Fiscal Year 2023 Sees False Claims Act Settlements and Judgments Surpass $2.68 Billion

April 15, 2024
Fiscal Year 2023 Sees False Claims Act Settlements and Judgments Surpass $2.68 Billion

The Fiscal Year 2023 ending September 30, 2023, was another busy year for the enforcement of the False Claims Act by the U.S. Department of Justice and various whistleblower law firms like Brown, LLC. The total amount of recoveries due to settlements and judgments exceeded more than $2.68 billion, reflecting the significant effort of the government to combat fraud. The whistleblower lawyers at Brown, LLC account for over 2.5% of those False Claims Act recoveries with its cases against Genomic Health and Carter Healthcare, as well as others. According to a press release from the Department of Justice, the U.S. government and whistleblowers were part of 543 settlements and judgements during Fiscal Year 2023. This marks the highest number of resolved claims under the False Claims Act ever in a single year, and the total aggregate recovery under the False Claims Act since 1986 surpasses $75 billion. With False Claims Act whistleblower rewards ranging from 15-30% and averaging approximately 20%, that’s roughly $15 billion that could have gone to whistleblowers who report fraud against the government in the right manner.

The Different Types of Fraud that Encompassed the $2.68 Billion in False Claims Act Settlements and Judgments

Most of the recovered amounts under the False Claims Act were in the healthcare sector, which typically implicates Medicare Fraud, Medicaid Fraud, Tricare Fraud, Pharmaceutical Fraud, and kickbacks. Roughly $1.8 billion in recovered federal funds dealt with fraud by various healthcare establishments and providers, including managed care providers, hospitals, pharmacies, laboratories, long-term acute care facilities, and physicians. Healthcare fraud is typically the leading category in False Claims Act settlements because of its massive budget and spotty oversight and Fiscal Year 2023 was no exception. Notable types of fraud against the government in other sectors with large amounts of recovery under the False Claims Act included procurement fraud, which is also known as defense contractor fraud, pandemic-related loan fraud with the omnipresent PPP Loan Fraud, cyber-fraud, and other categories of fraud as well. Basically, with the ever-increasing federal spending, there’s commensurate ever-increasing scams and fraud.

Healthcare Fraud is Again the Leading Source of False Claims Act Settlements and Judgments

Similar to previous years, healthcare fraud was once again the largest sector in False Claim Act settlements and judgments. Accounting for more than 65% of False Claim Act settlements, federal programs such as Medicare, Medicaid, and TRICARE were amongst the programs defrauded by bad actors. The U.S. government is particularly stringent on cracking down against healthcare fraud given the large amounts of federal funds involved and the harmful effects such fraud has on patients and their families – that is money lost to fraud leads to less services available for beneficiaries, longer wait times, and further inequities. Types of healthcare fraud included Medicare Advantage fraud, unnecessary services and substandard care, unlawful kickbacks, and others. Some notable healthcare fraud settlements included the following examples – albeit, it should be noted that even with settlements, unless the Defendant explicitly admitted to or was found guilty of the conduct it should just be considered allegations:

  • Cigna Group: Cigna agreed to settle alleged claims for submitting false diagnosis codes for Medicare Advantage patients to increase payments from Medicare. Cigna was alleged to have used a “chart review” program to submit additional codes for reimbursement and paid vendors to conduct in-home testing without performing or ordering diagnostic testing for the reported conditions. Cigna settled the claim for $172 million which could have generated up to $51.6 million in whistleblower awards.
  • Cornerstone Hospital Medical Center: Cornerstone agreed to settle claims for about $21.6 million that the long-term acute care facility had knowingly submitted claims performed by unlicensed practitioners and students, even submitting claims for services that were not actually provided, which under the False Claims Act permitted a whistleblower reward of roughly $6 million.
  • Cardiac Imaging Inc.: Cardiac Imaging and its CEO agreed to settle alleged claims for $85.5 million that the company had paid kickbacks to cardiologists that were above fair market value to induce physicians for PET Scan referrals. The concept of fair marker value is integral to kickback and Stark Law claims, and this False Claims Act settlement could have generated a whistleblower award around $25 million.

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Notable Settlements and Judgments in Other Sectors

While healthcare fraud remained the leading cause of False Claims Act settlements, there were plenty of substantial settlements in other sectors. Some other notable False Claims Act results that involved some of the best whistleblower law firms included:

  • Booz Allen Hamilton: Booz Allen agreed to resolve its claims for $377 million, one of the largest settlements for procurement fraud ever. Booz Allen was alleged to have improperly allocated indirect costs to government contracts that either had no relationship or were incorrect amounts. The company was also alleged to have failed to disclose its accounting method for costs supporting its businesses. Procurement fraud is at the heart and the origin of the False Claims Act and exploiting monies meant to protect our military puts our soldiers and sailors at risk. With this False Claims Act resolution, the whistleblowers stood to receive up to $111 million in whistleblower rewards.
  • Victory Automatic Group Inc.: Many instances of fraud under the Paycheck Protection Payment, enacted during the COVID-19 pandemic, have started to come out and the government continues to prioritize this area (if only they spent those resources proactively, they wouldn’t be in this situation). Victory Automatic settled claims of receiving money purposed for small businesses with fewer than 500 employees, despite sharing its operations with dozens of automobiles across the company with more than 3,000 employees. The alleged claims were settled for $9 million.
  • Verizon Business Network Services: Verizon agreed to settle for $4 million in cybersecurity failures for contracts to provide secure internet connections to the government.
  • International Vitamins Corporation: International Vitamins Corporation agreed to pay nearly $22.8 million for allegedly misclassifying over thirty (30) vitamin and nutritional supplements to avoid paying customs duties. Customs Fraud is often an overlooked issue that can be remedied through the False Claims Act.

Whistleblowers Stand Out in Fiscal Year 2023 False Claims Act Settlements and Judgments

Whistleblowers, also known as relators, are individuals who report violations of the False Claims Act by filing what is known as a qui tam lawsuit. If a whistleblower is successful in the claim, they will receive a portion of the recovery, anywhere from fifteen percent to thirty percent, depending on whether or not the government decides to intervene. In Fiscal Year 2023, whistleblowers filed over seven hundred qui tam lawsuits, resulting in settlements and judgments that exceeded $2.3 billion. Given the total recovered awards of settlements and judgments was around $2.68 billion, it’s clear to see the significance that whistleblowers play in the enforcement of the False Claims Act. Whistleblowers averaged over thirteen new cases every week.

If you have a potential whistleblower claim under the False Claims Act, there is a financial incentive that the government will provide to reward you for the risks that you take if the case succeeds. Enlisting a qualified False Claims Act whistleblower lawyer will place you in a superior position to best recover the financial reward in a whistleblower claim. A False Claims Act whistleblower firm will also provide you with the assistance you need in case an employer attempts to retaliate against you, as well as plan for your future. While these cases can be complex, a False Claims Act whistleblower lawyer will ensure you have everything you need for the best chance of success.