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2013: The Year in Federal Fraud Recoveries

In case you missed it, the Department of Justice (DOJ) recently announced its annual False Claims Act (FCA) recovery statistics. According to Assistant Attorney General Stuart F. Delery, in fiscal year 2013, DOJ’s Civil Division secured $3.8 billion in fraud settlements and judgments (considerably less than the previous fiscal year’s record-setting total of nearly $5 billion, but still a substantial sum).

As in past years, the lion’s share of the total in FY 2013 came from health care fraud cases, with $2.6 billion in recoveries. Contract fraud cases accounted for $890 million of the total—a new record according to the announcement.

The total amount recovered under the FCA since 1986, when the law was substantially strengthened by amendments sponsored by Senator Chuck Grassley (R-Iowa) and former Representative Howard Berman (D-Calif.), now stands at $38.9 billion. About 11 percent of that amount was awarded to the whistleblowers who exposed the fraud and false claims by filing lawsuits under the qui tam provisions of the FCA, which entitles them to a share of the recovery.

“These recoveries would not have been possible without the brave contributions made by ordinary men and women who made extraordinary sacrifices to expose fraud and corruption in government programs,” remarked Assistant Attorney General Delery.

The FCA—also known as the “Lincoln Law”—celebrated its 150th anniversary in 2013. Here are some of the notable FCA recoveries that occurred during 2013:

  • AT&T: $18.25 million paid to settle allegations that the company improperly billed a federal program that provides telecommunications access to the disabled
  • Caddell Construction Company: $1.15 million settlement of allegations that it falsified its compliance with federal programs to help disadvantaged small businesses; in December 2012, Caddell Construction paid $2 million to resolve criminal fraud claims in the matter
  • CH2M Hill: $19 million joint civil/criminal settlement and an admission that it had encouraged employees to submit falsified time cards at the Department of Energy’s Hanford Nuclear Site
  • Fluor: $1.1 million settlement of allegations that it engaged in illegal lobbying while managing part of the Hanford Site (see this Project On Government Oversight blog post for more details about the case)
  • General Electric: $6.6 million settlement of allegations that it submitted false claims in connection with defense contracts for aircraft fuel tanks and other components
  • Northrop Grumman: $11.4 million settlement of allegations that it improperly billed the government for employee costs
  • Pfizer: payment of $490.9 million and a guilty plea to a Federal Food, Drug and Cosmetic Act violation by its Wyeth division for improperly marketing a kidney transplant drug
  • SAIC: $11.75 million settlement of allegations of submitting inflated bills on a federal anti-terrorism grant program; $5.75 million settlement of allegations that it submitted false information to the government in order to win a contract
  • United Technologies: $664 million court judgment against its Pratt & Whitney subsidiary for overbilling the Air Force in the 1980s for jet engines (more information about this case can be found in this POGO blog post)

On the sesquicentennial of its enactment, the FCA is still an effective weapon for fighting fraud. How effective? Consider the record-setting recoveries the DOJ announces every year. And consider a study released by the Taxpayers Against Fraud Education Fund in October 2013 that found the government recovers $20 for every $1 it invests in prosecuting health care fraud under the FCA.