Fiscal Year 2010 proved to be a record breaking year for False Claims Act (“FCA”) cases, according to recently published statistics from the U.S. Department of Justice (“DOJ”). The total amount of funds recovered by the government either through settlements or judgments was nearly $2.4 billion: the largest annual recovery ever. Consistent with the increase in overall FCA recoveries, whistleblower rewards (also known as relator’s shares) were also the largest on record: the government awarded approximately $385 million to whistleblowers in FCA cases. Nearly $2 billion of the overall recovery was attributable to FCA cases related to fraud on federal healthcare programs, including Medicare and Medicaid. A distant second was fraud in connection with Department of Defense programs at approximately $240 million. And the balance was spread among all other federal programs.
The total number of FCA cases referred to the DOJ was also the highest ever recorded. This uptick is encouraging in the sense that more whistleblowers are having the courage to step forward and expose fraud upon the public fisc. This may well be the result of the 2009 amendments to the FCA, which made the law a more effective tool. On the other hand, the increase in the number of cases is problematic when viewed in conjunction with the statistics regarding the government’s immediate caseload. The DOJ is currently investigating 1,246 cases and has 139 active cases in which it has intervened. Thus, this significant backlog of cases coupled with the increase in cases filed this year, may lead to longer delays in intervention decisions, or result in the government declining to intervene in cases that it might have intervened in but for its lack of resources to deal with the higher caseload. So, while these newly released statistics demonstrate that the government is continuing to aggressively investigate and prosecute FCA cases, they also highlight the need for even more resources to be devoted to these cases in order to decrease the current backlog, and to offset continued increases in newly filed cases.
It is also worth noting that these statistics under-represent the impact of qui tam and whistleblower cases. The DOJ statistics do not include money recovered by state or local governments. Particularly with respect to cases involving fraud on the Medicaid system-approximately half of which is funded by state governments-the settlements and judgments often return substantial sums to state governments. In addition, the DOJ statistics do not include portions of settlements that are attributed to criminal charges, which are often brought by DOJ as a result of disclosures made in qui tam lawsuits.