New Study Reveals False Claims Act Worth Every Penny

The Taxpayers Against Fraud Education Fund is a non-profit organization dedicated to increasing awareness of fraud committed against the government, such as healthcare, Medicaid and Medicare fraud. In its new study, it has concluded that for every $1 invested in fighting fraud, lawsuits arising under the FCA return nearly $20. That is $20 returned directly to American taxpayers – where it rightfully belongs.

Healthcare economist Jack Meyer recently examined the worth of whistleblower lawsuits in his new study entitled Fighting Medicare & Medicaid Fraud: The Return on Investment from False Claims Act Partnerships. The study compared the costs of the healthcare fraud investigation and its prosecution to the amount of money returned by each case to the federal Treasury, less the amount awarded to whistleblowers – who are a vital component to the equation.

The results are astounding. Meyer calculated that from 2008 to 2012, the U.S. government expended $574.6 million in the investigation and prosecution of healthcare fraud. In comparison, FCA whistleblower cases recovered $$49.384 billion of taxpayer money. These recoveries derived both from settlements (agreements to pay but no admission of guilt) and judgments (court-ordered mandates to pay). This investment return represents a ratio over 16 to 1.

The windfall does not stop there, however. In addition to civil judgments and penalties recovered as a result of the FCA, the federal government (and many state governments) have recovered nearly $9 billion in criminal fines and penalties from healthcare companies caught defrauding government healthcare programs. Upon adding civil penalties and criminal fines, the ratio of return exceeds 20:1, resulting in an incredible investment under an equally valuable piece of legislation.

In addition to his raw data, Meyer details some of the intangible impacts the FCA imposes upon the health care industry. Specifically, the effects of large recoveries create a deterrence factor in the industry that works to convince corporations to avoid certain conduct with which they may otherwise have experimented. As Meyer states, “major settlements with large recoveries have a ripple effect that reduces the likelihood of even greater frauds against the Medicare and Medicaid programs….We don’t know exactly how much fraud is being deterred by the False Claims Act, but the number if almost certainly many billions of dollars a year more than is simply being recovered.”

The impact of the federal FCA has also induced many state legislatures to enact a similar False Claims Act, thereby protecting state tax dollars from abuse and misrepresentation. As we have previously reported, the Internal Revenue Service, the Securities and Exchange Commission and the Commodity Futures Trading Commission have enacted similar whistleblower provisions to entice individuals to report on tax, securities and commodities trading fraud, respectively.

Contact a whistleblower attorney if you would like to invest in your community

The benefits to serving as a whistleblower plaintiff are immeasurable. In addition to the possibility of a large payout reward, whistleblowers also enjoy the satisfaction of knowing that corporate greed and fraud, which is seemingly out of reach, can be reined in and controlled. It is one of the few areas of the law where just one person can make all the difference in the world.

If you have original information relating to healthcare fraud, contact a whistleblower attorney today.