Top Five Areas of Fraud Against the Government

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Health insurance fraud continues to plague taxpayers and is the top area of recovery under the FCA.
Image source: Fidelityinsgroup.com

We regularly report on various breaking news stories covering settlements and verdicts under the False Claims Act. The FCA has consistently proven to be a pivotal tool for the U.S. government in tracking down the fraudulent misuse and waste of taxpayer dollars. Under the FCA, an individual may commence a lawsuit, known as a qui tam action, against any business or individual believed to be defrauding the government. This usually occurs pursuant to a government contract, but can also involve other areas of the private sector – namely, the healthcare industry.

In this piece, we briefly discuss the top five areas where corporate misspending appears the most, as well as what you can do if you ever come upon information relating to a similar fraudulent scheme.

#5 – College and University Enrollment Schemes

Nearly every public college and university in the U.S. receives funding from the federal government. This is due largely to the steady increase of enrollees needing federal student loan money in order to complete their degree. In several highly-publicized cases, colleges were found to be unlawfully inducing students to enroll in order to collect their tuition, even if their application did not reveal a strong likelihood of finishing the degree program with an employable academic record. This issue has proven especially true within law schools as schools are facing public scrutiny for skewing their data related to likelihood of a job after graduation. Under the FCA, any school that accepts a student for the sole purpose of obtaining his or her federally-backed tuition money could face liability and treble damages.

#4 – Tax Evasion

Under an Internal Revenue Code provision modeled after the FCA, taxpayers found to be unlawfully avoiding income tax payments could face liability in the event a whistleblower decides to file a qui tam law suit against the offender. Under current regulations, the lawsuit must alleged tax evasion exceeding a certain threshold and must be filed by someone who was not directly involved in the planning of the evasive scheme. To date, the IRS has recovered millions of dollars in unpaid tax liability under the new whistleblower provisions.

#3 – Securities Fraud

The SEC has implemented a whistleblower program as required by the 2010 Dodd Frank Act – a piece of legislation designed to address Wall Street dishonesty and avoid another economic meltdown akin to the crisis of 2008. Under its whistleblower program, any person with direct, firsthand knowledge of fraud involving the securities industry is incentivized to come forward and report the information. This can include international securities fraud, so long as it involves and affects the U.S. markets or domestic commerce. Whistleblower rewards under these provisions have proven to be very sizable and the SEC is dedicated to continuing its commitment to eliminating dishonesty on the trade floor.

#2 – Defense Contracts

The FCA is rooted in eliminating fraud pursuant to a defense contract. During the Civil War, soldiers were routinely burdened as a result of bad contracts with vendors who either provided unusable goods or failed to provide goods at all. As a result, the Lincoln administration enacted the first FCA to punish any corporation or individual deciding to engage in similar conduct. Today, fraud in defense contracts abounds and dishonest contractors may face up to treble damages for falsely invoicing the government for defense work either never performed or not performed pursuant to the tenets of the agreement.

#1 – Healthcare

Fraud in the healthcare industry is, by far, the number one area of taxpayer fraud. We report regularly on the plight of programs like Medicare and Medicaid that are constantly receiving requests for reimbursement for medical services never rendered. Healthcare fraud also includes billing for one costly service when a less-expensive service was actually rendered. Facilities also attempt to increase profits by allowing nurses to perform work and then billing at the doctor’s rate. In fiscal year 2013, the U.S. recovered over $3 billion in taxpayer money under the FCA for fraud in the healthcare industry.

What to Do If You Are Aware of Fraud Against the Government

It can be difficult to come forward against fraud under any of the above scenarios. Whistleblowers routinely face retaliation, termination, or demotion for deciding to report fraud. By working with a whistleblower attorney, you can navigate the legal process with the assistance of a true advocate who will not only offer aggressive representation, but compassionate counsel as well.

By | 2018-03-26T10:25:09+00:00 January 16th, 2014|False Claims Act Legal News|