In one of the highest annual coveries in the history of the False Claims Act, more than half of the $4.7 billion obtained in settlements and judgments from civil cases involving fraudulent and false claims in the 2016 fiscal year came from the health care industry.
According to Benjamin C. Mizer, head of the Justice Department’s Civil Division, $2.5 billion of the recoveries were from drug companies, medical device companies, laboratories, hospitals, nursing homes and physicians.
Under the False Claims Act, the government is able to bring litigation against companies to redress false claims for government funds and property under government contracts. This includes a wide range of areas, such as defense and national security, disaster insurance, highway funds, small business contracts and more.
The $2.5 billion number only accounts for federal losses, which means the health care industry ended up paying far more in 2016.
“In many of these cases, the Department was instrumental in recovering additional millions of dollars for state Medicaid programs,” the Department of Justice said in a news release. “This is the seventh consecutive year the Department’s civil health care fraud recoveries have exceeded $2 billion.”
Largest Recoveries Came From Drug and Medical Device Industry
The largest recoveries this past year came from the drug and medical device industry, totaling $1.2 billion.
Wyeth and Pfizer Inc. paid $784.6 million in April 2016 to resolve federal and state claims that Wyeth knowingly reported false and fraudulent prices on two drugs used to treat symptoms of acid reflux and ulcers.
“In a complaint filed in 2009, the government alleged that Wyeth failed to report deep discounts on Protonix Oral and Protonix IV that it made available to thousands of hospitals nationwide,” said the Department of Justice in an April 2016 news release. “As part of the settlement, Wyeth and Pfizer do not deny the government’s allegations.”
In November 2015, Novartis Pharmaceuticals Corp. agreed to a $390 million settlement over claims that it gave kickbacks to specialty pharmacies in exchange for recommending two of its drugs. The settlement included 306.9 million to the federal government and $83.1 million to state Medicaid programs.
“Today’s settlement with Novartis should serve as a warning to companies who choose to operate their businesses with kickbacks rather than honesty – those companies will pay more in the long run,” FBI Assistant Director-in-Charge Diego Rodriguez said in a November 2015 press release. “Doctors should be advising patients based on medical facts, not pharmacies based on dollar signs.”
Strengthened False Claims Act Led to More Recoveries
In recent years, the government has been recovering more money under the False Claims Act than ever before. Since the 2009 fiscal year, more than $31.3 billion has been recovered with $19.3 billion of that money coming from health care fraud claims.
“Congress amended the False Claims Act 30 years ago to give the government a more effective tool against false and fraudulent claims against federal programs,” Mizer said in a news release.
An amendment to the act in 1986 increased incentives for whistleblowers to file lawsuits on behalf of the government. In some cases, whistleblowers can receive up to 30 percent of the recovery if the government prevails in the action. Since 2009 the government recovered nearly $24 billion from these cases and paid out more than $4 billion in whistleblower awards.
The increase in whistleblower cases over the past few years has the dual effect of keeping businesses accountable and benefiting citizens who depend on a variety of federal programs.
“In short, Americans across the country are healthier, enjoy a better quality of life, and are safer because of our continuing success in protecting taxpayer funds from misuse,” Mizer said.