False Claims Act Feeding Frenzy

While everyone likes to write about the FCPA, the UK Bribery Act and other hot topics, False Claims Act enforcement and litigation continue to increase and the size of money awards grow and grow.

The Justice Department likes to trumpet its awards on the FCPA, and they frequently cite 2010 as a banner year with fines of over $1 billion.  But imagine if FCPA fines were seven times greater!!!

Between January 2009 and June 2011, the Department of Justice recovered more than $7.3 billion in civil settlements and judgments under the False Claims Act.  This trend is likely to continue and may even increase.  There are currently over 1400 qui tam cases under seal which the government is still reviewing.  for which the government has yet to reach a decision on intervention.

The Justice Department's powers to enforce the FCA were enhanced with recent amendments to the law, especially its new-found authority to issue civil investigative demands.  in the first quarter of 2011, the Justice Department filed over forty new cases.  Some experts in the area have suggested that there are at least ten new settlements being negotiated which will top a total of ten billion dollars.

The Obama Administration has made fighting fraud a top priority and the results are dramatic.  The Administration is committed to continuing this fight.  Legislation was recently introduced in Congress to increase funding for FCA enforcement activities.  Vice President Biden will lead an 11-member "Government Accountability and Transparency Board," that will seek even more ways to "detect and remediate fraud, waste, and abuse in Federal programs."  The Centers for Medicare & Medicaid Services ("CMS") announced that starting July 1, 2011, CMS began using predictive modeling technology to identify fraudulent Medicare claims.  State government are following suit as well and amending thier own fraud laws and increase state recoveries.

During 2011, the Justice Department and sister agencies announced numerous record-setting FCA settlements.

-- In January 2011, a technology company agreed to pay $46 million to settle claims that a company it acquired in 2010 submitted false claims and caused others to submit false claims to the GSA and other federal agencies.

-- In February 2011, a pharmaceutical company pleaded guilty to a misdemeanor violation and settled FCA claims stemming from the alleged illegal promotion of an epilepsy drug for a total of  $102 million.

-- In March 2011, an Illinois medical products company agreed to pay $85 million to settle a whistle-blower lawsuit accusing the company of paying kickbacks to hospitals and companies that bought supplies paid for by federal health care programs

-- In April 2011, a telecommunications company agreed to pay $93.5 million to resolve allegations that the company and its subsidiary overcharged the GSA on voice and data telecommunications services contracts. 

-- In April 2011, a pharmaceutical company announced that it had reached a settlement in principle to resolve a qui tam action filed against it by the pharmacy Ven-A-Care of the Florida Keys, Inc. for $154 million.  (Ven-a-Care has won settlements in at least 18 suits and since 2000 has won awards of over $380 million.)

-- In June 2011, two oil and gas companies and their affiliates agreed to pay more than $17 million to settle allegations that the companies underpaid royalties owed on natural gas produced from federal and Indian leases.

The aggressive FCA trend is likely to continue -- and may even increase -- as more and more whistle-blowers seek the financial rewards of asserting FCA claims with the government's assistance.