It is no secret that, as a whistleblower’s law firm, we are big fans of the False Claims Act (“FCA” or “the Act”). The Act holds liable any person/entity that presents a false or fraudulent claim for payment to the federal government (or an agency thereof) and/or create false records to that end. In essence, it forbids overcharging the government for goods or services or charging for goods/services that are never delivered. The Act’s qui tam provision is particularly powerful since it enables private individuals to bring suits on the government’s behalf. This is key because it is often private parties, rather than the government itself, who are aware of these fraudulent schemes. Recent trends show that the legislature and the courts are committed to working with whistleblowers and, more generally, to using the False Claims Act as a powerful tool to battle health care fraud and other forms of fraud on the U.S. government.
DOJ Nearly Doubles Per Claim False Claims Act Penalties
As Becker’s Hospital Review, a healthcare industry journal, reported last month, the Department of Justice (“DOJ”) recently published an interim final rule substantially increasing the monetary penalty for violations of the FCA. Previously, penalties ranged from $5,500 to $11,000 per claim. The new penalties nearly double the old ones and range from $10,781 to $21,563. These increased penalties took effect on August 1 and only apply to violations occurring after November 2, 2015. The increase was made pursuant to the Bipartisan Budget Act of 2015 which required agencies to increase FCA penalties and authorized rulemaking to implement a “catch up adjustment” to account for inflation. The DOJ is just one of the agencies updating penalties (the Railroad Retirement Board was the first), but it is certainly among the most impactful.
We feel that it is worth emphasizing that penalties are determined on a “per claim” basis. Most FCA cases involve numerous claims, often numbering in the hundreds or even thousands. Also, these penalties are in addition to the damages paid as restitution, that is the payment of money to right the wrong committed by the defendant(s).
Increased Commitment to Individual Liability
Another sign of the government’s commitment to the FCA is the increased attention to individual liability, an issue we discussed on this blog last month (see link below). As set forth in a DOJ memorandum issued in September 2015, referred to as the “Yates Memo,” the DOJ is working to increase legal accountability for individual corporate wrongdoing. The Memo opens with a clear commitment — “Fighting corporate fraud and other misconduct is a top priority of the Department of Justice” – and goes on to explain, “[o]ne of the most effective ways to combat corporate misconduct is by seeking accountability from the individuals who perpetrated the wrongdoing.”
The commitment to holding individuals accountable for corporate wrongdoing extends beyond the FCA, but the FCA is among the most powerful tools for carrying out the Yates Memo’s mission. The Memo sets forth several steps for fulfilling this commitment, including limiting cooperation credit to corporations that provide information about individuals involved in the wrongs and preserving the right to pursue individuals not specifically included as part of the resolution of a case against a corporation. Particularly important for our purposes is the directive that criminal and civil authorities involved in corporate investigations remain in routine contact with each other. FCA cases often involve both criminal and civil charges.
Strong FCA Recoveries, Including in Whistleblower Actions
Ultimately, the proof of the government’s commitment to the fight against fraud lies in the numbers. According to the DOJ’s annual report, the government recovered more than $3.5 billion from FCA cases in fiscal year 2015. That figure made 2015 the fourth year in a row that recoveries under the FCA exceeded $3.5 billion, bringing the total recovered from January 2009 through the end of FY2015 to $26.4 billion. Although 2015 saw a reduced recovery total compared to recent years, commentators say there is no reason to think there will be a reduced emphasis on FCA enforcement.
Whistleblower-led cases have been responsible for the majority of recent FCA recoveries. In FY2015, whistleblower-initiated FCA actions led to $2.8 billion in recoveries. Whistleblowers were awarded some $597 million in rewards for their role in these efforts. Between January 2009 and the close of FY2015, qui tam False Claims Act cases led to the recovery of $19.4 billion in awards and settlements with $3 billion paid to whistleblowers for their role in the actions. Whistleblowers filed 638 suits using the Act’s qui tam provisions in 2015, a sign that recoveries will continue to be strong in the years to come.
A Few Words on Whistleblowers
The government’s commitment to the FCA is also a commitment to the whistleblowers who initiate many FCA cases. Under the FCA, whistleblowers are protected from retaliation by the targets of the suit. This is especially important given that many whistleblowers are employees or former employees –who, absent protection, would remain vulnerable to retaliation in many forms, including former employers hampering future job prospects — of the companies involved in the fraudulent schemes. Additionally, the FCA also provides a substantial reward to whistleblowers whose cases lead to a government recovery. This reward ranges from 15 to 30 percent of the recovery and it applies whether the case is resolved by verdict or, as occurs more often, via settlement.
Concluding Thoughts on a Powerful Act from Your False Claims Act Law Firm
These are just a few examples that demonstrate the growing power of the False Claims Act. Other reasons to believe the FCA will continue to be a force for change include the Supreme Court’s favorable treatment of implied certification claims (see link to our coverage below) and the increased success by whistleblowers in cases where the government chooses not to intervene (also linked below) which shows just how seriously courts take cases even where the whistleblower proceeds alone.
We are proud to work with honest private citizens who refuse to sit back and accept fraud. If you believe you have witnessed fraud on the government, including health care fraud or government contracts fraud, please contact our False Claims Act whistleblower’s attorney. Together we can continue to make a very real difference.
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(Image of Cash by Nic McPhee; Image of Courthouse by Robert Linder)