According to statistics recently released by the Department of Justice, DOJ recovered approximately $3 billion through the False Claims Act (FCA) in fiscal year 2019. DOJ’s recoveries were higher than FY 2018 and reflect an increased enforcement effort that is focused on government contracting and healthcare companies in recent years.
A majority of the recoveries in the last fiscal year was related to life science businesses and the healthcare sector. The DOJ settlements and judgments reflect government priorities in fraud deterrence and its intent to continue to use of the FCA to combat fraud. Indeed, the FCA, which is codified at 31 U.S.C. §§ 3729-3733, is the federal government’s primary weapon in combatting fraud against government agencies and programs.
The FCA provides for the recovery of treble damages and civil penalties from any “person” (natural or corporate entity) who causes the submission of or knowingly submits a fraudulent or false claim to the US for property or money.
Under the False Claims Act, it is illegal to submit claims for payment to Medicare or Medicaid that one knows or should know are false or fraudulent. False claims can result in fines of up to three times the programs’ loss plus an additional per-claim amount. And criminal violations under 18 U.S.C. § 287 can result in imprisonment and criminal fines.
DOJ healthcare enforcement efforts for the past fiscal year largely related to health care programs, such as Medicaid, Medicare, and TRICARE. Drug manufacturers like Insys Therapeutics, Avanir Pharmaceuticals, Actelion Pharmaceuticals, and Jazz Pharmaceuticals paid in some $624 million to resolve allegations of selling non-approved drugs to healthcare providers.
Fraud in Procurement
Fraud in the procurement of government contracts continues to be a focus in the DOJ’s use of the FCA. Its latest report demonstrates that this past fiscal year Five South Korean Companies, including GS, Caltex Corporation, S-Oil Corporation, and SK Energy, paid more than $162 million under the False Claim Act with respect to allegations of anticompetitive conducting providing fuel under government contracts.
Fraud Recoveries in other Industries
The fiscal year 2019 report reflects a wide variety of fraud recoveries under the FCA—some from perhaps unexpected sources. Duke University, for instance, paid over $112.5 million to resolve allegations pertaining to its violation of the False Claim Act. The University allegedly submitted progress reports and applications containing false researches on the National Institute of Health (NIH)’s grants.
DOJ also demonstrated a continued commitment to focus on those who it believes have abused their authority and license rights to remove minerals and assets from federal lands.
Freeman Law assists companies and individuals with responding to False Claims Act allegations and qui tamplaintiffs. Necessary actions may include conducting internal investigations of suspected FCA violations and counseling with respect to potential actions under the FAR’s Contractor Code of Business Ethics and Conduct regulations.
FCA cases often require forensic analysis and detailed review of disputed transactions. The attorneys at Freeman Law bring a unique forensic and white-collar background, along with substantial government-litigation experience—and can assist those involved in FCA or anticipate FCA disputes.
For a primer on the False Claims Act, see our prior post.