Feds recoup $3 billion in false claims in fiscal 2010

The Justice Department secured $3 billion in settlements and judgments from civil lawsuits in fiscal 2010, most often involving companies attempting to defraud the federal government, according to new Obama administration data.

The financial recoveries, the second highest in the nation's history and a 25 percent increase from fiscal 2009, were achieved primarily through investigations of public health care fraud, according to Tony West, assistant attorney general for Justice's civil division.

In total, the government returned $2.5 billion to federal programs and the U.S. Treasury through health care investigations -- its largest take ever. Payments by pharmaceutical and medical device manufacturers accounted for most of the settlements.

The Health and Human Services Department made the biggest recoveries, through the Medicare and Medicaid programs. The Office of Personnel Management, which administers the Federal Employees Health Benefits Program, and the Defense Department, which manages the TRICARE insurance program, also yielded high returns, according to Justice.

In a briefing with reporters on Monday, West said the recovered funds would have otherwise "padded the bank accounts of defendants who sought profit over quality reasonably priced health care, or profiteering from the wars in Southeast Asia or personal gain over supporting law enforcement with the best protection money can buy."

Officials brought in an additional $327 million in settlements through cases of financial fraud involving civilian government contracting, the Troubled Assets Relief Program and the $800 billion Recovery Act. And the government recouped another $10.6 million from Pentagon contractors operating in Iraq and Afghanistan. Other cases involved grants for small businesses, bulletproof vests for law enforcement officers and federally insured mortgages.

Of the $3 billion in recoveries, more than $2.3 billion involved qui tam lawsuits initiated by whistleblowers through the False Claims Act, a Civil War-era law that allows nonfederal officials to file claims against contractors they believe have defrauded the government.

"Once again the [Justice] statistics prove that whistleblowing works," said Stephen Kohn, executive director of the National Whistleblowers Center. "The False Claims Act recovers billions of dollars for taxpayers and deters future fraud against the federal government."

Through the False Claims Act, whistleblowers are entitled to 15 percent to 30 percent of the proceeds from a successful suit. In fiscal 2010, whistleblowers, known as relators, received a combined $385 million.

"This law is the most powerful tool in rooting out fraud against the federal treasury," said Sen. Charles Grassley, R-Iowa, who has authored a number of changes and expansions to the law during the past two decades. "Not only does the law help recover billions of taxpayer dollars, but it also deters untold more. Our amendments have empowered whistleblowers to come forward and risk their careers to do what was right. Taxpayers and whistleblowers have a real friend with this law."

Since 1986, the government has recovered more than $27 billion through the False Claims Act.