The U.S. Justice Department recovered more than $3.5 billion in settlements and judgments stemming from civil fraud cases against the government in fiscal year 2015. This marks the fourth year in a row that Justice Department recoveries met or exceeded the $3.5 billion mark.
Since 2009, the government has recovered $26.4 billion in cases brought under the False Claims Act. Most of the recoveries stemmed from qui tam (or whistleblower) provisions under the FCA. Of the total 2015 False Claims Act recoveries, more than $2.8 billion can be traced back to whistleblower lawsuits.
The government paid out $597 million in whistleblower rewards to the brave men and women who filed qui tam complaints in 2015, often putting their careers in jeopardy in the name of pursuing justice.
More and More Whistleblowers Are Coming Forward, Leading to Greater Recoveries
The number of whistleblower lawsuits has grown significantly since 1986, with 638 qui tam lawsuits filed last year. The growing number of whistleblowers has also led to increased recoveries for the government. In the period between January 2009 and the end of fiscal year 2015, the government recovered $19.4 billion in settlements and judgments stemming from qui tam lawsuits and paid out roughly $3 billion in whistleblower awards during the same time period.
The False Claims Act was amended in 1986 to, among other things, encourage whistleblowers to come forward if they had knowledge of fraud. Then in 2009, the Fraud Enforcement and Recovery Act made additional improvements to the FCA and other fraud statutes. Most recently in 2010, the Affordable Care Act added vital protections and inducements for whistleblowers, and strengthened the Anti-Kickback Statute.
Health Care Industry Continues to be Pain Point for Fraud and Abuse
According to the Justice Department, $1.9 billion in fiscal year 2015 False Claims Act recoveries came from the health care industry alone. These recoveries stemmed from settlements and judgements for providing unnecessary or inadequate care, paying kickbacks to health care providers in order to incentivize the use of goods and or services, and overcharging for goods or services paid for by government health care programs.
Two of the largest 2015 False Claims Act recoveries came from Denver, Colorado-based DaVita Healthcare Partners, the nation’s leading provider of dialysis services. In one case, DaVita agreed to pay $450 million to settle claims that it knowingly generated unnecessary waste in administering two of the company’s drugs—Zemplar and Venofer—to dialysis patients. DaVita then billed the government for costs associated with waste that could have been avoided. In a separate case, DaVita paid another $350 million to resolve claims that it paid kickbacks to doctors in an effort to induce patient referrals to the company’s many dialysis clinics throughout the country.
Hospitals were another sector of the health care industry that played a part in the large number of 2015 False Claims Act recoveries. Hospitals collectively paid $330 million in settlements and judgments stemming from fraud claims. Pharmaceutical companies also paid a collective $96 million, and skilled nursing homes and rehabilitation facilities paid a collective $38 million.
Government Contractor Fraud 2015 False Claims Act Recoveries
Fraud allegations involving government contractors accounted for $1.1 billion in settlements and judgments in 2015, which brings the total government contractor fraud recoveries since January of 2009 to nearly $4 billion.
Some of the most significant government contractor 2015 False Claims Act recoveries:
Supreme Group B.V. ($146 Million):
The government accused Dubai, United Arab Emirates-based Supreme Group and several subsidiaries of submitting false claims to the Department of Defense for food, fuel, water and cargo transportation for American troops in Afghanistan. Supreme Group affiliates Supreme Foodservice FZA and Supreme Foodservice GmbH pleaded guilty to related violations, paying over $288 million in criminal fines.
Lockheed Martin Integrated Systems ($27.5 Million):
A Lockheed Martin subsidiary, Lockheed Martin Integrated Systems agreed to pay $27.5 million to settle allegations that the company charged the government at a higher level for work performed by employees who lacked qualifications necessary for performing the higher level work.
The Boeing Company ($18 Million):
The Boeing Company agreed to pay $18 millionto settle a whistleblower allegations claiming the company improperly charged the government for aircraft maintenance. The whistleblower, James Thomas Webb, Jr., received a reward of $3,060,000 for bringing the fraud allegations to the government’s attention. He was represented by whistleblower attorneys at Baum, Hedlund, Aristei & Goldman.
Housing and Mortgage Fraud Produced $365 Million in 2015 False Claims Act Recoveries
From 2009 until the end of fiscal year 2015, DOJ has recovered over $5 billion in housing and mortgage fraud. This total includes 2015’s recoveries, which totaled $365 million.
Among the most notable housing and mortgage 2015 False Claims Act recoveries:
First Tennessee Bank ($212.5 Million):
From 2006 to 2008, First Tennessee admitted to originating and endorsing mortgages for federal insurance that did not meet Federal Housing Administration (FHA) requirements. The bank further admitted that it knowingly failed to report these deficiencies, despite widespread knowledge of their existence among senior managers in early 2008.
MetLife ($123.5 Million):
MetLife Bank, N.A., a subsidiary of MetLife, Inc., purchased First Tennessee in 2008. MetLife admitted to similar misconduct as described in the First Tennessee case between 2008 and 2012.
Walter Investment Management ($29.63 Million):
Walter Investment Management settled claims that its subsidiaries violated the Department of Housing and Urban Development’s rules for the Home Equity Conversion Mortgages programby submitting false claims for fees and other costs associated with servicing reverse mortgage loans. Reverse mortgages allow elderly people to access the equity in their homes by providing monthly payments, which enable them to cover expenses whilst remaining in their homes. Banks and other institutions that service reverse mortgages are eligible for HUD insurance, provided they meet requirements. Walter Investment Management was accused of failing to meet HUD requirements.