False Claims Act Yields $519 Million for Whistleblowers in FY2016

The Justice Department announced the third highest annual recovery in the history of the False Claims Act yesterday – $4.7 billion for the federal government for fiscal year 2016 (ending Sept. 30th). Whistleblowers received awards of $519 million for their assistance recovering $2.9 billion – more than half of the funds returned through settlements and judgments. During President Obama’s Administration, the Government paid more than $4 billion to whistleblowers for their information and assistance in the recovery of nearly $24 billion through qui tam lawsuits.

Although it wasn’t specifically mentioned, the government’s recovery included the amount our False Claims Act attorneys helped to recover from Salix Pharmaceuticals (a Valeant subsidiary).  The $54 million settlement was announced in June.

There were 709 lawsuits filed by whistleblowers under the False Claims Act in FY 2016. Most, if not all, of those lawsuits are still under seal and being investigated by the Department of Justice currently. It will be a few years before we have information about the success of those qui tam lawsuits.

The largest area of recovery in 2016 was once again the health care industry, with the federal government recovering $2.5 billion from health care fraud. According to the DOJ, it is the seventh consecutive year that health care recoveries have topped $2 billion. Kickback cases were prominently listed among the successes, although the top case involved price reporting.

Mortgage fraud was second with nearly $1.7 billion in recoveries. In 2014, fraud in the mortgage industry during and before the Great Recession caused mortgage fraud to displace health care fraud at the top spot of the False Claims Act for a year. The 2016 mortgage recoveries were the second highest annually. The government also uses FIRREA to recover funds due to mortgage fraud – and any amount brought in through that law is not counted in this total.

Government procurement fraud, education fraud by for-profit schools, and customs fraud finished off the list of areas highlighted by the DOJ announcement. The top case of fraud in federal programs and contracts involved the BP oil spill. As part of the $20 billion dollar consent decree, the company settled allegations that it made false reports about its safe drilling margin, a condition of the lease that allowed it to do oil exploration on the Outer Continental Shelf, for $82.6 million. The customs fraud cases involved violations of the reverse false claims subsection of the law. This means that importers of foreign goods sought to avoid the payment of duties on imports.