On Monday December 19, 2011, the Department of Justice announced year-end results for False Claims Act (“FCA”) cases in fiscal year 2011. The results, summarized below, demonstrate a dramatic increase in FCA cases brought by the government and private whistleblowers. The pharmaceutical industry is the prime target at the moment, but companies with defense contracts, federal subsidies and loans, and government contracts more generally are on the enforcement radar.

Background on the FCA

The False Claims Act is the government’s primary tool for combating government fraud. It does so by imposing civil liability on those who knowingly submit false or fraudulent claims for payment to the United States. Violators are liable for three times the government’s loss (treble damages) plus a civil penalty for each false claim submitted.

The Act allows an individual who has knowledge of an FCA violation (a whistleblower or relator) to bring a suit on behalf of the government and to share in any resulting damages recovered under the suit. Relators are entitled to 15 percent to 30 percent of the proceeds of a successful suit. This incentive, along with recent statutory changes that broaden the Act’s reach, have significantly increased the number of FCA cases brought in 2011.

The Government Recovered More than $3 Billion in FCA Claims in 2011

The Department of Justice has increasingly made fraud claims - including the FCA - a top enforcement priority. In addition, recent amendments to the FCA and other statutes have made it easier for private whistleblowers to bring FCA suits. As a result, in 2011 alone, the United States has recovered more than $3 billion in FCA damages and penalties. This brings the total recovery under the FCA to more than $8.7 billion since January 2009. The number of cases brought under the FCA has also dramatically increased - more than 11 percent in 2011 alone. Other highlights from the DOJ press release include:

• 638 qui tam actions brought by whistleblowers this year - nearly twice the average of between 350-450 a year;
• $2.8 billion recovered in cases brought by whistleblowers;
• $2.4 billion recovered in cases involving federal healthcare programs, including $2.2 billion from pharmaceuticals;
• Second consecutive year of more than $3 billion in FCA recoveries.

The Takeaway

The United States is committed to robustly enforcing the FCA, and the opportunities for whistleblowers to reap massive windfalls have never been greater. We anticipate that the FCA will be a continuing and growing source of potential liability for companies involved in healthcare, defense contracts, or entities involved with government contracts, loans, or incentive programs.

For more information, please visit the False Claims Act litigation page of the Haynes and Boone, LLP website, or contact one of the attorneys below.