New data released by a prominent anti-fraud group in Washington, Taxpayers Against Fraud Education Fund, revealed that payments by companies accused of violating the False Claims Act rose in fiscal year 2014, hitting a record $5 billion. The rise is due to the increase in whistleblowers willing to come forward with information about fraudulent behavior by their employers, a risky proposition that occasionally pays off big.
Helped by the $2.2 billion payment by Johnson & Johnson late last year over its off-label use of Risperdal, the Department of Justice has revealed that it will bring in more than $5 billion this year under the False Claims Act. Though this may seem like a huge sum, and it is, it is merely a drop in the bucket of what the government is owed. Beyond the billions lost due to fraud and waste, more than $300 billion in unpaid taxes all add up to big deficits.
Though the money may not seem huge compared to the overall size of the federal government's budget, it can be big money for the whistleblowers brave enough to bring the cases of fraud to light. This year alone, whistleblowers walked away with $388 million for their efforts in rooting out waste. Since the program began in 1987, whistleblowers have earned $4.3 billion.
One example from this year is a nurse out of Alabama who reported fraudulent Medicare billing. In April, the company settled its claim with the Department of Justice and ended up paying out $15 million to the nurse.
The Alabama case illustrates just how big the health care world has become in terms of the False Claims Act. Originally created to police the defense industry, whistleblowers have increasingly gravitated towards the health care industry, realizing it serves as fertile ground due to the abundance of money and fraud sloshing around.
Experts say the rise in the amount of payments corresponds directly with the rising number of whistleblowers willing to come forward. Back in 1987, when the False Claims Act was first passed, only 30 individuals were willing to step forward and bring qui tam cases against those companies accused of defrauding the government. This past year saw the number rise to 753 individuals.
Though coming forward and acting as a whistleblower can pay off financially in some cases, it is far from a get-rich-quick scheme. Experts say that each year only a small number of cases filed ever reach a favorable settlement. Of this number, there is no guarantee that the payouts will reach the level needed to quit working. The problem that this can lead to is that whistleblowers often find themselves blacklisted from future job opportunities, this despite federal protections meant to shield whistleblowers from retaliation.
Sources:
Whistleblower Cases Hit New Records, by Karen Aho, published at Businessweek.com on July 29, 2014.
Under False Claims Act, Whistleblowers Get Their Share of Billions, by Rich Lord, published at Post-Gazette.com on February 22, 2014.
