Kusserow’s Corner: DOJ Reports Recoveries of $3.8 Billion from False Claim Act Cases in 2013


The Department of Justice (DOJ) secured $3.8 billion in settlements and judgments from civil cases involving fraud against the government in the fiscal year ending September 30, 2013. This dollar amount, which is the second largest annual recovery of its type in history, brings total recoveries under the False Claims Act (FCA) since January 2009 to $17 billion. It is also the fourth year in a row that the DOJ’s recovery efforts brought more than $3 billion. However, it was less than last year’s nearly $5 billion in recoveries. As in previous years, health care represented the largest amount at $2.6 billion, and for the fourth year in a row was over $2 billion. In second place was procurement fraud (related primarily to defense contracts) accounted for another $890 million.

Most false claims actions are filed under the FCA’s whistleblower, or qui tam, provisions, which allow private citizens to file lawsuits alleging false claims on behalf of the government. If the government prevails in the action, the whistleblower, known as a relator, receives up to 30 percent of the recovery. The number of qui tam suits filed in fiscal year 2013 rose by 100 to a record number of 752. Recoveries in qui tam cases during fiscal year 2013 totaled $2.9 billion out of the total of $3.8 billion in recoveries, with whistleblowers recovering $345 million.

Health Care Fraud

From January 2009 through the end of the 2013, the DOJ used the FCA to recover $12.1 billion in federal health care dollars. Most of these recoveries relate to fraud against Medicare and Medicaid. Some of the largest recoveries this past fiscal year involved the pharmaceutical and medical device industries that accounted for $1.8 billion. The DOJ recovered an additional $443 million for state Medicaid programs. Many of these settlements involved allegations that pharmaceutical manufacturers improperly promoted their drugs for uses not approved by the FDA—a practice known as “off-label marketing.” Some of the largest settlements included:

  • Abbott Laboratories Inc. paid $1.5 billion to resolve allegations that it illegally promoted the drug Depakote to treat agitation and aggression in elderly dementia patients and schizophrenia when neither of these uses was approved as safe and effective by the FDA.
  • Amgen Inc. paid $762 million to settle allegations that included its illegal promotion of Aranesp, a drug used to treat anemia, in doses not approved by the FDA and for off-label use to treat non-anemia-related conditions.
  • Ranbaxy USA Inc. paid $505 million to settle allegations of false claims to federal and state health care programs for adulterated drugs distributed from its facilities in India.

The Civil Division’s Consumer Protection Branch’s U.S. Attorneys obtained 16 criminal convictions and more than $1.3 billion in criminal fines, forfeitures and disgorgement under the federal Food, Drug and Cosmetic Act (FDC Act). The FDC Act protects the health and safety of the public by ensuring, among other things, that drugs intended for use in humans are safe and effective for their intended uses and that the labeling of such drugs bears true, complete and accurate information.

The following highlights some other cases of health care fraud, including:

  • A $237 million judgment against South Carolina-based Tuomey Healthcare System Inc., after a four-week trial, for violating the Stark Law and the FCA.
  • A $26.3 million settlement with Steven J. Wasserman M.D., a dermatologist practicing in Florida, to resolve allegations that he entered into an illegal kickback arrangement with Tampa Pathology Laboratory that resulted in increased claims to Medicare. Tampa Pathology Laboratory previously paid the government $950,000 for its role in the alleged scheme. This was one of the largest individual settlements in the history of the FCA.

Richard P. Kusserow served as DHHS Inspector General for 11 years. He currently is CEO of Strategic Management Services, LLC (SM), a firm that has assisted more than 3,000 organizations and entities with compliance related matters. The SM sister company, CRC, provides a wide range of compliance tools including sanction-screening.

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Copyright © 2013 Strategic Management Services, LLC. Published with permission.