A Billion Here, A Billion There, And Soon You're Talking Real Money: 2009 False Claims Act Recoveries Total $2.4B

The U.S. government obtained $2.4 billion in settlements and judgments in cases involving fraud against the government in the fiscal year ending Sept. 30, 2009, the Justice Department announced today. This represents the second largest annual recovery of civil fraud claims in history, and brings total recoveries since 1986, when Congress substantially strengthened the civil False Claims Act, to more than $24 billion. 

The numbers tell an important story - and demonstrate the government's interest in pursuing fraud.

Of the $2.4 billion in settlements and judgments obtained in fiscal year 2009, nearly $2 billion was recovered in lawsuits filed under the False Claims Act’s qui tam provisions. These provisions authorize private persons, known as "relators," to file suit on behalf of the United States against those who have falsely or fraudulently claimed federal funds. Such cases run the gamut of federally funded programs, from Medicare and Medicaid to defense and other government procurement contracts, federally insured mortgage and other federal housing programs, disaster assistance loans, agricultural subsidies and more. In fiscal year 2009, relators were awarded $255 million. (This figure does not include relator shares awarded after Sept. 30, 2009.)
 
Fiscal year 2009 settlements include two records, both triggered by qui tam suits. In a record settlement of federal Medicaid claims, the state of New York and New York City agreed to pay the United States $540 million. And in a record settlement in a General Services Administration defective pricing case, NetApp Inc. and NetApp U.S. Public Sector Inc. paid the government $128.7 million.
 
In fiscal year 2009, health care fraud recoveries reached $1.6 billion, two-thirds of the year’s total. The Department of Health and Human Services 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.
 
The largest health care recoveries came from the pharmaceutical and medical device industries, which accounted for $866.7 million in settlements, including Aventis Pharmaceuticals Inc., Bayer HealthCare LLC, Eli Lilly & Company and Quest Diagnostics Inc. and its subsidiary, Nichols Institute Diagnostics Inc. In addition to federal recoveries, these pharmaceutical and medical device fraud cases returned $402 million to state Medicaid programs.
 
Procurement fraud accounted for a quarter of fiscal year 2009 recoveries with $608.4 million in settlements and judgments, including $422 million attributable to Department of Defense contracts. Of that amount, $59 million related to contracts in support of the wars in Iraq and Afghanistan, including two settlements with The Boeing Company totaling $27 million and a $26.3 million settlement with APL Limited. This brings settlements and judgments in procurement fraud cases involving the wars in Southwest Asia to a total of $76 million, with many matters still pending.
 
We're betting that next year's recoveries will exceed this year's - by a lot.