FEBRUARY 3, 2022. Last year whistleblowers were rewarded $237 million for reporting $1.6 billion in fraud involving taxpayer-funded programs such as Medicare and U.S. Department of Defense contracts. As the Acting Assistant Attorney General commented, “Industry insiders are uniquely positioned to expose fraud and false claims and often risk their careers to bring these schemes to light. Our efforts to protect taxpayer funds benefit from the courageous actions of these whistleblowers, and they are justly rewarded under the False Claims Act.”
In the fiscal year ending September 30, 2021, the Department of Justice (DOJ) obtained over $5.6 billion in False Claims Act settlements and judgments. This is the second largest amount the DOJ has obtained in cases under the False Claims Act; in 2014, the DOJ obtained almost $5.7 billion from fraud and False Claims Act settlements and judgments.
By the numbers:
- FY 2021: $5.6 billion in False Claims Act settlements and judgments
- Whistleblowers filed 598 qui tam suits in FY 2021
- These qui tam lawsuits account for $1.6 billion in settlements and judgments
- Whistleblowers were rewarded $237 million for reporting fraud
- Over $5 billion of the settlements and judgments were related to the healthcare industry
- Settlements and judgments since 1986: $70 billion
The DOJ tracks settlements and judgments since 1986, as Congress then increased the incentives for whistleblowers to file suit on behalf of the government as part of the False Claims Act. Whistleblowers who report fraud may receive 15-25% of the government’s recovery.
The $5 billion in settlements and judgments from healthcare related cases (as reported frequently on this blog—durable medical equipment, telehealth, pharmaceuticals, home healthcare providers) represent only federal losses, and the DOJ reported recovering additional amounts for state Medicaid programs.
Top areas of healthcare-related fraud for 2021 were:
Medicare Part C
Notably, combating Medicare Advantage Program (Medicare Part C) fraud has been a top priority for the DOJ, as more than 26 million Americans were enrolled in Medicare Part C plans in 2021, and more than $343 billion in government funds is projected to flow to insurance carriers who offer Medicare Advantage plans. Various healthcare services providers paid millions to resolve allegations that they were ratcheting up diagnosis codes in order to garner higher risk adjustment payments.
A cornucopia of healthcare service providers settled allegations “involving the willful solicitation of or payment of illegal remuneration to induce the purchase of a good or service paid for by a federal health program.” Cases included: laboratories paying patient recruiters for urine drug testing patient referrals; a mail-order diabetic testing company providing Medicare beneficiaries “free” or “no cost” diabetic testing glucometers and not making an effort to collect copays; an electronic health records technology vendor providing “lavish” event tickets and amenities to prospective customers; and pharmaceutical companies engaging in a price-fixing scheme regarding certain generic drugs.
The False Claims Act was originally enacted to pursue civil action against contractors who provided defective or exorbitantly priced goods or services to the government during the Civil War. Procurement fraud in present times revolves around contractors misrepresenting the prices of goods and services, contractors providing goods and services that do not comply with contract requirements, contractors certifying that subcontractors meet certain requirements for disadvantaged businesses, and kickbacks in government contracts.
Falsifying Pricing Data
Two defense contractors paid $75 million collectively to settle allegations that they had inflated and knowingly submitted false pricing data for contracts for military equipment. A furniture maker paid $7.1 million to resolve allegations that it did not disclose accurate information about its sales practices on its General Services Administration (GSA) contract and did not offer lower prices to government customers.
Providing Goods or Services Noncompliant with Contract Requirements
A healthcare and IT services provider paid $18.9 million to resolve allegations of using unqualified labor and overcharging the government for IT and healthcare service, in violation of two GSA contracts. Another contractor settled allegations that it “knowingly failed to maintain nine helicopters in accordance with Department of Defense contract requirements,” resulting in personnel using helicopters that were “not airworthy and should not have been certified as fully mission capable.”
Procurement Fraud and Kickbacks
Kickbacks in healthcare fraud jeopardize medical decision-making. Kickbacks in government contracting fraud make the choice of subcontractors for a contract questionable as to whether the most qualified and best-priced subcontractor is on the job. A communications company paid $12.7 million to resolve allegations that subcontractors paid kickbacks to the communications company’s senior management in exchange for favorable treatment on contracts. In the case of another contractor, a senior manager allegedly solicited kickbacks from subcontractors and then hid those costs in other expenses in the project.
The DOJ also reported significant settlements and judgments in 2021 related to COVID-19 relief programs, cybersecurity, government-funded educational programs, and False Claims Act actions against individuals.
If you would like to report Medicare, Medicaid, government contracts, or other fraud involving taxpayer-funded programs or contracts, 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/.