In a recent article published by the whistleblower advocacy organization Taxpayers Against Fraud (TAF), an unofficial tabulation of False Claims Act settlements shows a lucrative fiscal year with over $3 billion recovered on behalf of taxpayers, with $2 billion of that represented by whistleblower-initiated cases.
FY 2015 saw many repeat offenders, including DaVita and AstraZeneca, who together comprised more than a third of the total amount. Moreover, this year saw an increase in mortgage fraud settlements, many of which remained unresolved since the 2008 housing crisis. [1.“Whistleblowers return billions to U.S. taxpayers in 2015,” Taxpayers Against Fraud, October 6, 2015, http://taf.org/blog/whistleblowers-return-billions-us-taxpayer-fy2015.]
Fortunately, the return on investment appears to be increasing as well. This past year, an independent audit revealed that the federal government recovers nearly $3.00 for every $1.00 invested in investigating and prosecuting fraud under the False Claims Act. Moreover, TAF concluded that nearly two-thirds of the amount recovered on behalf of taxpayers in 2015 occurred as a result of whistleblower-initiated lawsuits.
Looking over the past year, the following settlements and verdicts emerge as some of the most lucrative, top-grossing FCA resolutions on behalf of taxpayers:
-DaVita: As the FCA heavyweight this year, DaVita settled two separate claims for nearly $1 billion combined. The first involved allegations of unlawful kickbacks within the renal dialysis industry – an alarming and growing trend. The second accused the company of intentionally trashing certain chemical components of the dialysis process – claiming defectiveness – in order to increase Medicare and Medicaid reimbursements. The former settled for $400 million while the latter settled for $495 million.
-Supreme Food Service: This whopping $434 million settlement involved allegations that the Swiss company engaged in an elaborate scheme to defraud the U.S. government by executing shell companies and “double dipping” within government contracts for the provision of food to soldiers serving in Afghanistan.
-VMWare: In a $75 million settlement, VMWare agreed to resolve claims it overcharged the Department of Defense (DOD) for software services. The settlement came as a result of a five-year investigation by the DOD.
-First Tennessee Bank: In another mega-settlement, First Tennessee Bank agreed to settle claims of mortgage fraud for $212 million. In this case, the bank was engaged in allegedly deficient underwriting protocols, which resulted in the unlawful referral of several sub-prime residential mortgages to HUD for mortgage insurance.
-MetLife, LLC: In one of the top mortgage fraud cases, MetLife, LLC, settled for $125 million amid allegations that it abused its responsibilities as a participant in the Direct Endorsement program on behalf of HUD.
The heavy-hitting cases of 2015 show progress in the fight to eliminate fraud but reveal a long way ahead still for government officials and taxpayers. This year’s cases also highlight the vital role that whistleblowers play. With the exception of the First Tennessee Bank and Met Life settlements, whistleblowers figured prominently in each of these cases. To echo a statement from Taxpayers Against Fraud, “[W]histleblower programs are the most effective tool government has to fight fraud….Fraud is not a victimless crime.”