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$2.2 Billion in Fraudulently-Taken Monies Returned to the Taxpayer in Fiscal Year 2020. DOJ Paid the Individuals Who Reported the Fraud $309 Million.

This past year, the Justice Department went after companies that cheated taxpayers out of $2.2 Billion.  Those monies were recovered on behalf of defrauded taxpayer-funded programs, grants, and contracts.  That $2.2 Billion figure represents only one single year of fraud recoveries under the False Claims Act.  Well over 70 percent of these taxpayer cheats were “outed” by individuals who reported the fraud to the Justice Department.  For reporting the fraud, they received over $309 Million in reward payments.

Notably, the fraudsters came from every industry from health care to waste treatment to national defense to energy.

Health Care Fraud

In the health care space, the fraud was committed by drug and medical device companies, labs, health care and managed care providers, hospice companies, hospital systems, and pharmacies.  It involved Medicare, Medicaid, and TRICARE.

Fraud by pharma companies ran the gamut.  One pharmaceutical manufacturer paid $591 Million and had bosses directing their sales force to pay physicians to write more scripts for drugs intended for patients with high blood pressure or cardiovascular disease.  They did this by setting up a so-called speaker program that on its face appeared to be a legitimate program designed to have physicians speak to other physicians about intended uses, benefits, and warnings of the drugs.  However, the speaker program turned out to be a ruse designed to give money or other remuneration to doctors to entice them to prescribe more of the company’s drugs.

Other big pharma companies paid over $160 million for copay scams that also enticed physicians to write more prescriptions for their drugs.  In this scheme, the pharma companies used so-called foundations to pay the copays for the patients.  These are kickbacks to patients and sometimes the pharma company paid kickbacks to the foundations.

One developer of electronic health records (EHR) software took kickbacks from a big pharma company in exchange for allowing the pharma company to build into the software design a notification system that would cause health care providers to overprescribe the pharma company’s opioid drugs.

In other cases, health care companies paid over $151 Million for unlawful kickbacks that interfered with medical judgment and patient decision-making.  Kickbacks were paid to physicians, labs, specialty practice groups and durable medical equipment (DME) suppliers by durable medical equipment (DME) manufacturers, hospitals, and lab companies.

national chain of psychiatric hospitals, a lab company, and a pain clinic also paid $158 million for worthless medical services or services that patients did not medically need.

Government contracts fraud

The False Claims Act and criminal fraud laws were also strategically used to recover $199 Million in funds misspent under Government contracts.  The agencies that contracted for the goods and services and were defrauded included the United States Department of Energy, the General Services Administration, and the U.S. Department of Defense.

The fraud in these Government contracts was across a broad spectrum from overbilling hours for construction labor to bribing Government officials to procure military contracts to lying about transporting goods across Iran to using a front company to procure a military construction contract in South Korea.

Fraud involving other taxpayer-funded programs

Money was also returned to the Government under the False Claims Act for other duped taxpayer-funded programs.  The frauds involved a Department of Energy loan, the Government’s Food Stamp Program called the Supplemental Nutrition Assistance Program (SNAP)funds provided to universities for natural disasters, customs duties, a grant provided by the National Institute of Health for teaching and grant-writing, the U.S. Department of Housing and Urban Development’s multi-family housing insurance program for a medical center.

Most of these cases were successful because individuals reported the fraud.  Whistleblowers are critical to the Department of Justice’s anti-fraud enforcement efforts and are entitled to a share of any recoveries.

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© 2020 by Tycko & Zavareei LLPNational Law Review, Volume XI, Number 19
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About this Author

Renée Brooker Whistleblower Lawyer Tycko & Zavareei Law Firm
Partner

FORMER PROSECUTOR IN SENIOR LEADERSHIP POSITION AT DOJ, RESPONSIBLE FOR BILLIONS OF DOLLARS IN RECOVERIES UNDER WHISTLEBLOWER LAWS, NOW REPRESENTING WHISTLEBLOWERS

(202) 417-3664‬
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