The Justice Department recently released the government’s False Claims Act recovery numbers for fiscal year 2013. These investigations and lawsuits resulted in the recovery of $3.8 billion dollars – the second-highest annual amount ever recovered by the government, surpassed only by 2012’s nearly $5 billion total. Of last year’s recoveries, $2.6 billion were related to health care fraud and almost $900 million were related to procurement fraud (generally involving defense contracts).
Since January 2009, the Justice Department has used the False Claims Act to recover more than $17 billion in federal dollars, of which $12.1 billion was recovered in health care cases. Many of these cases begin as citizen whistleblower or qui tam cases, whereby a private citizen can sue alleging false claims or fraud on behalf of the government, and, if the government prevails, receive a percentage of the recovery. Notably, the number of these suits filed in 2013 was a record 752 cases. Whistleblowers received $345 million out of the total recovery of $2.9 billion in these cases.
As in past years, some of the largest recoveries were in pharmaceutical cases, including over $2.2 billion paid by certain pharmaceutical companies for allegedly improperly promoting their drugs for unapproved or “off-label” uses. Additionally, Stark Law and Anti-Kickback Statute investigations continue to be a focus in False Claims Act cases.
The focus on health care fraud related investigations and recoveries by the government show no signs of losing steam in 2014. Given the government’s increasing focus on enforcement actions to prevent and deter fraud, the implementation of an effective compliance program is more important than ever.
Having a strong compliance culture lessens the chance that an employee will commit a violation of the law that may have adverse results for the health care provider, and also increases the chance that, if a violation does occur, it will be discovered and addressed in a timely manner and before it becomes a more serious problem. Investing in a strong compliance program on the front end can help the company avoid the devastating financial and reputational costs of a federal investigation and, potentially, a prosecution or civil enforcement action.
While a compliance program is not a guarantee that a government investigation will not occur, if a potential criminal problem arises, the existence of a robust and vibrant compliance program is a significant factor that the government considers when deciding whether to prosecute a company. If a company is prosecuted, the existence of an adequate compliance program may limit the potential penalty.
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