Monday, December 19, 2011

Department of Justice and Health & Human Services Officials Speak Out About Record False Claims Act Recoveries and Cutting Waste in Federal Spending

False Claims Act recoveries, the government's promise of more enforcement, and the crucial role played by whistleblowers in enforcing the False Claims Act have been making the news these last ten days. 

First, the departing head of the Centers for Medicare and Medicaid Services, Dr. Donald Berwick, told the New York Times in a December 3rd interview that "20-30%" of all health care spending is "waste."  Dr. Berwick listed "five reasons" for the “extremely high level of waste” in health care spending:  "overtreatment of patients, the failure to coordinate care, the administrative complexity of the health care system, burdensome rules and fraud."  Overtreatment of patients can be cast as unnecessary treatment, akin to fraud, and can give rise to claims under the False Claims Act.  Indeed, Dr. Berwick observed that "Much is done that does not help patients at all, and many physicians know it.”

Second, Deputy Attorney General James Cole recently spoke at a December 13th press conference on the subject of cutting waste in federal spending.   The Department of Justice, Cole noted, "recovered over $5.6 billion in criminal and civil fraud proceeds," which is "more than has ever been recovered in a single year in the history of the Department of Justice."  The $5.6 billion in fraud recoveries included everything from "healthcare fraud to grant fraud, from mortgage fraud to procurement fraud."  Fraud recoveries, Cole explained, occurred across the nation:  "Between fiscal years 2008 and 2011, the Department has doubled fraud recoveries in twenty-one states, as well as the District of Columbia and the Virgin Islands."   Health care fraud enforcement not only resulted in significant recoveries  --$900 million from 8 drug companies alone-- but generated revenue as well:  Cole noted that "[f]or every dollar Congress has provided for health care enforcement over the past three years, we have recovered nearly seven."

Finally, today Assistant Attorney General Tony West of the Department of Justice, Civil Division, announced  $3 billion in settlements and judgments in civil cases involving fraud against the government in the fiscal year ending Sept. 30, 2011.   Of the$3 billion total, West explained, $2.8 billion "came from suits filed under the qui tam, or whistleblower, provisions of the False Claims Act."  West went on to state that in the last 25 years "whistle blowers have filed more than 7,800 actions under the qui tam provisions" and  "qui tam suits hit a peak of 638 this past year, after hovering in the 300s and low 400s for much of the decade."  Of the $3 billion recovered, nearly $2.2 billion came from in civil claims against the pharmaceutical industry.

In short, the message is clear: the federal government will continue to target waste in federal spending, with special enforcement devoted to health care spending.  Whistleblowers and the qui tam suits they file will continue to play a crucial role in investigating fraud and obtaining recoveries against those who commit fraud against the federal government.  We can expect False Claims Act suits to continue to grow.

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