A Banner Year for False Claims Act Recoveries – For Whom?
December 21, 2012
By: Lindsay Simmons
Principal Deputy Assistant Attorney General Stuart Delery recently announced the Department of Justice’s (DOJ’s) record year for False Claims Act (FCA) civil recoveries. What was the FY 2012 amount? Nearly $5 billion.
To what does DOJ attribute this startling number? According to Delery, who spoke at a recent briefing, “this Administration has achieved record returns for the U.S. Treasury and demonstrated the power of the False Claims Act for addressing fraud” by “by focusing on rooting out fraud like never before.”
Over the past four fiscal years DOJ has generated more than $13.3 billion in revenue for the U.S. treasury through FCA cases. And there is no question this trend will continue. DOJ’s Civil Fraud Unit is working with federal and state partners around the country to pursue, aggressively, FCA matters of all kinds – many involving government contractors.
Delery’s remarks centered not only on the dollar value of DOJ’s FCA activities. He also cited the fact that “fraud against the government is not just a problem that affects us as taxpayers.” According to Delery, false claims are “an epidemic that plagues every aspect of our daily lives.” Among the examples cited were those where government contractors supplied defective equipment to the military – affecting the lives of servicemen and women.
What are the implications of this trend? If you are a government contractor – or otherwise receive or make payments to the federal government – you need to be keenly aware of this dramatic step-up in the government’s civil fraud recovery program and redouble your efforts to be a responsible, ethical and complaint business concern.
Recognizing that enforcement alone will not resolve what Justice perceives as rampant fraud, it works in ways beyond FCA cases to address this problem. Among other efforts, Justice partners with other agencies “to root out fraud before it happens” and to negotiate compliance agreements. DOJ also pursues non-monetary remedies and other measures to promote future compliance.
One of the most significant aspects of Delery’s remarks was his expression of gratitude to whistleblowers:
Many of these cases would not be possible without the whistleblowers,known as relators, who have come forward to report fraud, often at great personal risk. We thank them for their service to the country and look forward to continued, productive collaboration in the years ahead.
Note: $3.3 billion of the $5 billion in FCA recoveries in 2012 came from a record 647 whistleblower – qui tam – suits brought by private citizens. Whistleblowers receive up to 30% of the recovery. And, as previously reported here, Congress recently passed the Whistleblower Protection Enhancement Act, so the number of qui tam suits will likely continue to increase overtime.
The Government is on the hunt for ways to reduce the federal budget. Make no mistake; pursuit of “fraud, waste and abuse” is part of that hunt.
Now is the time to examine your internal controls.
Ask yourself: Do you have a strong written program to ensure compliance with the terms and conditions of your government contracts? How often do you review and update your program? Do you provide regular training to ensure your employees understand their responsibilities? Do you encourage employees to report, internally, their concerns regarding compliance? Promoting internal communication typically improves compliance and reduces the chance of whistleblower actions. Make a New Year’s resolution – take a fresh look at your internal controls.
Lindsay Simmons is the attorney responsible for the content of this article.