Government Must Pay Billions for False Claims

The U.S. Department of Justice recovered more than $4.7 billion in settlements and judgments from civil cases involving fraud and false claims against the government in the 2016 fiscal year, Benjamin C. Mizer, head of the Justice Department’s Civil Division, announced last month.

The money was obtained by using the False Claims Act, which allows the government to redress false claims for government funds and property under government contracts, such as national security and highway funds. The act was strengthened by Congress in 1986 to give the government a more effective tool in fighting fraudulent claims against federal programs and reclaiming taxpayer money.

“In short, Americans across the country are healthier, enjoy a better quality of life, and are safer because of our continuing success in protecting taxpayer funds from misuse,” Mizer said in a new release.

The act was also amended 30 years ago to increase incentives for whistleblowers to file lawsuits that allege false claims for the government. Whistleblowers could receive up to 30 percent of recovered money if the government wins.

Last fiscal year ending on Sept. 30 marks the highest annual recovery of false claims in the history of the act, and $31.3 billion has been recovered since 2009.

Majority of Money Recovered From Health Care Industry

Of the money recovered, $2.5 billion came from the health care industry, which includes drug companies, medical device companies, nursing homes, laboratories, physicians and hospitals.

According to the Department of Justice, the largest recoveries last year — totaling $1.2 billion — came from the drug and medical device industry. Two notable cases involve Wyeth and Pfizer Inc. and Novartis Pharmaceuticals Corp.

In April 2016, Wyeth and Pfizer paid $784.6 million to resolve federal and state claims that Wyeth knowingly reported false prices to the government on Protonix Oral and Protonix IV. The two drugs are known as proton pump inhibitors that reduce the amount of acid in the stomach to treat acid reflux and ulcers.

“The government alleged that Wyeth (before it was acquired by Pfizer) failed to report deep discounts available to hospitals, as required by the government to ensure that the Medicaid program enjoyed the same pricing benefits available to the company’s commercial customers,” the Department of Justice said in a news release. “Wyeth paid $413.2 million to the federal government and $371.4 million to state Medicaid programs.”

Health Care Fraud?

In another notable settlement from the health care industry, Novartis Pharmaceuticals Corp. paid $390 million based on claims that it gave kickbacks to specialty pharmacies in return for recommending Exjade and Myfortic.

“In the course of our investigation with the Health and Human Services Office of Inspector General, Novartis was found to be giving incentives to pharmacies to push certain drugs to patients,” said FBI Assistant Director-in-Charge Diego Rodriguez in a November 2015 press release. “Today’s settlement with Novartis should serve as a warning to companies who choose to operate their businesses with kickbacks rather than honesty – those companies will pay more in the long run.”

Novartis paid $306.9 million to the federal government and $83.1 million to state Medicaid programs.

The recoveries are considered a big win for the government. Not only are they meant to benefit taxpayers but also hold companies, including those in the health care industry, accountable.

“These recoveries restore valuable assets to federally funded programs such as Medicare, Medicaid, and TRICARE, the health care program for service members and their families,” the DOJ said in a news release. “But just as important, the Department’s vigorous pursuit of health care fraud prevents billions more in losses by deterring others who might otherwise try to cheat the system for their own gain.”