Justice Department Announces $3.7 Billion in False Claims Act Recoveries-Ethics and Compliance in Dollars and Common Sense-Part 4 in a Series

By: Christine V. Williams on 01/03/2018

Compliance programs, such as those that have been touched upon by Outlook Law in its Ethics and Compliance Series, can reduce the liability of a company when bad acts are uncovered.  For instance, the Federal Sentencing Guidelines that Outlook Law has been exploring are used as a mitigation factor when bad acts occur.  Of the $3.7 Billion in recovery, $3.4 Billion was brought about by whistleblowers, which also enforces the piece written on tone from the top and reinforcement by executives and management (front line as we called it).  The following are some interesting pieces from the press release by the Department of Justice.

The Department of Justice (DOJ) announced $3.7 Billion in False Claims Act (FCA) recovery in its 2017 fiscal year.  According the to the DOJ, the FCA is the government’s primary civil remedy to redress fraud in claims for property and funds from the government, including healthcare and government contracting.  These include recovery against companies and individuals associated with those companies.  Some notable facts from the DOJ release:

  • Since 1986, with action by Congress to strengthen the FCA, recoveries have totaled more than $56 Billion
  • Health Care Industry
    • Of the $3.7 Billion, $2.4 Billion came from health care industry, including drug companies, hospitals, pharmacies, laboratories, and physicians
  • Some procurement fraud includes:
    • $95 Million settlement payment to the government and resolution of pursuit of any other claims by either party
    • $125 Million to resolve allegations by the Department of Energy for a contractor’s failure to follow applicable nuclear quality standards
    • $45 Million to resolve allegations of false statements and claims related to a GSA IT contract
  • Individual Accountability
    • Joint and Several Liability (Everyone is Liable for the Sum-a claimant may pursue an obligation against any one party as if they were jointly liable and it becomes the responsibility of the defendants to sort out their respective proportions of liability and payment)
    • Owners and Executives for private corporations agreed to be held jointly and severally liable for settlement payments with their corporations.
      • Founders of a company as well as executive employees jointly and severally liable for $155 Million settlement
      • An owner of a company agreed to be jointly and severally liable for the $145 Million settlement
      • Owners of ambulance company agreed to be jointly and severally liable for $12.7 million with their company
    • Individuals Not Jointly and Severally Liable
    • DOJ obtained more than $60 Million in settlements and judgements with individuals under the FCA that did not involve joint and several liability
  • Settlements with individuals included $20 Million, $18 Million, $3.8 Million, $1 Million and $750,000
  • Whistleblower Suits
  • Of the $3.7 Billion in settlements and judgements, $3.4 billion related to lawsuits filed under the qui tam (whistleblower) provisions of the FCA. During the same time frame, the government paid out $392 Million to whistleblowers who filed complaints
  • 669 qui tam suits were filed last year, with an average of 12 new suits filed every week

Outlook Law has run a series of Ethics and Compliance pieces and will continue to do so.  In an atmosphere of strict enforcement and high recoveries, as demonstrated by the Department of Justice statistics, it is important to remember and reinforce the core values of a company.