FEBRUARY 28, 2024. The Department of Justice has released its annual report on False Claims Act Settlements and Judgments for fiscal year 2023 and the statistic reaffirm the Department’s commitment to supporting whistleblowers and recovering misspent taxpayer dollars. For FY 2023, False Claims Act settlements and judgments amounted to over $2.68 billion, with recoveries since 1986 now totaling over $75 billion. The government and whistleblowers had a successful year with 543 settlements and judgments, a new record for the DOJ. Collectively, these whistleblowers were awarded $349 million for standing up for what is right and ensuring that taxpayer dollars are not misspent.
WHAT IS THE FALSE CLAIMS ACT?
The False Claims Act safeguards government programs and operations – that are funded by taxpayer dollars – by imposing treble damages and penalties on those companies that make false claims for money to the government or fail to pay or repay the government what it is owed. By ensuring that taxpayer dollars are spent properly, these programs and operations can continue to provide access to “medical care, support our military and first responders, protect American businesses and workers, help build and repair infrastructure, offer disaster and other emergency relief, and provide many other critical services and benefits.”
In 1986, Congress bolstered the False Claims Act though its qui tam, or whistleblower provisions, increasing incentives for whistleblowers to bring allegations of false claims on behalf of the government. A successful whistleblower, the relator, can receive 15%-30% the settlement amount for their efforts in a case.
HEALTHCARE FRAUD.
Of the $2.68 billion recovered in FY 2023, $1.8 billion comes from healthcare-related matters. The DOJ’s report highlighted key actions in the healthcare space, ranging from submissions of inaccurate information to kickbacks.
An important facet of healthcare fraud cases involves Medicare, specifically Medicare Advantage. Also known as Medicare Part C, this program has become the largest component of Medicare and allows beneficiaries to obtain their healthcare benefits through private insurers that partner with Medicare for a fixed monthly rate.
One example of a Medicare Part C settlement is the Cigna Group’s September 2023 settlement, where the company paid $172 million to resolve claims that it violated the False Claims Act by submitting false diagnosis codes for its Part C beneficiaries to increase its funds from Medicare. Cigna knowingly submitted these false claims and did not correct them. The whistleblower in this case, a former part-owner of a vendor retained by Cigna, received $8.1 million for his efforts in the case.
In October 2023, Cardiac Imaging Inc. and its founder and CEO, Sam Kancherlapalli, agreed to pay $85.5 million to resolve claims that they violated the False Claims Act, Anti-Kickback Statute, and Stark Law by paying referring cardiologists above fair-market value to refer patients to Kancherlapalli’s company.
PROCUREMENT FRAUD.
Procurement fraud is another facet of the fraudulent actions covered by the DOJ. This type of fraud deals with the manipulation of contracts by underperforming duties, using less expensive materials, or violating regulations to gain an unfair advantage or secure more money.
In July 2023, one of the largest procurement fraud settlements was announced, with Booz Allen Hamilton Holding Corporation agreeing to pay $377 million to resolve claims that it violated the False Claims Act by improperly billing its government contracts and failing to disclose how it calculated costs. Tycko & Zavareei co-represented the whistleblower, Sarah Feinberg, who received $69.8 million for her role in exposing the fraud.
PANDEMIC FRAUD.
In the wake of the COVID-19 pandemic, Congress authorized unprecedented amounts of aid to allow federal agencies to give financial assistance to individuals, businesses, and non-federal governments. Included in this is the Coronavirus Aid, Relief, and Economic Security (CARES) Act. Its purpose was to provide emergency loans to small businesses that were in danger due to the pandemic business shutdowns. The Paycheck Protection Program (PPP) is one of the more well-known parts of the CARES Act.
In October 2023, Victory Automotive Group Inc. entered into a $9 million settlement agreement for allegedly violating the False Claims Act by submitting a PPP application with false information which was approved. Victory later filed for loan forgiveness, which was also approved, based on false information as well. For his efforts in the case, the whistleblower received $1.62 million.
CYBER FRAUD.
The DOJ is committed to reinforcing cybersecurity measures, considering it a priority of the Department as the field continues to expand. The Civil Cyber-Fraud Initiative is one of the ways the DOJ has bolstered its defenses against fraud in the sphere and has seen many fruitful settlements and judgments as a result.
In September 2023, Verizon Business Network Services LLC agreed to pay over $4 million to settle claims that it did not completely satisfy cybersecurity measures in its dealings with the federal government. Upon learning of these issues, Verizon submitted a self-disclosure to the federal government, receiving credit for these actions in the settlement.
OTHER FRAUD.
The DOJ handles many different types of fraud against the government, spanning from patents to misclassifications that cause unjust gains in wealth. Additionally, the DOJ also pursues individuals for defrauding the government, not just corporations.
In September 2023, the DOJ announced a settlement agreement with Yale University and Dr. John Crystal for $1.5 million to settle claims that they did not disclose certain patents and withheld royalties to the Department of Veteran Affairs.
In April 2023, the DOJ settled with Dr. Joel Aronowitz, Daniel Aronowitz, and Joel A. Aronowitz, M.D., a medical corporation, and other parties for $23.9 million to settle claims that they improperly billed Medicare and Medicaid for skin graft surgeries. Three whistleblowers risked their careers to expose the fraudulent practices and protect taxpayer funds.
The Principal Deputy Assistant Attorney General praised the results of the report, stating, “The accomplishments announced today are a testament to the extraordinary dedication and skill of individuals across the nation who work tirelessly to protect taxpayer dollars from fraud and abuse.” He went on to say, “We are grateful for the hard work and courage of whistleblowers who play a critical role in identifying fraud, often at substantial risk to themselves … Our efforts to ensure that public funds are spent properly continues to benefit greatly from their actions.”
Whistleblowers who see something and say something are the heart of the DOJ’s efforts to stop fraudulent activity against the government!
If you would like to report healthcare, government contracts, customs, or cybersecurity 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. 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 was the Senior Counsel for Health Care Fraud. Eva and Renée now represent whistleblowers. For a free consultation, you can contact Renée at [email protected] (tel.: 202-417-3664) or contact Eva Gunasekera at [email protected]. You can also go to Tycko & Zavareei LLP’s website for whistleblowers to learn more at www.fraudfighters.net.