U.S. Recovers More Than $3 Billion in Whistleblower Lawsuits in 2011

02/13/2012 // San Francisco, CA, USA // Whistleblower Law Firm // Jeffrey Keller // (press release)

Highlighting the power of a century-old federal law — and the courage of individuals determined to see justice prevail — the U.S. government recovered more than $3 billion in cases involving fraud against it in the fiscal year ending Sept. 30, 2011. This marks the second consecutive year in which the Department of Justice’s recoveries — from both settlements and judgments — topped the $3 billion mark. Making these sums possible was the False Claims Act, a federal law that dates back to 1863 and was created to provide financial incentives for whistleblowers to alert authorities to fraud and profiteering.

Since January 2009, the Justice Department has recovered $8.7 billion in False Claims Act cases – the largest three-year total in its history. More than $30 billion has been recovered since the False Claims Act was significantly amended — increasing the incentives for individuals to file whistleblower lawsuits on behalf of the government — in 1986.

“What these recoveries show is that the False Claims Act has become a powerful, necessary tool for redressing fraud against the government,” says Jeffrey F. Keller, a founding partner at Keller Grover, a nationally recognized labor and employment law firm, and a veteran whistleblower lawyer. “The cases we are seeing run the gamut — fraud within the Medicare program, overcharges on military contracts, or companies charging for work that was never performed. It takes a lot of courage to shine a spotlight on pervasive, fraudulent practices and whistleblowers offer suffer serious repercussions — demotions, terminations, even harassment. The Federal Claims Act helps protect them, and reward them, for doing the right thing.”

The whistleblower provisions of the False Claims Act allow private citizens to file lawsuits on behalf of the government and share in any subsequent recovery. Since the 1986 amendments, more than 7,800 whistleblower lawsuits have been filed, according to the Justice Department. This year, 638 suits were brought — a significant increase, whistleblower lawyers say, over the 300 to 400 suits that have typically been filed in recent years.

“We are tremendously grateful to whistleblowers who have brought fraud allegations to the government’s attention and assisted us in this public-private partnership to fight fraud,” said Assistant Attorney General Tony West in a statement announcing the recoveries. West also paid tribute to the two legislators who had led the effort to revise the False Claims Act a quarter of a century ago: Senator Charles Grassley and Representative Howard Berman. “Without their foresight, the breadth of the recoveries we announce here today would not have been possible,” West said.

Enforcement actions involving the pharmaceutical industry were the source of the largest recoveries this year: In all, the department recovered nearly $2.2 billion in civil claims against drugmakers in fiscal year 2011. This included $900 million from eight drug manufacturers to resolve allegations that they had engaged in unlawful pricing to increase their profits. It also included the $750 million GlaxoSmithKline PLC paid to resolve allegations that it knowingly submitted, or caused to be submitted, false claims to government healthcare programs for adulterated drugs and for drugs that failed to conform with the strength, purity, or quality specified by the Food and Drug Administration.

An additional $422 million was recovered in procurement fraud cases, including $89.3 million in recoveries in connection with the wars in Afghanistan and Iraq.

“It’s ironic, perhaps, that the Federal Claims Act was originally enacted to stem fraud during the American Civil War,” says Keller, the whistleblower lawyer. “A lot has changed in a century and a half, but one thing hasn’t: the need to redress wrongdoing against our country, citizens, and soldiers, and to support those who seek justice. As these recent recoveries demonstrate, the False Claims Act does exactly that — and does it very, very well.

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