The U.S. Department of Justice obtained a record $5.69 billion in settlements and judgments from civil cases involving fraud and false claims against the government in the fiscal year ending September 30, Acting Associate Attorney General Stuart F. Delery and Acting Assistant Attorney General Joyce R. Branda for the Civil Division announced. This is the first time the department has exceeded $5 billion in cases under the False Claims Act, and brings total recoveries from January 2009 through the end of the fiscal year to $22.75 billion – more than half the recoveries since Congress amended the False Claims Act 28 years ago to strengthen the statute and increase the incentives for whistleblowers to file suit.
“In the past three years, we have achieved the three largest annual recoveries ever recorded under the statute,” said Acting Associate Attorney General Delery. “This sustained success demonstrates that these figures result not only from large individual matters, but from a continuous commitment year after year to pursue those who defraud taxpayers and to remain vigilant in identifying those who would unlawfully obtain money from the federal fisc.”
The recoveries reflect the administration’s priorities to hold the financial industry accountable for its part in the gross misconduct that led to the housing and mortgage crisis, and to continue to root out fraud in the health care industry. In fiscal year 2014, the department recovered an unprecedented $3.1 billion from banks and other financial institutions involved in making false claims for federally insured mortgages and loans.
False claims against federal health care programs such as Medicare and Medicaid accounted for another $2.3 billion. These amounts reflect federal losses only. In many of these cases, the department was instrumental in recovering additional billions of dollars for consumers and state treasuries.
The False Claims Act is the government’s primary civil remedy to redress false claims for government funds and property under government contracts, including national security and defense contracts, as well as under government programs as varied as Medicare, veterans’ benefits, federally insured loans and mortgages, transportation and research grants, agricultural supports, school lunches and disaster assistance. With more whistleblowers coming forward since the act was strengthened in 1986, the government opened more investigations, which led to the surge in recoveries we see today.
Most false claims actions are filed under the act’s whistleblower, or qui tam, provisions that allow individuals to file lawsuits alleging false claims on behalf of the government. If the government prevails in the action, the whistleblower, known as a relator, receives up to 30 percent of the recovery. The number of qui tam suits filed in fiscal year 2014 exceeded 700 for the second year in a row. Recoveries in qui tam cases during fiscal year 2014 totaled nearly $3 billion, with whistleblowers receiving $435 million.
Housing and Mortgage Fraud
The $3.1 billion in federal funds recovered in the wake of the housing and mortgage crisis this past fiscal year includes $1.85 billion from Bank of America Corporation, $614 million from JPMorgan Chase, $428 million from SunTrust Mortgage Inc. and $200 million from U.S. Bank. This brings recoveries for civil fraud and false claims against federal housing and mortgage programs from January 2009 through the end of fiscal year 2014 to $4.65 billion – an historic and important amount, especially as it restores scarce funds stolen from vital government programs.
For details about the settlements, see previously issued press releases on Bank of America, JPMorgan Chase, SunTrust and U.S. Bank.
Health Care Fraud
The $2.3 billion in health care fraud recoveries in fiscal year 2014 marks five straight years the department has recovered more than $2 billion in cases involving false claims against federal health care programs such as Medicare, Medicaid and TRICARE, the health care program for the military. This steady, significant and continuing success can be attributed to the high priority the Obama Administration has placed on fighting health care fraud.
In 2009, Attorney General Eric Holder and Health and Human Services Secretary Kathleen Sebelius announced the creation of an interagency task force, the Health Care Fraud Prevention and Enforcement Action Team (HEAT), to increase coordination and optimize criminal and civil enforcement. Additional information on the government’s efforts in this area is available at StopMedicareFraud.gov, a webpage jointly established by the Departments of Justice and Health and Human Services.
Other Fraud Recoveries and Actions
Although mortgage, housing and health care fraud dominated recoveries for fiscal year 2014, the department has aggressively pursued fraud in government procurement and other federal programs.
Significant recoveries include settlements with Hewlett-Packard Co. and The Boeing Co. Hewlett-Packard paid $32.5 million to resolve claims involving a contract for IT products and services with the U.S. Postal Service. Boeing paid $23 million to settle alleged false claims for labor on maintenance contracts for the C-17 Globemaster aircraft with the U.S. Air Force.
In addition, the government filed lawsuits against a number of government contractors.
Recoveries in Whistleblower Suits
Of the $5.69 billion the government recovered in fiscal year 2014, nearly $3 billion related to lawsuits filed under the qui tam provisions of the False Claims Act. During the same period, the government paid out $435 million to the individuals who exposed fraud and false claims by filing a qui tam complaint, often at great risk to their careers.
The number of qui tam suits rose from 30 in 1987, to 300 to 400 a year from 2000 to 2009, to more than 700 for each of the last two fiscal years. The growing number of qui tam lawsuits filed since 2009 has led to increased recoveries, which exceeded $2 billion for the first time in fiscal year 2010, and has approached or exceeded $3 billion ever since.
As recoveries increased, so have whistleblower awards. From January 2009 to the end of fiscal year 2014, the government paid awards in excess of $2.47 billion.
