Companies face a lot of risks these days in this enforcement environment.  With the reelection of President Obama, businesses need to plan for four more years of continuing enforcement risks. 

While everyone appears to be spending time on FCPA enforcement and compliance, companies need to spend more time in protecting themselves from the False Claim Act.  The government uses the False Claims Act to recover false claims for federal money or property, such as Medicare benefits, federal subsidies and loans and payments under contracts for goods and services, including military contracts.  With the federal government expanding its role in the mortgage market, the government is now targeting false claim cases in the financial industry.  

The federal government has all the tools and resources it needs.  It relies on a well-established program for whistleblowers (e.g. “relators”), who initiate qui tam actions in the hope of  a reward of up to 30 percent of the recovery.

The federal government False Claims Act program continues to be successful – this fiscal year the government recovered nearly $5 billion, an increase of $1.7 billion over last year.  Since 2009, the government has recovered a total of $13.3 billion. 

Healthcare Fraud

The Justice Department’s 2012 efforts also included record recoveries for health care fraud, where recoveries topped $3 billion for the first time in a single fiscal year.  Housing and mortgage fraud accounted for an unprecedented $1.4 billion.

Enforcement actions against the pharmaceutical and medical device industry were the source of some of the largest recoveries this year.  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.  

Glaxo Smith Kline (GSK) paid $1.5 billion to resolve False Claims Act allegations as part of a $3 billion global settlement including criminal fines and forfeitures as well as state Medicaid recoveries. 

Housing and Mortgage Fraud

The Financial Fraud Task Force continued its pursuit of financial fraud involving the housing and mortgage industries which resulted in a  $25 billion agreement among the federal government, the attorneys general of 49 states and the District of Columbia, and the nation’s five largest mortgage servicers for loan servicing and foreclosure abuses.  

Procurement Fraud

The Department of Justice pursued traditional procurement fraud including military contracts for goods and services.  In fiscal year 2012, the department recovered $427 million in false claims for goods and services purchased by the government, bringing total recoveries for procurement fraud since January 2009 to $1.7 billion.

Whistleblower Suits

The Justice Department joined 647 qui tam suits, a record number for a single year.  A record $3.3 billion was recovered in whistleblower suits.  Since 1986, whistleblowers have been awarded nearly $4 billion, with $439 million in awards in fiscal year 2012.