A delegation from countries including India, Maldives, Nepal, Pakistan, and Sri Lanka, visited the National Whistleblower Center (NWC) today to learn about U.S. whistleblower reward laws and their role in cracking down on fraud both domestically and internationally. The visit was facilitated by the International Visitor Leadership Program (IVLP), an initiative of the U.S. Department of State.
In a recent interview with the AARP, Attorney General Sessions took a strong stance against Medicare fraud. Sessions stated that it’s time to consider taking Medicare fraud as seriously as the war on drugs (certainly an issue Attorney General Sessions believes to be of paramount importance).
Medicare fraud is a serious issue. It is estimated that 10% of Medicare funds are lost to fraud and waste, totaling approximately $16.2 billion. This suggests that billions of dollars, which should be directed to funding health care for our seniors, are instead going to fraudsters taking advantage of American taxpayers and the elderly.
Yesterday, the House Judiciary Subcommittee on the Constitution and Civil Justice held a hearing entitled “Oversight of the False Claims Act,” in which corporate lobbyists organized by the Chamber of Commerce worked to advance their agenda to cripple the False Claims Act.
This week the Department of Justice issued a series of press releases announcing settlements in several cases under the False Claims Act. The settlement of these cases, originally brought under the qui tam, or whistleblower, provisions of the False Claims Act, resulted in recoveries of over $200 million for the U.S. Taxpayers. The settlements are listed below:
Pharmaceutical company Endo Health Solutions Inc. and its subsidiary Endo Pharmaceuticals Inc. (Endo) have agreed to pay $192.7 million to resolve criminal and civil liability arising from Endo’s marketing of the prescription drug Lidoderm for uses not approved as safe and effective by the Food and Drug Administration.
Medical device manufacturer EndoGastric Solutions Inc. has agreed to pay the government up to $5.25 million to resolve allegations that it violated the False Claims Act by misleading health care providers about how to bill federal health care programs for a procedure using a device manufactured by the company and by paying kickbacks.
Vector Planning and Services Inc. (VPSI), an information technology, systems engineering, program management and consulting firm headquartered in Chantilly, Va., has agreed to pay the government $6.5 million to settle False Claims Act allegations that the company inflated claims for payment under several Navy contracts.
MPRI Inc. has agreed to pay $3.2 million to resolve allegations that it submitted false labor charges on a contract to support the Army in Afghanistan.
During the 2013 fiscal year, the Justice Department secured $3.8 billion in settlements and judgments from civil cases under the False Claims Act (FCA). This dollar amount, which is the second largest annual recovery of its type in history, brings total recoveries under the FCA since January 2009 to $ 17 billion – nearly half the total recoveries since the FCA was amended 27 years ago in 1986. The largest annual recovery was in 2012 with nearly $5 billion recovered.
“It has been another banner year for civil fraud recoveries, but more importantly, it has been a great year for the taxpayer and for the millions of Americans, state agencies and organizations that benefit from government programs and contracts,” said Assistant Attorney General Delery. “The $3.8 billion in federal False Claims Act recoveries in fiscal year 2013, plus another $443 million in recoveries for state Medicaid programs, restores scarce taxpayer dollars to federal and state governments. The government’s success in these cases is also a strong deterrent to others who would misuse public funds, which means government programs designed to keep us safer, healthier and economically more prosperous can do so without the corrosive effects of fraud and false claims.”
The Department of Justice announced today that that General Electric Hitachi Nuclear Energy Americas LLC (GE Hitachi) has agreed to pay $2.7 million to resolve allegations under the False Claims Act that it made false statements and claims to the Department of Energy and the Nuclear Regulatory Commission (NRC) concerning an advanced nuclear reactor design.
GE Hitachi allegedly made false statements to the NRC and Department of Energy about a component of the advanced nuclear Economic Simplified Boiling-Water Reactor (ESBWR) known as the steam dryer. A steam dryer removes liquid water droplets from steam produced by the nuclear reaction that generates electricity in boiling-water type reactors. The NRC requires that applicants for nuclear reactor design certification, such as GE Hitachi, demonstrate that vibrations caused by the steam dryer will not result in damage to a nuclear plant. The government alleged that GE Hitachi concealed known flaws in its steam dryer analysis and falsely represented that it had properly analyzed the steam dryer in accordance with applicable standards and had verified the accuracy of its modeling using reliable data.
Between 2007 and 2012, GE Hitachi received funding from the Department of Energy to cover up to half of the cost of developing, engineering and obtaining design certification for the advanced nuclear ESBWR. The NRC, which regulates the civilian use of nuclear power in the U.S., is responsible for determining whether to approve GE Hitachi’s application for the reactor design certification. The NRC is still reviewing the application and has not reached a final decision on the certification.
“Transparency and honesty are absolutely critical when dealing with issues relating to the design of a nuclear reactor,” said Assistant Attorney General for the Justice Department’s Civil Division Stuart F. Delery. “The Department of Justice will protect federal funds and the Nuclear Regulatory Commission’s crucial mandate of ensuring public safety.”
The allegations against GE Hitachi were brought to light by whistleblower LeRay Dandy, a former employee. His share of the settlement has not yet been determined.
Proposed false claims act legislation is one of the first bills to advance in the West Virginia House Judiciary Committee on the first day of the legislative session. The legislation establishes qui tam proceedings, legal action brought by private citizens against the state or companies doing business with the state believed to have committed fraud or violated the law.
