Whistle-blowing pays off
Fraud settlements bring in $2.5 billion for feds
See? We mean it. Tony West, assistant attorney general at the U.S. Justice Department’s civil division, delivered that message last week when he announced the government’s biggest-ever take from healthcare cases under the False Claims Act: $2.5 billion.
Since the early days of the Obama administration, the Justice Department and HHS have promised they would dedicate more money, manpower and attention to finding and punishing companies, organizations and people who rip off federal healthcare programs.
“If you break the law, if you try to cheat taxpayers out of public funds, if you try to market drugs outside of what the FDA has said is safe and effective, we will hold you accountable,” West said in a conversation with reporters last week about the fiscal 2010 yield from False Claims Act settlements and judgments.
Fiscal 2010’s record tally is interesting for what it omits, as well as for its magnitude, said Patrick Burns, spokesman for Taxpayers Against Fraud Education Fund. The Washington-based advocacy group represents whistle-blowers and their lawyers whose suits trigger the bulk of investigations under the fraud-fighting law.
The number does not, for example, include hundreds of millions of dollars the Justice Department secured in criminal penalties. The fiscal 2010 healthcare tally was fattened with a few massive settlements from pharmaceutical companies accused of illegally marketing their products. The biggest contributor was Pfizer, which paid the U.S. $669 million in a False Claims Act settlement, but also $1.3 billion in criminal fines and forfeiture.
“If nobody’s going to go to jail, all you really did here was cheat the whistle-blowers,” Burns said, arguing that a company’s criminal guilty plea does little to deter wrongdoing in the industry.
West said the government is indeed setting its sights on executives whose organizations commit fraud on their watch. He pointed to a recent publication by HHS’ inspector general’s office spelling out the circumstances in which the agency would seek to exclude them from participating in Medicare and Medicaid.
West also pointed to the recent indictment of Lauren Stevens, the former associate general counsel to GlaxoSmithKline accused of making false statements and concealing and falsifying documents during an inquiry by the U.S. Food and Drug Administration.
Burns added another: Mark Philip, former president of Stryker Corp. subsidiary Stryker Biotech. Philip was personally indicted in October 2009 for allegedly encouraging surgeons to roll an unapproved mixture of the company’s products into sausage and cigar shapes for use in spine and bone procedures. Philip pleaded not guilty, and the case is pending in U.S. District Court in Boston.
“You make those people unemployed and unemployable, you will see an impact,” Burns said.
As is perennially the case, healthcare cases made up the bulk of the False Claims Act recoveries in all industries. In fiscal 2010, healthcare accounted for 83% of the $3 billion yielded by civil fraud cases. Last year, the healthcare total was $1.5 billion. The previous record was $2.3 billion in 2006, when the figure included a $900 million settlement with Tenet Healthcare Corp.
West vows to hold companies responsible for illegal actions.