August 23, 2023
In the fiscal year ending September 30, 2022, the federal government recovered $2.2 billion in penalties from defendants in settlements and judgments reached pursuant to the False Claims Act (FCA). Since the FCA was instituted, over $72 billion in such FCA recoveries have been made.
What makes this particularly interesting for potential whistleblowers with knowledge of fraud perpetrated against the government is that, when such a whistleblower institutes an FCA lawsuit, that individual has the potential to obtain a financial reward of between 15% and 30% of the total financial penalties levied against the defendant. Doing the math, many millions of dollars in financial rewards are paid out to private whistleblower plaintiffs each year for doing their civic duty of printing fraud against American taxpayers to light.
The FCA makes it illegal to, among other things, knowingly submit a false claim for payment to the federal government. Any individual or organization who defrauds the US government by violating the FCA can be sued under the FCA. Below are several common areas of fraud in which successful FCA claims have been pursued.
A leading type of fraud underlying successful FCA lawsuits is related to the federal Medicare and Medicaid programs, with over $1.7 billion in financial penalties levied against defendants accused of defrauding the government via these programs in fiscal year 2022. Additionally, individuals and organizations that exploit TRICARE, the federal health care program for military service members and their families, are liable pursuant to the FCA.
Examples of healthcare fraud that have formed the basis of recent successful FCA lawsuits include:
- A pharmaceutical company paid $260 million to resolve FCA claims related to rebates it received for a drug that the company improperly classified as a “new drug” in order to increase revenue.
- A California health system paid over $70 million in connection with an FCA complaint related to the defendant’s improper claims for reimbursements to the California Medicaid program, including requesting reimbursements for services that the company was already required to provide and services that were not eligible for reimbursement.
- Three nursing homes were fined for providing substandard nursing services.
- A healthcare provider was fined for requesting reimbursement for hospice services for patients who were deemed to not be critically ill.
- A pharmacy was fined over $2 million for submitting claims for drug prescriptions which were switched from lower-cost to higher-cost prescriptions without a valid reason.
The federal government has recently pursued claims related to fraud in connection with funds paid out related to the COVID-19 pandemic. This included 35 separate FCA lawsuits in fiscal year 2022 relating to fraudulent Paycheck Protection Program (PPP) payments made to businesses and individuals, including a claim brought against a regional bank for a fraudulent PPP loan.
Additionally, the federal government recovered $17.8 million from a healthcare company that used Covid vaccines earmarked for at-risk individuals for the company’s board of directors and financial contributors.
Military Procurement and Law Enforcement Fraud
Parties that supply goods and services to the US military may be sued for violating the FCA, and defendants include contractors, weapons manufacturers, and others. Recent examples of such FCA defendants include the following:
- An operator of living communities for military service members and their families was successfully sued for charging the government performance fees that it did not earn.
- A provider of logistics services in Operation Iraqi Freedom paid a substantial FCA penalty for receiving kickbacks from local providers.
- A contractor paid FCA penalties for providing defective material for bulletproof vests.
- Pursuant to the Department of Justice’s new Cybersecurity Initiative, a Florida company that received government funds to create a secure database for the health records of state department and Air Force personnel in Iraq and Afghanistan was fined under the FCA for not meeting the cybersecurity requirements of the program.
Other Types of Fraud
While Medicare/Medicaid fraud and military procurement fraud are among the most common types of fraud underlying FCA lawsuits, the language of the FCA is quite broad and can encompass any number of fraudulent business practices which result in the loss of funds to the federal government. Such recent examples include:
- Several large airlines with contracts to deliver US mail paid FCA fines for falsely reporting mail delivery statuses to the government.
- A company paid an FCA fine for using a subsidiary to obtain a government contract based on the status of the subsidiary as a small business, when the larger company actually did the bulk of the work related to the contract.
- A wireless phone company was found liable under the FCA for signing up ineligible customers for a federally funded program to provide free wireless service to low-income individuals.
Contact a California FCA Attorney Today
A plaintiff in a successful FCA lawsuit has the potential of obtaining a financial reward between 15% and 30% of the total penalties levied against the defendant. It is important to work with legal counsel with the experience to not only assist you in compiling and submitting your information in pursuit of obtaining the largest whistleblower reward possible – while at the same time protecting victims of fraud and promoting fair market competition – as well as the experience to protect you from retaliation and obtain justice on your behalf. If you have information that you believe may form the basis of an FCA claim, contact our office today to schedule a consultation with one of our attorneys to determine your next steps.