Headlines Do Not Fight Fraud, Whistleblowers Do
By Attorney Tony Munter
The Department of Justice released its summary of False Claims Act cases for fiscal 2021 yesterday with what I would charitably describe as an unusual headline. Frankly, it had many of us in the Qui Tam world doing a double take. The headline says “Justice Department’s False Claims Act Settlements and Judgments Exceed $5.6 Billion in Fiscal Year 2021.”
That headline was picked up by Law 360, which said “DOJ Recovers $5.6 Billion in 2021 for 2nd-highest FCA Haul.” I can’t blame Law 360 for relying on a DOJ headline, the DOJ is usually is pretty conservative in how they post headlines, especially with respect to FCA recoveries and money.
Law 360 did miss the fine print from the DOJ.
No, they have not “recovered” anywhere near $5.6 Billion. In fact, half of that may never be recovered. The DOJ counted in that figure money from Opiod litigation against Purdue Pharma. They say that as part of a “global resolution of criminal and civil liability, in October 2020, Purdue agreed to an allowed, unsubordinated, general unsecured bankruptcy claim for $2.8 billion to resolve…”
An allowed, unsubordinated, general unsecured bankruptcy claim against a company currently in bankruptcy is not what any lawyer’s clients would call cash. How much ultimately will be recovered as a result of the Opiod mess is not known, but you are not going to find many experts who think the DOJ is going to collect anything like $2.8 Billion out of this particular claim. Yet they counted it as part of the total and Law 360 fell for it and used “recovered” and now people may think this was one of the best years for the False Claims Act ever. I’m sure most of the lawyers at DOJ who work on cases found this mortifying.
Instead of writing fancy headlines, the DOJ should ask for more than line attorneys and investigators they have and put a plan out in public as to how they might collect that kind of money for real. Would a Congressperson or Senator be against more resources to fight fraud? Well maybe they would, but they sure won’t want to go on the record to say so.
Check out the Taxpayers Against Fraud, Fraud by the Numbers project at TAF.org and you will see that even the $5.6 Billion figure would not represent much of a fraud recovery, not as a percentage of government spending. It is not when compared with how much money is spent by the U.S. Government or any realistic assessment of how much is lost to fraud. The U.S. spent $1.2 Trillion on Medicare in 2021 alone. There’s Medicaid, Defense, Customs enforcement, royalties on energy produced on federal lands, money spent abroad and at home. Look around, bragging about collecting $5.6 Billion in fraud claims for the entire U.S. Budget would be pitiful as against a realistic assessment of fraud, but when half of that figure is an “unsecured bankruptcy claim,” we should all demand more far more enforcement of the False Claims Act. We should remember as well the Whistleblowers who were responsible for cases that generated $1.6 billion according to the DOJ last year. Strengthening the False Claims Act, working to enforce it and working with whistleblowers will actually help fight fraud. Reaching for a headline is not enough.
