Top FCA Cases In FY 2016: Whistleblowers Help Recover $2.9 Billion

Top FCA Cases In FY 2016: Whistleblowers Help Recover $2.9 Billion

The U.S. Justice Department has achieved its third highest annual recovery in False Claims Act (FCA) history, recovering over $4.7 billion from civil cases involving fraud and false claims against the government in fiscal year (FY) 2016, the Justice Department reported Wednesday.

Of the $4.7 billion for FY 2016, the largest fraction, $2.5 billion in Federal losses, came from the health care industry. Recoveries from the financial industry fell in second place, with settlements and judgements involving federally insured residential mortgages hitting $1.7 billion in FY 2016.

The Department obtained nearly 61% of the $4.7 billion recovered via the aid of whistleblowers, industry insiders who choose to report information on fraud. Whistleblowers collected a total of $519 million in cash whistleblower awards for aiding in the government’s recovery of $2.9 million from the 702 qui tam suits filed in FY 2016.

Whistleblowers Collect $519 Million for Aiding FY 2016 FCA Recoveries

Federal and state False Claims Acts are the government’s primary tool for discovering cases of fraud against government programs and contracts and recovering funds lost to fraud, waste and abuse. Whistleblowers with inside information on fraud are able to file false claims actions under the qui tam provisions of the FCA.

When the government prevails in a false claims action, the whistleblower receives up to 30 percent of the total amount recovered.  An average of 13.5 new whistleblower lawsuits are filed each week. In FY 2016, whistleblowers filed 706 FCA suits and helped to recover $2.9 billion in lost government funds. The government awarded the FY 2016 whistleblowers a cumulative $519 million.

“The qui tam provisions provide a valuable incentive to industry insiders who are uniquely positioned to expose fraud and false claims to come forward despite the risk to their careers,” said Principal Deputy Assistant Attorney General Benjamin C. Mizer, head of the Justice Department’s Civil Division. “This takes courage, for which they are justly rewarded under the Act.”

Top 11 FCA Whistleblower Awards For FY 2016

  • Lauren Kieff and William LaCorte: Awarded $98.05 million of $784.60 million Wyeth and Pfizer case recovery
  • Ralph D. Williams: Awarded $84.43 million of $513 million Tenet Healthcare case recovery
  • David Kester: Awarded $66.40 million of $390 million Novartis case recovery
  • John Slowik: Awarded $51.1 million of $646 million Olympus Corp. case recovery
  • Leatrice Richards and Thomas Schuhmann: Awarded $38.2 million of $250 million cardiac device case with 457 U.S. hospitals
  • Amadeo Pesce and 5 others: Awarded $30.35 million of $256 million Millennium Health case recovery
  • Janet Halpin and Shawn Fahey: Awarded $24 million of $125 million RehabCare and Kindred case recovery
  • Lisa Alexander and James P. Goan: Awarded $22.9 million of $125 million Warner Chilcott case recovery
  • Lynntoya Washington, Michael T. Mahoney and two others: Awarded $11.3 million of $95.5 million Education Management Corp. case recovery
  • Brian Shields: Awarded $10 million of $67 million Genentech case recovery
  • Keisha Kelschenbach: Awarded $9.6 million of $64 million M&T Bank Corp. case recovery

Health Care Industry Dominates FY 2016 False Claims Act Recoveries

For the seventh consecutive year, civil recoveries from the health care industry exceeded $2 billion. Of the total $4.7 billion recovered from FCA in FY 2016, $2.5 billion in federal losses came from the health care industry – (not including the millions of dollars recovered for state Medicaid programs).

A majority of cases involved drug companies and the medical device industry ($1.2 billion), hospitals and outpatient clinics ($360 million), medical laboratories ($260 million) and nursing homes and skilled nursing facilities ($160 million).

5 Largest Health Care FCA Settlements In FY 2016:

Health care fraud recoveries like these not only restore valuable taxpayer dollars to federally funded programs such as Medicare and Medicaid, but ensure quality health care for our nation’s citizens and acts to deter others who are considering cheating the system for their own financial gain.

“These health care recoveries benefit vulnerable citizens in Medicare and Medicaid and the taxpayers who pay for those programs,” said Daniel R. Levinson, Inspector General of the U.S. Department of Health and Human Services.  “Beyond those significant settlements, though, my agency works to improve voluntary observance of federal laws through corporate integrity agreements addressing compliance weaknesses, and self-disclosures that encourage health care providers and other entities to voluntarily report suspected violations.”

Housing and Mortgage Fraud: Second Highest FY 2016 FCA Recoveries

In the second highest annual recovery in the history of the federally insured mortgage program and the second highest recovery category for FY 2016 FCA cases, the Justice Department recovered over $1.7 billion from housing and mortgage fraud settlements and judgements. Over the past 7 years, (including FY 2016) the Justice Department has recovered over $7 billion from housing and mortgage fraud.

  • Wells Fargo paid $1.2 billion after admitting that it had originated and endorsed residential mortgages as eligible for Federal Housing Administration (FHA) insurance when the mortgages did not meet requirements and failing to report deficiencies to authorities despite receiving internal notice of those deficiencies.
  • Freedom Mortgage Corp. paid $133 million after likewise admitting that it had originated and endorsed residential mortgages as eligible for FHA insurance when the mortgages did not meet requirements and failing to report deficiencies to authorities despite receiving internal notice of those deficiencies.

By authorizing the ineligible loans, Wells Fargo and Freedom Mortgage stole taxpayer dollars to boost their mortgage profits at little to no risk. FHA insurance eligibility requirements are intended to reduce the risk of default. Ignoring these requirements puts consumers at risk of losing their homes to foreclosure and increases the number of claims against the FHA when the loans enter default. Addressing deficiency reports revealing increased rates of underwriting deficiencies is critical to preventing violations and losses.

The suits and settlements reached in FY 2016 highlight the diversity of FCA cases pursued by the Justice Department and its dedication to combatting false claims against the government. Whistleblowers continue to contribute to this fight by reporting cases of fraud involving such varied areas as defense, health care, national security, federally insured loans and mortgages, food safety and inspection, small business contracts, highway funds, agricultural subsidies, tariffs and disaster assistance.