Federal Fraud Recoveries Decline in Fiscal Year 2017Tweet
January 2, 2018
On the Thursday before Christmas, the Department of Justice (DOJ) released its annual fraud recovery numbers. The DOJ announced it had recouped $3.7 billion through settlements and judgments in False Claims Act cases in fiscal year 2017.
This amount is nearly 23 percent lower than the previous fiscal year, but roughly in line with FY 2015's total. This seems to be a trend: a historical analysis of DOJ's fraud recoveries since 1986 (the year Congress substantially strengthened the False Claims Act) shows that, in recent years, a substantial drop-off occurs in non-election years.
Overall, since 1986, the False Claims Act has helped taxpayers claw back more than $56 billion—an average of $1.8 billion per year.
As in past years, the largest share of the recoveries—about two-thirds—involved health care fraud. But a substantial sum also came from some of Uncle Sam’s largest contractors:
- AECOM and Bechtel: $125 million to settle False Claims Act allegations that the contractors charged the government for deficient materials and services at the Hanford Nuclear Site. Separately, AECOM paid over $5.2 million to settle another fraud investigation involving its work at Hanford.
- Agility: $95 million to settle a 12-year-old case accusing the company of overcharging the government for food supplied to U.S. troops in the Middle East.
- Atlantic Diving Supply: $16 million for allegedly inducing the government to award small business contracts to companies misrepresenting their eligibility as socially or economically disadvantaged small businesses.
- Huntington Ingalls Industries: $9.2 million to resolve claims of overbilling the government for work at its Mississippi shipyards.
- Pacific Architects and Engineers: $5 million to settle allegations that it failed to properly screen and oversee personnel working on a contract to train Afghan security forces.
- Sierra Nevada Corporation: $14.9 million for allegedly causing the government to pay inflated labor costs on contracts.
- Defense contractors accounted for $220 million in fraud settlements and judgments.
According to the DOJ, of the $3.7 billion in fraud recoveries in FY 2017, $3.4 billion came from whistleblower lawsuits filed under the qui tam provisions of the False Claims Act. Since 1986, the government has awarded nearly $6.6 billion of its recoveries (12 percent of the total) to the whistleblowers who filed the lawsuits—often at great risk to their careers.
“Because those who defraud the government often hide their misconduct from public view, whistleblowers are often essential to uncovering the truth,” Acting Assistant Attorney General Chad Readler proclaimed in the DOJ announcement.
Senate Judiciary Committee Chairman Chuck Grassley (R-IA), a longtime champion of the False Claims Act who helped strengthen the law over the years, trumpeted the DOJ’s latest numbers.
“To those who doubt the value of whistleblowers and the False Claims Act, I’d just say: $56 billion and counting,” Grassley stated in a press release.
We’ll see if the federal fraud recovery trend continues and next year’s total shows an election-year increase. The DOJ recently indicated it will more aggressively seek to dismiss qui tam lawsuits when it concludes the case lacks merit, instead of allowing the whistleblower to proceed. A government motion for dismissal doesn’t automatically doom the lawsuit, although judges are more likely to side with the government and throw out the case. Depending on how strict the DOJ is when assessing a case’s merit, this policy change could substantially lower how much the government recovers from companies accused of defrauding or endangering the health and safety of U.S. taxpayers.
Neil Gordon is an investigator for the Project On Government Oversight. Neil investigates and maintains POGO's Federal Contractor Misconduct Database.
Topics: Contract Oversight
Authors: Neil Gordon
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