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INDUSTRY NEWS

FCA Recoveries Over $20 Billion | Pharmaceutical Fraud | Big Business | Mail Fraud
The Scope of Pharmaceutical Fraud | Lighting the Fuse on Gunpowder Fraud

Fiscal Year 2006 was a record year for False Claims Act recoveries, says Taxpayers Against Fraud, which estimates total settlements and judgments will top $3.142 billion. This figure does not include more than $200 million in settlements which have been announced by companies but not yet green-lighted by the U.S. Department of Justice.

Notes Jim Moorman, President of Taxpayers Against Fraud, "We have seen extraordinary fraud settlements this year. The whistleblowers, investigators, and private and Department of Justice attorneys that have worked on these cases deserve a huge thank you from the American people." also said that the numbers should grow as activity increases in states that pass their own False Claims Acts.

Specific cases:

FCA Recoveries Over $20 Billion
Total False Claims Act recoveries (Federal and State) since the 1986 amendments now total over $20 billion, with nearly $1 billion announced in the first quarter of FY 2007. To put this into perspective, the $20 billion recovered from fraud-feasors to date represents a stack of $100 bills more than 19 miles high. In the health care arena, the U.S. Government is recovering $15 back for every $1 invested in False Claims Act health care investigations and prosecutions.

Pharmaceutical Fraud
$3.9 Billion in Pharmaceutical Fraud Is Just the Tip of the Iceberg
Taxpayers Against Fraud Education Fund has released a new study which notes that in the last two years, pharmaceutical manufacturers have paid a total of $1.6 billion to resolve allegations of Medicare and Medicaid fraud, but that these cases represent just the tip of the iceberg as more than 180 additional cases remain under seal, representing scores of billions of additional stolen dollars.

In total, more than $3.9 billion has been recovered from drug manufacturers over the past six years as the result of just 16 cases brought by whistleblowers under the False Claims Act. Of the six False Claims Act cases that were settled in Fiscal Years 2005 and 2006, all involved fraud against Medicaid, and all were initiated by whistleblowers.

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The Scope of Pharmaceutical Fraud
The House Committee on Oversight and Government Reform is investigating the scope of pharmaceutical pricing fraud in government health care programs.

Jim Moorman, President of Taxpayers Against Fraud, noted that "So far, 16 settlements with prescription drug manufactures have recouped nearly $4 billion in civil damages and criminal penalties. There are more than 180 additional unresolved cases. Based on the cases settled to date, the potential liability of the drug cases currently backlogged at the U.S. Department of Justice is likely to be in the $60 billion range."

Big Business
Kerr-McGee Nailed for Fraud
A federal jury in Denver has found Kerr-McGee liable for cheating the U.S. Government out of millions of dollars in oil royalties. The decision is a vindication for former Minerals Management Service (MMS) auditor Bobby Maxwell who argued that the U.S. Department of Interior was purposefully turning a blind eye to scores of millions of dollars worth of fraud. Maxwell, along with three other former MMS auditors, have sued dozens of oil companies for cheating the U.S. Government.

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Lighting the Fuse on Gunpowder Fraud
For decades, the St. Marks Powder company, has been producing gunpowder for the military but not testing it as required. St. Marks, a division of General Dynamics, sells about $100 million worth of gunpowder every year, most of it used in small-caliber weapons. General Dynamics rushed to self-disclose the fraud when they found out a whistleblower might come forward. Under the FCA, a company is required to pay double damages, rather than triple damages, if they self-disclose.

Mail Fraud
U.S. Postal Inspectors investigate any crime in which the U.S. Mail is used to further a scheme--whether it originated in the mail, by telephone, or on the Internet. The use of the U.S. Mail is what makes it mail fraud.

If evidence of a postal violation exists, Postal Inspectors may seek prosecutive or administrative action against the violator. However, if money is lost through a fraudulent scheme conducted via the mail, Inspectors lack the authority to ensure you receive a refund and can’t require that products, services, or advertisements--on the Internet or elsewhere--be altered.

Postal Inspectors base investigations of mail fraud on the number, pattern, and substance of complaints received from the public. The Postal Inspection Service will carefully review the information you provide. We may share the information with other agencies when there is a possible violation within their jurisdiction.

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