A Fraud By Any Other Name Would Be As… Expensive

The False Claims Act provides for treble damages and a penalty between $5,500 and $11,000 for anyone who submits a false claim to the United States. With treble damages and penalties, committing fraud against the government can become a very expensive proposition. It’s hard to see how high-level executives at the companies being sued in qui tam suits could think that fraud is a good way to do business, but this seems to be the logic that was followed in several cases.

In looking at the top 27 FCA cases, 93% of them have to do with some type of healthcare fraud. In fact, among the top 5 FCA cases, each one is related in some way to the healthcare industry.

At the top of the list is drug-making mastodon Pfizer. In the fall of 2009, Pfizer agreed to pay $2.3 billion to settle claims, including claims brought under the FCA. $1.3 billion of the settlement constituted criminal penalties. This penalty sounds like it would be the final straw for Pfizer, but when you consider Pfizer’s 3rd quarter 2009 profit alone was $2.88 billion, you have to wonder whether even an enormous fine like this is enough to deter a drug company from potentially engaging in fraud.  Pfizer was sued for allegedly marketing certain popular drugs like Bextra and Lipitor for unapproved uses. The company made huge profits off of these drugs, and legal experts are not convinced that fines will prevent drug makers from going down the same road in the future.

The FCA keeps drug companies on their toes, but it remains to be seen whether fraud will be completely eliminated.  Our society does love its drugs–prescription drugs are so ubiquitous that they are even showing up in trace amounts in public drinking water supplies–and as long as profits outweigh fines, the temptation to engage in fraud to increase those profits will probably endure.

This article is brought to you by The Qui Tam Team, the epicenter for whistleblowers and people interested in the False Claims Act, Qui Tam Provisions, and Medicare and Medicaid fraud. To discuss a potential case, please call Eric Young at 1 (800) 590-4116.