Top 5 Notable Qui Tam Lawsuits of 2021
Since 1986, financial awards under the False Claims Act have totaled more than $70 billion. This large sum reflects the importance of whistleblowers when it comes to ensuring that justice is done. Whistleblowers help fight corruption and fraud, saving taxpayers’ money and the government’s time.
False Claims Act & Whistleblower Financial Incentives
Under the False Claims Act, a whistleblower, also known as a relator, can bring a lawsuit against an entity that has attempted to defraud the government out of funds. The law, first passed in 1863 in a response to defense contractor fraud during the Civil War, has since been amended several times to best incentivize whistleblowers to come forward with information and to protect them against retaliation.
Currently, the False Claims Act states that any party that has knowingly submitted false claims to the government can be held liable for treble damages (three times the amount of the government’s damages), plus a penalty for each claim that is linked to current inflation rates. This high financial penalty rate also benefits whistleblowers since private citizens who come forward with information and partake in the lawsuit are eligible to recover a percentage of the government’s overall recoupment. These payouts are not capped at any amount and can be sometimes up to 30% of the overall recovery.
Healthcare Fraud Represents Majority of Recent Qui Tam Lawsuits
According to data from the Justice Department, 2021 showed a trend in qui tam lawsuits towards the healthcare field, with fraudulent insurance claims overrepresented in the pool of whistleblower payouts. Some of the most notable fields that saw qui tam decisions handed down in 2021 included:
Overall, recovery from False Claims Act lawsuits stayed fairly high, with the most recent official numbers reported at $5.6 billion recovered by the federal government from the fiscal year 2021.
Top 5 Notable Qui Tam Lawsuits of 2021
St. Jude Medical Inc
In this case revolving around the healthcare manufacturing industry, St. Jude Medical Inc paid $27 million as part of a qui tam settlement under the False Claims Act. Between November 2014 and October 2016, the facility knowingly sold defective heart devices to healthcare providers, which were then implanted into patients.
According to Acting U.S. Attorney Jonathan F. Lenzner for the District of Maryland, “Medical device manufacturers have an obligation to be truthful with the Food and Drug Administration (FDA), and the U.S. government will not pay for devices that are unsafe and risk injury or death.” The faulty devices were surgically implanted into patients at heightened risk of cardiac arrest. Meant to detect irregular heartbeats and send small, safe “shocks” into the cardiac area to ensure a steady rhythm, the devices instead had faulty lithium batteries which caused the devices to cease functioning at any point.
Debbie Burke, one of the patients affected by the defective cardiac devices, was the whistleblower in this case known as United States ex rel. Debbie Burke v. St. Jude Medical, Inc., No. 16-cv-3611 (D. Md.).
Navistar Defense LLC
On May 27, 2021, the Department of Justice announced a $50 million payout to resolve allegations under the False Claims Act by Illinois-based defense contractor Navistar. The claim involved inflated prices for a suspension system for armored vehicles called “Mine-Resistant Ambush Protected Vehicles.”
Acting U.S. Attorney Channing D. Phillips for the District of Columbia underscored the importance of this whistleblower claim, saying, “Money overcharged to the United States is money that should go to providing the very protection and security that we contracted to provide to our troops. The settlement evidences our commitment to go after any contractor who treats America’s dedication to our troops as a get rich quick scheme at the expense of the taxpayer and the safety of our military personnel.”
A former Government Contracts Manager for Navistar was the whistleblower who came forward with information that led to the settlement. The whistleblower was awarded a payout of $11,060,000 from the overall government recoupment.
Archdiocese of New Orleans
In an example of justice delayed but not denied, the Archdiocese of New Orleans was held accountable in November 2021 for fraud in the wake of devastating Hurricane Katrina. The lawsuit alleged that FEMA funds for repair and rebuilding of certain structures after the natural disaster were fraudulently claimed by the Archdiocese, leading to a $1 million settlement.
University of Miami
In 2021, the University of Miami was ordered to reimburse the federal government for false claims against the pool of Medicare funds available. This lawsuit under the False Claims Act, which was settled for $22 million, alleged that the University of Miami routinely ordered unnecessary tests for patients and used “misleading billing practices” to pad their Medicare bills. The government reported that the University was warned by a Medicare Administrative Contractor that their advisory practices were not adequate to alert patients to changes in their medical costs.
The University system also allegedly ordered “medically unnecessary” tests for patients at the Miami Transplant Institute, a kidney transplant program run out of Jackson Memorial Hospital. The combination of these practices resulted in the multi-million dollar settlement, the whistleblower payout percentages of which are still being calculated.
Defense contractor Insitu, Inc. settled a qui tam lawsuit with the federal government with a payout of $25 million in January of 2021. The company was accused of knowingly overcharging the government for unmanned aerial vehicle contracts, or drones. The whistleblower in this case, D R O’Hara, a former executive of Insitu, also brought to light the use of less expensive recycled or refurbished materials during construction in order to further artificially inflate profits for the company. The whistleblower award in the Insitu settlement was calculated at a share of $4,625,000 from the recovered funds.
Qui Tam in 2022 and Beyond
These five cases show a variety of different kinds of fraud-fighting. Whistleblowers are an important check against corruption. Coming forward can help recover public funds, ensure quality services, and keep people safe. From 2022 onwards, a variety of other qui tam lawsuits are sure to be settled, with various payouts going to the courageous individuals who came forward with the truth.