WASHINGTON (Legal Newsline) – At $4.7 billion, fiscal year 2016's haul is the third-highest annual recovery of fraudulent claims in the history of the False Claims Act.
The health care industry was the primary target of false claims litigation and the pending repeal of the Affordable Care Act could create new challenges for federal regulators. Fiscal Year 2016 marked the second year in a row that whistleblower actions exceeded those started by the government alone.
The fiscal year average of recovery under the FCA is almost $4 billion since 2009, and total recovery is more than $31 billion during that same period.
“An astonishing 60 percent of those recoveries were obtained in the last eight years,” Benjamin Mizer, deputy attorney general, said in a press release.
On Dec. 14, the U.S. Department of Justice released a report with details regarding the recovery of $4.7 billion from False Claims Act cases during the fiscal year 2016.
The massive increase may be the result of a growing trend in whistleblower suits. Tony Anikeeff, is a partner at Williams Mullen, co-chairs the firm's government contracts, and handles their civil False Claims Act and related matters.
“I have noticed an uptick in the government’s willingness to support an array of alleged violations,” Anikeeff told Legal Newsline.
Under the FCA, civil litigation can be started by the government or it may be initiated by qui tam relators, also known as whistleblowers. The government may join the whistleblowers who bring the action or leave them to proceed alone.
If the suit is successful, the relator is eligible to receive up to 30 percent of the recovered amount. Anikeeff says that he believes whistleblower litigation will continue to grow because “there’s so much money available to the qui tam relators.”
In fact, in the fiscal year 2016, there were 702 qui tam suits, resulting in more than $500 million awarded to the qui tam relators. Anikeeff is also confident that the incoming administration will continue to uphold the premise of the Yates memo.
The memorandum issued by the Justice Department in 2015 serves as a guide to prosecutors, and it alters long-held policies and practices in federal investigations. Among several specific directives named in the memo, a strong emphasis is placed on targeting individual decision makers within an organization under investigation.
Mizer and other Justice Department officials believe that targeting individuals ensure that the appropriate parties are held responsible for their actions, and it increases public confidence in the justice system.
More than $2 billion of the $4.7 came from the health care industry including hospitals, drug companies and physicians. There are two types of penalties an organization is subject to for making false claims - a penalty for each claim, and if the government has paid out money based on the claim, punitive damages can be incurred. At one time, the per penalty fine was only $5,500 to $10,000. Now the range is $10,000 to $20,000 dollars.
For a smaller company, Anikeeff says “the damages and penalties are knee-buckling, and many are forced to settle those claims.”
However, drug companies like Wyeth and Pfizer willingly paid $724 million to settle state and federal claims that Wyeth knowingly reported fraudulent prices on drugs used to treat acid reflux disease. Compared to what Wyeth profited by reporting the false prices, Anikeeff says the fine is “minuscule.”