The False Claims Act (FCA) serves as the United States Government’s primary civil remedy to combat and restore false claims for government property and funds under government programs and contracts. In 2017 alone, the United States Department of Justice obtained over $3.7 billion in settlements and judgments which involved fraud and false claims against the United States Government. Of the $3.7 billion in settlements and judgments obtained, $2.4 billion involved the health care industry, which includes, but is not limited to, drug companies, hospitals, pharmacies, laboratories, and physicians. In addition to fraud associated with the health care industry in 2017, the FCA also served to redress false claims arising in many other areas, such as “defense and national security, food safety and inspection, federally insured loans and mortgages, highway funds, small business contracts, agricultural subsidies, disaster assistance, and import tariffs.”
Looking closer at statistics provided by the Department of Justice on FCA suits, Fiscal Year 2017 marks the eighth consecutive year that the United States Government has recovered more than $3 billion in FCA matters. According to Acting Assistant Attorney General of the Justice Department’s Civil Division, Chad A. Readler, “[e]very day, dedicated attorneys, investigators, analysts, and support staff at every level of the Justice Department are working to root out fraud and hold accountable those who violate the law and exploit critical government programs. The recoveries . . . are a testament to the efforts of these valuable public servants and a message to those who do business with the government that fraud and dishonesty will not be tolerated.”
Qui Tam Actions
Of the $3.7 billion recovered in FCA suits during Fiscal Year 2017, $3.4 billion were connected to lawsuits filed under the qui tam provisions of the FCA. . Obviously, this is quite a significant statistic, as qui tam lawsuits made up approximately 92% of the billions of dollars recovered by the Government. Additionally, the United States Government paid out $392 million to those individuals who helped exposing the fraud and false claims by filing a qui tam complaint during Fiscal Year 2017. 
As Chad Readler noted, “[b]ecause those who defraud the government often hide their misconduct from public view, whistleblowers are often essential to uncovering the truth. The Department’s recoveries this past year continue to reflect the valuable role that private parties can play in the government’s effort to combat false claims concerning government contracts and programs.”
How Do Qui Tam Actions Work?
A qui tam action occurs when a private party—a “relator”—brings an action on the government’s behalf. In a qui tam action, the government, not the relator, is considered to be the “real” plaintiff. However, even though the Government is the real plaintiff in a qui tam action, the relator still receives a share of the award if the lawsuit is successful.
Under §3730(b) of the False Claims Act, any person who has evidence or knowledge of fraud against the government may file a qui tam lawsuit. The complaint must be filed confidentially in camera—or privately—and under seal. After the complaint is file, the government will want to interview the whistleblower and gather all of the evidence surrounding the potential fraud claim. After investigating the situation, the United States Government has the choice to “intervene” in the action (i.e. take over the primary responsibility for prosecuting the action) or they can decline to intervene, allowing the relator to proceed individually with the action. If the government does decide to intervene in the action, the relator is entitled to between fifteen (15) and twenty-five (25) percent of the amount recovered by the Government in the action; however, if the government does not decide to intervene, then the relator becomes entitled to twenty-five (25) to thirty (30) percent of the amount recovered in the action. If the qui tam action is successful, (1) the relator’s share is paid out from the amount recovered by the government from the defendants, and (2) the relator is entitled to legal fees and other expenses incurred in the action.
Each year, state and federal governments pay billions of dollars for nursing home care, medical devices, hospital care, and pharmaceutical drugs through Medicaid, Medicare, and other programs. As such, fraud within the healthcare industry continues to be the biggest contributor to the amount of money recovered by the federal government through FCA actions year in and year out.
Recent FCA Actions in the Healthcare Industry:
- Shire Pharmaceuticals LLC paid $350 million to settle federal and state False Claims Act allegations that Shire and Advanced Bio Healing employed “kickbacks” and other illegal methods to induce healthcare clinics and physicians to overuse its bioengineered human skin substitute product.
