Qui Tam Relators Key to Recovering Billions of Tax-Payer Dollars through FCA Lawsuits
Of the $3 billion collected, $2.1 billion came from False Claims Act lawsuits brought qui tam whistleblowers
Today, the Department of Justice announced it collected more than $3 billion in settlements and judgments from the False Claim Act (FCA) cases in 2019. The FCA is a statute that allows individuals, or qui tam relators, to file lawsuits on behalf of the government and to receive a share of any recovery. Recoveries since 1986, when Congress substantially strengthened the FCA, now total more than $62 billion.
The cases resolved during 2019 covered various kinds of fraudulent conduct in several industries. The majority of the recoveries, $2.6 billion, involved the health care industry, including drug and medical device manufacturers, managed care providers, hospitals, pharmacies, hospice organizations, laboratories, and physicians. In many cases, the DOJ also assisted in the recovery of millions of dollars to state Medicaid programs.
The government also went after fraud schemes that put patients at risk and increased health care costs, holding drug companies accountable for their role in the opioid crisis. Two of the most significant recoveries involving the health care industry this past year came from opioid manufacturers. First, Insys Therapeutics paid $195 million to settle civil allegations that it paid kickbacks to induce physicians to prescribe Subsys for their patients. Second, Reckitt Benckiser Group plc paid a total of $1.4 billion to resolve liability related to the marketing of the opioid addiction treatment drug Suboxone.
Significant non-healthcare related recoveries in 2019 include:
- SK Energy Co. Ltd., GS Caltex Corporation, Hanjin Transportation Co. Ltd., Hyundai Oilbank Co. Ltd. and S-Oil Corporation– who paid over $162 million to resolve allegations that they engaged in anticompetitive conduct targeting contracts to supply fuel to the U.S. military in South Korea
- Hydro Extrusion Portland Inc., formerly known as Sapa Profiles Inc. (SPI), paid $34.6 million to resolve civil liability for causing a government contractor to invoice NASA and the Department of Defense’s Missile Defense Agency (MDA) for aluminum extrusions that did not comply with contract specifications.
- Northrop Grumman Systems Corporation (NGSC) paid $27 million to resolve allegations that it billed the Air Force for labor hours purportedly incurred by individuals stationed in the Middle East who had not worked the hours claimed.
- American Airlines paid $22 million, and British Airways Plc/Iberia Airlinespaid $5.8 million in separate settlement agreements. These agreements resolved allegations that they falsely reported the time it took them to transfer possession of United States mail to foreign postal administrations.
- Informatica LLC paid $21.57 million to resolve allegations that it overcharged the government by providing misleading information about its commercial sales practices used in contract negotiation with the General Services Administration (GSA).
A recurring theme year after year is that whistleblowers are the catalyst behind the government’s False Claims Act recoveries. Of the $3 billion collected in 2019, $2.1 billion came from actions brought by qui tam relators under the False Claims Act. According to the DOJ, an average of more than 12 new False Claims Act lawsuits were filed every week in 2019, a total of 633 actions filed by qui tam relators. The government paid out $265 million in whistleblower rewards to those who exposed fraudsters by filing allegations under the False Claims Act.
“Whistleblowers continue to play a critical role identifying new and evolving fraud schemes that might otherwise remain undetected,” said Assistant Attorney General Jody Hunt of the Department of Justice’s Civil Division. “Taxpayers have benefitted greatly from these individuals who are often required to make substantial sacrifices to bring these schemes to light.”
The DOJ should continue to embrace whistleblowers. Qui tam actions filed under the False Claims Act are essential to combating government contract fraud. Violators of the False Claims Act are liable for three times the dollar amount of the fraud upon the government and civil penalties of $5,000 to $10,000 for each false claim. A qui tam relator can receive between 15 and 30 percent of the total recovery from the defendant, whether through a favorable judgment or a settlement. The whistleblower must file a qui tam lawsuit to be eligible to recover money under the FCA. Merely informing the government about the violation will not qualify you for an award.