Enforcement actions involving the pharmaceutical and medical device industry were the source of the largest recoveries of up to about $2 billion.
The latest report by the non-profit organization Taxpayers Against Fraud (TAF) that supports whistleblower lawsuits has found that every dollar invested by the federal government to investigate and prosecute healthcare fraud generates a return of about $16.4.
From 2008 to 2012, the government spent $574.6 million to recover nearly $9.4 billion. In reality the return is much higher, almost $20 for every one dollar spent as civil fraud recoveries now represent only a portion of all False Claims Act (FCA) recoveries in the health care arena, stated the TAF report.
Large settlements are associated with large criminal fines and state Medicaid recoveries that are not accounted for in federal FCA statistics, according to the TAF.
The DoJ noted that these record recoveries were made possible through a closer collaboration between the DoJ and the department of Health and Human Services (HHS) which resulted in the Health Care Fraud Prevention & Enforcement Action Team (HEAT) initiated in May 2009 to investigate and prosecute fraud related to pharmaceuticals and medical devices.
The department recovered nearly $2 billion in cases alleging false claims for drugs and medical devices under federally insured health programs and, in addition, returned $745 million to state Medicaid programs. These cases include recoveries from GlaxoSmithKline LLC (GSK) and Merck, Sharp & Dohme (Merck) - two of the three top settlements. GSK paid $1.5 billion to resolve FCA cases which included promoting drugs for uses not approved by FDA, paying kickbacks to physicians to prescribe their drugs and for making false and misleading statements about drug safety. Merck paid nearly $322 million in criminal fines, returned more than $200 million to state Medicaid programs and DoJ also recovered $444 million from the company for false and misleading claims about drugs and for off-label promotion of drugs.
Criminal fines associated with false claims recoveries by the federal government between 2008 and 2012 were $4.5 billion, and recoveries by state governments totaled $4.4 billion. Combined with the nearly $9.4 billion recovered in civil cases, the total amount recovered for the five-year period was roughly $18.3 billion.
"Even this number is too low, however, as in does not account for the deterrent effect of False Claims Act law enforcement. Major settlements with large recoveries have a ripple effect that reduces the likelihood of similar fraud against federal and state health care programs," claimed the TAF report. Emphasising the role of whistleblowers, the TAF report pointed out that bulk of the recoveries due to FCA cases were initiated and developed by whistleblowers and their private attorneys.
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