Top False Claims Act Settlements in the First Quarter of FY 2015


We’re in the first full week of 2015 but the federal government flipped its calendar three months ago when fiscal year 2014 concluded at the end of September. There have already been several significant cases resolved under the Federal False Claims Act in FY 2015. These include:

DaVita – October 2014
The largest settlement in the healthcare industry covering solely allegations of kickbacks was agreed to in October by one of the largest companies providing dialysis treatment and support services for chronic kidney failure. They will pay $350 million under the False Claims Act and forfeit $39 million related to two joint ventures in Denver. The whistleblower had served as a senior financial analyst in the company’s M&A department.

Supreme Foodservice – December 2014
This supplier of food, water and fuel to troops in Afghanistan overcharged the Department of Defense from 2005 until 2009 according to the government’s allegations. It agreed to pay $101 million under the False Claims Act and $288.36 million in restitution and criminal fines.

Stryker – December 2014
A former Stryker sales representative reported the company for distributing knee replacement surgery cutting guides after they were rejected by the FDA. The company agreed to pay $40 million under the False Claims Act and $40 million in criminal penalties and forfeiture.

Iron Mountain – December 2014
The information management company paid $44.5 million to settle allegations it overcharged the federal government for record storage services.

Extendicare – October 2014
The company paid $37 million to resolve allegations it billed Medicare and Medicaid for worthless nursing services and unnecessary rehabilitation therapy at 33 skilled nursing homes in eight states between 2007 and 2013.

Dignity Health – October 2014
The company, one of the five largest hospital systems in the nation, paid $37 million to settle allegations 13 of its hospitals billed government health programs for admitted patients having elective cardiovascular procedures who could have been treated on an outpatient basis and 4 hospitals similarly billed elective kyphoplasty procedures to treat spinal compression fractures.

Lockheed Martin Integrated Systems – December 2014
LMIS billed the government for work allegedly performed by employees who lacked the job qualifications specified by two U.S. Army Communication and Electronics Command issued contracts. It will pay $27.5 million to resolve the allegations.

CareAll – November 2014
This home health care agency, one of Tennessee’s largest, billed Medicare and Medicaid for services that were not medically necessary and rendered to patients who were not homebound. The $25 million settlement with the United States and Tennessee covered allegations of misconduct between 2006 and 2013. The company previously paid over $9 million in 2012 to resolve allegations of false cost reports submitted to Medicare.

Boeing – October 2014
The defense contractor paid $23 million to resolve allegations it improperly billed labor costs on maintenance contracts for the Air Force’s C-17 Globemaster. The government alleged that the company billed inappropriately, including for mechanics when they were attending meetings not directly related to the contracts.

State Lawsuits

In addition to the Federal False Claims Act, approximately thirty states have their own version of the law to prevent fraud against their state treasury. There have been a few noteworthy settlements in the past three months under state False Claims Acts as well. These include:

Office Depot – November 2014
The office supply store agreed to pay $68.5 million plus legal fees to resolve allegations under the California False Claims Act that the company failed to deliver its best price on goods sold to the state. Office Depot previously settled a similar lawsuit with New York State in May 2014 for $475,000 and Florida in 2010 for $4.5 million.

Organon – October 2014
The Netherlands pharmaceutical company now owned by Merck paid $31 million to various states, including approximately $2.5 million to New York State, to settle allegations of misrepresented drug prices, underpaid rebates, off label marketing and kickbacks to nursing home pharmacies.

Whistleblower Rewards

In the case listed above, whistleblowers earned more than $110 million. That figure doesn’t include the $170 million announced by whistleblowers from the Bank of America settlement from August which were made public in December.

We were able to quickly isolate these cases because of the work done by Taxpayers Against Fraud. If you would like to see the rest of the settlements from October through December, visit their website here.