’s primary civil enforcement tool to recover losses due to false claims for government funds and property under government contracts. In short, it was another banner year for the feds. A Look at the FCA Statistics During fiscal year 2013, the Department of Justice (DOJ) collected $3.8 billion through FCA settlements and judgments. The recovery represents the second largest in the history of law, although short of last year’s $4.9 billion. As in prior years, the healthcare industry accounted for the largest percentage of all FCA claims. Of the $2.6 billion in federal health care fraud recoveries, $1.8 billion were from alleged false claims for drugs and medical devices. A large bulk of the settlements involved allegations that drug companies improperly promoted their drugs for uses not approved by the Food and Drug Administration (otherwise known as “off-label marketing”). According to the DOJ report, procurement fraud rose to record levels in 2013. The agency recovered more than $887 million in settlements and judgments based on allegations of false claims and corruption involving government contracts. Spotlight on Qui Tam Suits In addition to imposing liability on any person who knowingly submits a false claim to the government or knowingly makes a false record or statement to get a false claim paid by the government, the FCA law also contains qui tam provisions, which allow private persons to file suit for violations of the statute on behalf of the government. If the government prevails in the action, the whistleblower, known as a relator, receives up to 30 percent of the recovery. In 2013, $2.9 billion of the $3.8 billion recovered by the DOJ resulted from lawsuits filed under the FCA’s qui tam provisions. In total, 752 claims were filed, which represents over 100 more than the prior record established in FY 2012. The Message for Government Contractors The latest statistics highlight that New York and New Jersey businesses, particularly those in the targeted industries, should thoroughly evaluate their FCA compliance activities. Given the rise in qui tam claims, having the proper procedures in place to handle whistleblower complaints should be a top priority. If you have any questions about the DOJ’s FCA statistics or would like to discuss your company’s compliance activities, please contact me or the Scarinci Hollenbeck attorney with whom you work.