Whistleblowers once again led the charge in the government’s fight against fraud in fiscal year 2020, with “qui tam” cases initiated by whistleblowers securing over 70% of the government’s $2.2 billion recovered under the False Claims Act.
Out of that total for False Claims Act settlements and judgments, $1.6 billion was due to qui tam lawsuits.
“Whistleblowers with insider information are critical to identifying and pursuing new and evolving fraud schemes that might otherwise remain undetected,” said Acting Assistant Attorney General Jeffrey Bossert Clark in a press release.
In FY 2020, the government paid $309 million to whistleblowers as rewards, based on their share of the recoveries from their qui tam lawsuits.
“These individuals often make substantial sacrifices to bring these schemes to light, and our efforts to protect taxpayer funds continue to benefit from their actions,” concluded Clark.
The largest portion of FY 2020 recoveries stemmed from fraud in the healthcare industry, primarily by pharmaceutical manufacturers. Healthcare settlements accounted for nearly $1.86 billion of the total recovered under the False Claims Act in FY 2020.
In the press release, DOJ highlighted kickbacks in the healthcare industry as particularly “pernicious because of their potential to subvert medical decision-making.”
Phillips & Cohen settled several qui tam cases alleging kickback schemes in FY 2020, including a whistleblower case against ResMed Corp, which allegedly paid kickbacks to suppliers and sleep labs. That case and four other qui tam lawsuits settled for a total of $39.5 million
Separately, Phillips & Cohen’s case against West Virginia medical center Wheeling Hospital alleging kickbacks to doctors settled for $50 million. The settlement amount was significant for the amount a single hospital paid to settle alleged violations of the Stark Law, which generally prohibits payments for certain patient referrals.
In FY 2020, DOJ joined a Phillips & Cohen lawsuit alleging wide-scale fraud by AECOM and certain New Orleans-area institutions involving Federal Emergency Management Agency funds. Xavier University of Louisiana settled its liability in the case for $12 million in June.
Regarding total False Claims Act recoveries, one reason for concern is a significant drop in the annual amount. Total recoveries for the year hit the lowest annual amount recovered under the False Claims Act since FY 2008, when only $1.48 billion was recovered. The high point for False Claims Act recoveries came in 2013, when $6.15 billion was recovered.
Faltering recoveries notwithstanding, whistleblowers continued to file hundreds of qui tam lawsuits alleging fraud on behalf of the government, launching 672 new qui tam matters in FY 2020.
To date, the federal government has recovered more than $46.52 billion as a result of whistleblower cases since 1986, when Congress overhauled the False Claims Act. This total excludes billions in criminal fines and qui tam recoveries by state governments.
The False Claims Act allows individuals to sue entities that are defrauding the government and recover funds on the government’s behalf. Learn more about the False Claims Act, qui tam lawsuits and whistleblower protections.
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