$5 Billion-Plus Recovered In Past Two Fiscal Years

More than $20 billion has been recovered in Federal civil actions under the False Claims Act ("FCA") since the statute which originated in the Civil War era, was amended in 1986 to provide enhanced rewards and protections for qui tam whistleblowers.

In the last federal fiscal year, FY 2007, some $2 billion in fraud against the Government was recovered for taxpayers. In qui tam whistleblower cases the relators, i.e. whistleblowers who came forward with their attorneys to report alleged fraud, receive 15%-25% of the recoveries. FY2006 was a record year for FCA recoveries with more than $3.1 billion in settlements and judgments, according to the U.S. Department of Justice.

Without whistleblowers, billions of dollars of fraud payments or demands for payment hidden from the Government would have gone unnoticed. Their fraud dollars would have remained in the pockets of individuals and entities responsible the frauds, but courageous whistleblowers stepped up to return defrauded dollars to the U.S. Treasury and, in the process, share in those recoveries.

In announcing the $2 billion in FY 2007 recoveries Peter D. Keisler, Acting Attorney General and Assistant Attorney General for the Civil Division in Washington lauded, "...the fortitude of whistleblowers who report fraud and the tireless efforts of the civil servants who investigate and prosecute these cases."

More than 70 percent of FY 2007's $2 billion was associated with qui tam whistleblowers under the False Claims Act and, according to Keisler's Nov. 1, 2007 news release, "...run the gamut of federally funded programs from Medicare and Medicaid to defense procurement contracts, disaster assistance loans, and agricultural subsidies."

For the seventh year in a row health care accounted for the lion's share of FY 2007 fraud settlements and judgments, more than $1.5 billion, which includes whistleblower claims and cases initiated independently by the Government. In health care, cases involving fraud against the Department of Health and Human Services recorded the biggest recoveries, mostly related to the Medicare and Medicaid programs.

Pharmaceutical company settlements were among the largest health care recoveries in FY 2007, representing more than half of the approximately $1.5 billion recovered in qui tam actions. They included Bristol-Myers Squibb Co., Aventis Pharmaceuticals, Inc., Medco Health Solutions, Inc., Purdue Pharma L.P. and Purdue Frederick Co., and InterMune, Inc.

Typical pharmaceutical allegations, "... involve illegal promotion of drugs or devices and causing the government to pay for uses that were neither found by the Food and Drug Administration to be safe and effective, nor supported by the medical literature, also known as 'off-label' marketing; paying kickbacks to physicians, wholesalers, and pharmacies to induce drug or device purchases; establishing inflated drug prices knowing that federal health care programs use these prices to reimburse providers, then marketing the ‘spread' between the federal reimbursement and the provider's lower cost to induce drug purchases; and failing to report the company's true ‘best price' for a drug to reduce rebates owed to the Medicaid program," according to the Department of Justice.

The Best Price scheme is the basis for this more than $400 million nationwide settlement against Merck & Co., Inc.