DOJ Sets Record for Health Care Fraud Recoveries in FY 2012

In fiscal year (FY) 2012, the Department of Justice (DOJ) recovered over $3 billion in health care fraud out of a total of $4.9 billion in settlements and judgments in civil cases involving fraud against the government, according to Tony West, Acting Associate Attorney General, and Stuart F. Delery, Principal Deputy Assistant Attorney General for the Civil Division. This amount topped the previous record for health care fraud recoveries, which was set in FY 2011. The DOJ explained that from January 2009 through the end of the 2012 fiscal year, it used the False Claims Act (FCA) to recover more than $9.5 billion in federal health care dollars, a record for any four-year period. Most of the recoveries were related to fraud against Medicare and Medicaid.

Qui tam Suits Key to Recoveries Under the FCA

Because most false claims actions are filed under the FCA’s whistleblower, or qui tam, provisions, which allow private citizens to file suits alleging false claims on behalf of the government, the DOJ stressed the significance of strengthening the FCA’s qui tam provisions. Specifically, the DOJ noted that (1) in 1986, Senator Charles Grassley and Representative Howard Berman successfully led efforts in Congress to amend the False Claims Act to encourage whistleblowers to come forward with allegations of fraud, (2) in 2009, Senator Patrick J. Leahy along with Senator Grassley and Representative Berman advocated for the Fraud Enforcement and Recovery Act of 2009 (P.L. 111-21); and (3) in 2010, the passage of the Patient Protection Affordable Care Act (P.L. 111-148) provided additional inducements and protections for whistleblowers and strengthened the provisions of the federal health care Anti-Kickback Statute. The increased incentives for whistleblowers have led to an unprecedented number of investigations and greater recoveries, the DOJ said. Of the $4.9 billion in fiscal year 2012 recoveries, a record $3.3 billion was recovered in whistleblower suits. In FY 2012 alone, relators filed 647 qui tam suits. Of the nearly 8,500 qui tam suits filed since the 1986 amendments, nearly 2,200 were filed since January 2009. Looking at qui tam recoveries for the same periods, the department tallied $24.2 billion since 1986, with nearly $10.5 billion of that amount recovered from January 2009 through fiscal year 2012. Since 1986, whistleblowers have been awarded nearly $4 billion, with $439 million in awards in fiscal year 2012.

Recoveries From Pharmaceutical Industry Top the List

The DOJ attributes the steady, significant and continuing success in health care fraud recoveries in part to the high priority placed by the administration on fighting health care fraud, including the creation of an interagency task force, the Health Care Fraud Prevention and Enforcement Action Team (HEAT) in 2009 to increase coordination and optimize criminal and civil enforcement. This coordination has yielded historic results,

The largest recoveries, nearly $2 billion, involved enforcement actions against the pharmaceutical and medical device industry that alleged false claims for drugs and medical devices under federally insured health programs. These cases returned $745 million to state Medicaid programs. Two of the top three settlements were with GlaxoSmithKline LLC (GSK) and Merck, Sharp & Dohme (Merck). GSK paid $1.5 billion (part of a $3 billion global settlement including criminal fines and forfeitures as well as state Medicaid recoveries) to resolve False Claims Act allegations that the company: (1) promoted the drugs for uses not approved by the Food and Drug Administration and paid kickbacks to physicians to prescribe those drugs as well as other drugs; (2) made false and misleading statements concerning the safety of the drug Avandia®; and (3) reported false best prices and underpaid rebates owed under the Medicaid Drug Rebate Program. The settlement with GSK is the largest health care fraud settlement in U.S. history. The DOJ recovered $441 million, including interest, from Merck to resolve allegations that the company promoted the drug Vioxx® for off-label use for relief of rheumatoid arthritis and company representatives made inaccurate, unsupported or misleading statements about Vioxx’s® cardiovascular safety to increase sales, resulting in payments by federal health care programs. In addition, Merck paid nearly $322 million in criminal fines and returned more than $200 million to state Medicaid programs. An additional $561 million False Claims Act settlement with Abbott Laboratories Inc., part of a $1.5 billion global resolution will be reflected in FY 2013 numbers.

In addition to the success under the FCA, the Civil Division, through its Consumer Protection Branch and U.S. Attorneys across the country obtained 14 criminal convictions and $1.5 billion in criminal fines and forfeitures under the Food, Drug and Cosmetic Act (FDCA).