The Civil Division of the U.S. Department of Justice has released the False Claims Act/Qui Tam statistics for FY 2012, which ended September 30, 2012. They can be found here. As in previous years,
the overwhelming number of all cases filed pursuant to the False Claims Act
were filed by qui tam relators and a great majority of the recoveries came from the health care area.
For 2012 False Claims Act (FCA) and Qui Tam (QT) matters, the DOJ statistics reveal the following:
- 782 FCA/QT new referrals, investigations, and qui tam matters. This number has increased slowly over the last two years as it was 773 in 2011 and 715 in 2010. QT actions continue to drive the overwhelming majority of new matters: almost 83% or 647 of the "new" matters were QT's.
- Total FCA/QT combined recoveries (settlements and judgments) were $4,959,333,498. Of that total:
- Almost $1.605 billion (32%) recovered in FCA cases filed by the government;
- Approximately $3.325 billion (67%) recovered in QT cases where government intervened;
- $29.387 million (.059%) recovered in QT cases where government did not intervene; and
- Total relator share awards: nearly $431 million (8.7% of total recoveries and judgments).
The DOJ divides the FCA/QT new matters and recoveries into three major categories: statistics related to Health and Human Services, Department of Defense, and Other. Not surprisingly, new matters and recoveries relating to health and human services (e.g., Medicare, Medicaid, VA, Tricare) continued to maintain a commanding lead in 2012:
- 436 new health-care related matters, of which 412 were QT cases
- Over $3 billion (61%) in total health care related recoveries, almost $2.5 billion in QT cases; and
- Over $284 million in relator share awards.
- 69 new defense related matters, of which 57 were QTs
- Almost $167 million (3%) in total defense related recoveries, only $2 million were non-QTs; and
- Over $19 million in relator share awards.
A. Brian Albritton
December 27, 2012
The U.S. Department of Justice announced yesterday that it had secured $4.9 billion in settlements and judgments in civil cases involving fraud against the federal government for fiscal year 2012. Highlights of DOJ's announcement include:
- $4.9 billion for 2012 is a "record recovery" for a single year, eclipsing the previous record by more than $1.7 billion.
- Total recoveries under the False Claims Act since January 2009, when President Obama took office, is $13.3 billion.
- 647 qui tam actions were filed in 2012.
- Of the $4.9 billion in recoveries, $3.3 billion resulted from suits filed by qui tam relators.
- Of the $4.9 billion, health care fraud recoveries accounted for more than $3 billion and housing and mortgage fraud recoveries accounted for $1.4 billion.
- Enforcement actions against the pharmaceutical and medical device industry were the source of the largest recoveries, such as the $1.5 billion paid by GlaxoSmithKline and $441 million paid by Merck.
- The mortgage fraud recoveries included a $900 million settlement with five mortgage companies to address mortgage loan servicing and foreclosure abuses.
- Procurement fraud recoveries totaled $427 million, bringing the total of procurement fraud recoveries to $1.7 billion since January 2009.
- Nearly 8,500 qui tam suits have been filed since 1986; 2,200 were filed since January 2009.
As Acting Associate Attorney General Tony West stated in announcing these False Claims Act recoveries, the "recovery of taxpayer dollars" is "a high enforcement priority" that has been brought about in part by the "aggressive use of [the False Claims Act]. . . . . The False Claims Act is, quite simply, the most powerful tool that we have to deter and redress fraud." The statements made by Associate Attorney General West and Principal Deputy Assistant Attorney General Delery in announcing these recoveries can be found here and here.
A. Brian Albritton
December 5, 2012
This week I came across two articles on the web concerning the False Claims Act which I commend to readers.
First, I recommend the "2012 Mid-Year False Claims Act Update" recently published by Gibson Dunn as it provides a good, succinct summary of False Claims Act highlights thus far in 2012. The Update addresses such topics as (i) legislative action, both federal and state, and discusses several states that recently amended their statutes as well as numerous other proposed state bills; (ii) surveys recent significant False Claims Act settlements in health care, mortgage and financial services, and procurement and defense industries; and (iii) case law developments and trends, discussing many of the cases highlighted in the blog such as Davis and Schweizer along with recent cases addressing the False Claims Ac "first to file" bar and "public disclosure" bar.
Second, I commend to you the article,"False Claims Act Investigations: Time for a New Approach?" published in October 2011 by John Bentivoglio, Jennifer Bragg, Michael Loucks, and Gregory Luce, all partners at Skadden Arps. The article observes that companies subject to False Claims Act investigations are hampered in their ability to defend themselves since most such investigations are conducted under seal, and the government is able to investigate and use its limited resources at a timetable that suits it. While a qui tam is under seal, the article point out "the government and the whistle-blower have an advantage" because "a company does not know the precise nature of the allegations pending against it and does not have the power of discovery and the right to defend that it is afforded by the federal court system once the suit has been disclosed and the litigation engaged." During this time, the article argues, government and the whistleblower can use the all-to-common extended seal period to keep the defendant in the dark as to precise nature of the allegations against it and to gather the evidence they need.
Given the advantages to the government and whistleblower of an extended seal period, the article asserts that "companies presently faced with a pending false claims investigation might consider whether a more aggressive strategy of forcing the government’s disclosure of the litigation (the unsealing of the complaint and other documents in the file) will better inform the company’s ability to defend itself: to engage in the process of discovery permitted by the Federal Rules of Civil Procedure." In turn, the article contends that several cases and legislative history permit defendants to challenge the government's justification for keeping a qui tam matter sealed.
Companies faced with False Claims Act investigations have a hard choice, and most prefer, as the article acknowledges, to settle or where possible, to dispose of the matter while under seal, thereby controlling the effects of bad press as well as other collateral damage. At the same time, I think that every False Claims Act defense counsel has experienced the frustration of trying to defend a qui tam that is under seal because they are in the dark as to the allegations against the client and the government refuses to disclose the substance of the alleged fraud it is investigating. From the vantage of the defendant, the government appears to employ a lengthy seal period to build a case at its leisure and to avoid having to actually litigate the matter. I would certainly be interested in hearing of any instances where defendants sought to unseal a matter on behalf of their client in order to force the matter into civil litigation as the article suggests.
A. Brian Albritton
July 18, 2012