- Mylan Inc. and Mylan Specialty L.P. agreed to pay $465 million to resolve claims that they violated the False Claims Act when they knowingly misclassified EpiPen as a generic drug in order to avoid paying rebates owed to Medicaid as required by the Medicaid Drug Rebate Program.
- Life Care Centers of America Inc. agreed to pay $145 million to settle a government lawsuit alleging that Life Care violated the False Claims Act when they knowingly caused skilled nursing facilities to submit false claims to Medicare and TRICARE for rehabilitation services that were not reasonable, necessary, or skilled.
- eClinicalWorks (ECW) paid a total of $155 million to resolve a False Claims Act lawsuit alleging ECW falsely obtained certification for the company’s electronic health records software when they concealed from its certifying entity that its software did not comply with certification requirements. Additionally, the $155 million settlement resolved allegations that ECW paid kickbacks to customers in exchange for the promotion of its product.
Government and Defense Contract Fraud
In 2017, the United States Government recovered $220 million from government and defense contract fraud. This was an increase from the previous year, where only $122 million was recovered by the Government.
Recent Government and Defense Contract Fraud FCA Actions:
- Agility Public Warehousing Co., KSC (Agility) agreed to resolve allegations that Agility overcharged the United States when they performed contracts with the Department of Defense to supply food to United States troops from 2003 to 2010. Agility agreed to pay $95 million to settle the lawsuits.
- Bechtel National Inc., Bechtel Corp., URS Corp., and URS Energy and Construction, Inc. agreed to pay $125 million to resolve allegations under the False Claims Act that they made false statements and claims to the Department of Energy, as well as improperly used federal contract funds to pay for a multi-year lobbying campaign of Congress and other federal officials to continue funding.
- Energy & Process Corporation (E&P) agreed to pay $4.6 million for knowingly failing to perform the required quality assurance procedures and supplying defective steel reinforcing bars in connection with a contract to construct a Department of Energy nuclear waste treatment facility.
- CA Inc. paid $45 million to resolve allegations under the False Claims Act that it made false statements and claims in the negotiation and administration of a General Service Administration contract for software licenses and maintenance services.
- ADS Inc. settled False Claim Act allegations that they knowingly conspired with and caused small businesses to submit false claims for payment in connection with fraudulently obtained business contracts for $16 million.
We Are Here to Help
It is important to speak with an experienced lawyer who has handles qui tam or whistleblower claims. The lawyers at Miller Law Group in Raleigh, North Carolina, have represented numerous whistleblowers and actions against those individuals and/or businesses that wrongly billed the government for services.
If you believe you have a whistleblower claim, contact Miller Law Group for a free consultation.
 See Justice Department Recovers Over $3.7 Billion From False Claims Act Cases in Fiscal Year 2017, THE UNITED STATES DEPARTMENT OF JUSTICE, https://www.justice.gov/opa/pr/justice-department-recovers-over-37-billion-false-claims-act-cases-fiscal-year-2017 (Dec. 21, 2017).
 Fraud Statistics – Overview, THE UNITED STATES DEPARTMENT OF JUSTICE, https://www.justice.gov/opa/press-release/file/1020126/download (Dec. 19, 2017).
 See, Justice Department Recovers Over $3.7 Billion From False Claims Act Cases in Fiscal Year 2017, THE UNITED STATES DEPARTMENT OF JUSTICE, https://www.justice.gov/opa/pr/justice-department-recovers-over-37-billion-false-claims-act-cases-fiscal-year-2017 (Dec. 21, 2017).
 See id.
 “Qui tam action”, CORNELL LAW SCHOOL, https://www.law.cornell.edu/wex/qui_tam_action.
 See 31 U.S.C. § 3730(b)(1).
 See Shauna Itri, An Introduction to Whistleblower/Qui Tam Claims, AMERICAN BAR ASSOCIATION, https://www.americanbar.org/groups/young_lawyers/publications/the_101_201_practice_series/an_introduction_to_whistleblower_qui_tam_claims.html (last visited July 19, 2018).
