“Last year, I told you the watchdogs are back.”
President Joseph R. Biden’s 2023 State of the Union address touched on a variety of topics of interest to potential whistleblowers and the legal advocates protecting those who speak up about wrongdoings in government spending. In the address, President Biden highlighted Medicare fraud, customs fraud, and government contracting fraud as three key areas that require strong action and oversight. The President indicated strong support for continued “watchdog” and fraud fighting efforts, stating, “For every dollar we put into fighting fraud, taxpayers get back at least ten times as much.” When fact-checked, that number is even better. An oft-cited statistic in the whistleblower space puts the rate of return on investment in False Claims Act enforcement at approximately 20:1.
Medicare fraud is the fraudulent use or misuse of Medicare funds. Medicare is a government-funded health insurance program that provides financial assistance to eligible individuals who are older, disabled, or have certain end-stage renal diseases. Medicare fraud occurs when someone uses Medicare money for personal gain by submitting false claims, such as billing Medicare for services that were not actually provided or were medically unnecessary, upcoding, or paying for patient referrals (kickbacks).
Medicare is a massive program that provides coverage to more than 60 million individuals in the United States and its territories, making it one of the largest government-run health insurance programs in the world. As such, Medicare fraudsters can potentially gain access to large amounts of money by exploiting Medicare’s vast resources.
President Biden announced in the State of the Union that as part of the Inflation Reduction Act the government is capping the cost of insulin at $35/month and capping out of pocket drug costs at $2,000/year for Medicare beneficiaries. Pharmaceutical fraud has historically been a goldmine for fraudsters—and through qui tam lawsuits, for the whistleblowers who report it. “If drug prices rise faster than inflation, drug companies will have to pay Medicare back the difference,” the President said. Whistleblowers, take note of potential fraud schemes that pharmaceutical companies may employ to make up the difference.
Customs fraud is the fraudulent evasion of customs duties, taxes, and fees. It occurs when someone intentionally misrepresents or omits information regarding products imported into or exported from a country in order to avoid paying the required customs duties, taxes, and fees. Common examples of customs fraud include mislabeling goods to pay lower duties, undervaluing goods to pay lower duties, and smuggling goods into the country without paying any customs duty. Customs fraud is especially prevalent in government spending because it enables businesses to evade taxes, which can ultimately lead to an unfair competitive advantage over other businesses that are playing by the rules.
Government contracting fraud is the fraudulent use of government contracts or purchase orders to obtain goods, services, or money. Government contracting fraud can occur when a contractor or vendor provides false information about their products or services in order to secure a contract with the government, when an individual falsely claims to have performed work or provided materials for which they received payment from the government, or when a contractor or vendor overbills the government for work that was not actually performed.
In the State of the Union, President Biden spoke about “put[ting] hundreds of thousands of people to work rebuilding our highways, bridges, railroads, tunnels, ports and airports, clean water, and high-speed internet across America.” The federal government does not build infrastructure; it hires contractors. Those contractors must abide by the terms of their contracts in order to submit claims to the government for payment. The President announced “new standards to require all construction materials used in federal infrastructure projects to be made in America,” referencing the Buy American Act (1933). Falsely certifying compliance with the Buy American Act on a company’s government contract constitutes a violation of the False Claims Act. Employees of government contractors with involvement in the procurement process should be aware of this type of fraud. Companies importing goods into the U.S. must also be advised that improperly marking their goods with the wrong country of origin, in attempt to avoid paying customs, are subject to False Claims Act liability.
Whistleblowers can help to protect our nation’s taxpayers from being taken advantage of by unscrupulous individuals. President Joe Biden has highlighted the need to combat Medicare fraud, customs fraud, and government contracting fraud in order to protect taxpayers and ensure that our government is using taxpayer money efficiently and effectively. Anyone with inside knowledge of a fraud scheme can be a whistleblower, and it’s up to all of us to help make sure these types of fraudulent activities are identified and addressed.
If you would like to report Medicare, government contracts, or customs fraud, you can contact attorneys at Tycko & Zavareei LLP. Eva Gunasekera and Renée Brooker are former officials of the United States Department of Justice and prosecuted whistleblower cases under the False Claims Act. Eva was the Senior Counsel for Health Care Fraud. Renée served as Assistant Director at the United States Department of Justice, the office that supervises False Claims Act cases in all 94 United States District Courts. Eva and Renée now represent whistleblowers. For a free consultation, you can contact Eva Gunasekera at [email protected] or contact Renée at [email protected] (tel.: 202-417-3664). Visit Tycko & Zavareei LLP’s website for whistleblowers to learn more at https://www.fraudfighters.net/.