“It incentivizes reporting internally from anyone working inside the government or anyone working inside private companies who see their companies overcharging the government,” Tim Miley, Speaker of the WV House of Delegates said on MetroNews Talkline last week.
The legislation will assist by identifying possible Medicaid fraud in the state, which is one of the main purposes of the bill. Some legislators have cautioned that the claims could overwhelm the Office of the Attorney General. “Anybody who is complaining about the bill for those reasons is doing so because they want to hide some of the government fraud," Delegate Stephen Skinner, D-Jefferson told The Journal.
Skinner pointed to controversial deals such as "Routergate" to show the necessity for a state False Claims Act. In 2013, an audit revealed that state officials wasted millions of federal stimulus dollars when they purchased more than 1,000 routers. The $24 million was supposed to be used to increase Internet access in the state.
The legislation is under attack by West Virginia’s corporate lobby. The chemical spill in Charleston that contaminated the drinking water for 300,000 residents hasn’t slowed down the corporate lobby’s drive to kill off this bill which is needed to protect the residents of West Virginia. The President of the West Virginia Chamber of Commerce, Steve Roberts, is characterizing the proposed law as a scheme for trial lawyers to get rich.
Roberts told Talkline that the proposal was nothing more than “a sue and settle scheme developed by the trial bar to try to expand the opportunity for lawsuits in West Virginia.”
Patrick Burns of Taxpayers Against Fraud took issue with Roberts’ claims.
“Do lobbyists for corporate crooks oppose paying fines and restitution?” Burns told Corporate Crime Reporter. “Of course. The fox is always opposed to anyone guarding the hen house.”
“The good news is if West Virginia wants to see a model for success, they only need look next door.”
“Virginia passed a state False Claims Act in 2002, and since then that state’s Medicaid Fraud Control Unit has returned an average of $228 million per year.”
“Virginia has also recovered millions of stolen dollars for its state pension fund, and is set to recover millions more for defective water pipe installed by municipalities.”
The federal government’s first False Claims Act was signed into law in 1778. Close to 30 states now have state False Claims Acts, including Texas, Maryland, New York, California, Michigan, Illinois, and Florida.
Intern Paul Lyons authored this post.
On Friday, December 6th, 2013, National Whistleblower Center Executive Director, Stephen Kohn, was a guest panelist at the Congressional Civil Justice Caucus Academy’s Briefing on False Claims Act Reform. The briefing was styled as a debate between Mr. Kohn and David Ogden. Mr. Ogden, a former Deputy U.S. Attorney General and the chair of WilmerHale’s Government and Regulatory Litigation Group, is one of the authors the U.S. Chamber’s Institute for Legal Reform’s proposed amendments to the FCA.
The Chamber claims that its proposed amendments will make the FCA more effective. The provisions are to incentivize companies to implement better compliance programs and prevent fraud before it happens. However, it is clear that the proposed reforms would do the opposite and actually hinder the FCA as well as the detection and prevention of fraud at large.
Mr. Ogden claims that the FCA is “simply ineffective at preventing fraud.” However, the FCA is the single most effective anti-fraud statute in the world. The FCA was reformed in 1986 to allow whistleblowers to perform qui tam actions, meaning that the whistleblower could pursue cases on behalf of the government and be rewarded for helping the government recover penalties from corporations that defraud the government. Since the inclusion of the Qui Tam provision the detection and prevention of fraud has risen exponentially. In 1986, prior to the reform, the U.S. government recovered 89 million dollars from detecting and prosecuting fraud. In 2012, that number rose to 4.95 billion dollars, 68% of that money was recovered via Qui Tam actions. All of this information and more is available in the National Whistleblower’s Center’s FCA Report.
Today the National Whistleblower Center released a new report on the importance of the False Claims Act which rebuts the Chamber of Commerce proposals.
"Whistleblower Reward Laws: Reform or Enhance?" was delivered by NWC Executive Director Stephen Kohn at a briefing before the Congressional Civil Caucus Academy. Click the this link to read the full report.
Today Senator Chuck Grassley questioned Health and Human Services Secretary Kathleen Sebelius regarding the Obama Administration’s position that qualified health plans and other programs related to the federally facilitated marketplace and other programs under the Affordable Care Act are not considered federal health care programs. This questioning is extremely important because under Sebelius’ interpretation many programs may be exempted from important anti-fraud laws.
Grassley questioned whether that would mean Obamacare programs are not subject to federal anti-kickback statutes and the federal False Claims Act, one of the government’s most effective tools against fraud, especially health care fraud in recent years.
“I’m alarmed that the Obama administration doesn’t understand the capacity for fraud in the new health care program,” Grassley said. “The head of the agency in charge doesn’t seem to appreciate that the billions of dollars in subsidies for individuals going to health insurers to join Obamacare are federal tax dollars. Those dollars should be subject to anti-fraud laws. Why wouldn’t they be?”
"It is imperative that the anti-fraud provisions of the False Claims Act apply to all federal monies paid under Obama Care,” said Stephen Kohn, Executive Director of the National Whistleblower Center. He continued, “HHS’ decision to exclude certain companies participating in the Obama Care program from federal anti-kickback laws will cost the taxpayers billions of dollars. I hope this was a mistake, and not the result of a back room deal with lobbyists for the medical industry."