 See id.
 See The False Claims Act: A Primer, THE UNITED STATES DEPARTMENT OF JUSTICE, https://www.justice.gov/sites/default/files/civil/legacy/2011/04/22/C-FRAUDS_FCA_Primer.pdf (last visited July 19, 2018).
 See Itiri, supra note 14.
 See “Shire PLC Subsidiaries pay $350 Million to Settle False Claims Act Allegations”, THE UNITED STATES DEPARTMENT OF JUSTICE, https://www.justice.gov/opa/pr/shire-plc-subsidiaries-pay-350-million-settle-false-claims-act-allegations (Jan. 11, 2017).
 See “Mylan Agrees to Pay $465 Million to Resolve False Claims Act Liability for Underpaying EpiPen Rebates”, THE UNITED STATES DEPARTMENT OF JUSTICE, https://www.justice.gov/opa/pr/mylan-agrees-pay-465-million-resolve-false-claims-act-liability-underpaying-epipen-rebates (Aug. 17, 2017).
 See “Life Care Centers of America Inc. Agrees to Pay $145 Million to Resolve False Claims Act Allegations Relating to the Provision of Medically Unnecessary Rehabilitation Therapy Services”, THE UNITED STATES DEPARTMENT OF JUSTICE, https://www.justice.gov/opa/pr/life-care-centers-america-inc-agrees-pay-145-million-resolve-false-claims-act-allegations (Oct. 24, 2016).
 See “Electronic Health Records Vendor to Pay $155 Million to Settle False Claims Act Allegations”, THE UNITED STATES DEPARTMENT OF JUSTICE, https://www.justice.gov/opa/pr/electronic-health-records-vendor-pay-155-million-settle-false-claims-act-allegations (May 31, 2017).
 See Fraud Statistics – Department of Defense, THE UNITED STATES DEPARTMENT OF JUSTICE, https://www.justice.gov/opa/press-release/file/1020111/download (Dec. 19, 2017).
 See “Defense Contractor Resolves Criminal, Civil, and Administrative Liability Related to Food Contracts”, THE UNITED STATES DEPARTMENT OF JUSTICE, https://www.justice.gov/opa/pr/defense-contractor-resolves-criminal-civil-and-administrative-liability-related-food (May 26, 2017).
 See “United States Settles Lawsuit Against Energy Department Contractors for Knowingly Mischarging Costs on Contract at Nuclear Waste Treatment Plant”, THE UNITED STATES DEPARTMENT OF JUSTICE, https://www.justice.gov/opa/pr/united-states-settles-lawsuit-against-energy-department-contractors-knowingly-mischarging (Nov. 23, 2016).
 See “Energy & Process Corp. Agrees to Pay 4.6 Million for Alleged False Claims Regarding Defective Steel Rebar and Quality Control Failures in Nuclear Waste Treatment Facility”, THE UNITED STATES DEPARTMENT OF JUSTICE, https://www.justice.gov/opa/pr/energy-process-corp-agrees-pay-46-million-alleged-false-claims-regarding-defective-steel (April 24, 2017).
 See “CA Inc. to Pay $45 Million for Alleged False Claims on Government-Wide Information Technology Contract”, THE UNITED STATES DEPARTMENT OF JUSTICE, https://www.justice.gov/opa/pr/ca-inc-pay-45-million-alleged-false-claims-government-wide-information-technology-contract (March 10, 2017).
 See “Defense Contractor ADS Inc. Agrees to Pay $16 Million to Settle False Claims Act Allegations Concerning Fraudulently Obtained Small Business Contracts”, THE UNITED STATES DEPARTMENT OF JUSTICE, https://www.justice.gov/opa/pr/defense-contractor-ads-inc-agrees-pay-16-million-settle-false-claims-act-allegations (Aug. 10, 2017).