Whistleblowers Received $170 Million In Fiscal 2005;
More Than $1 Billion Recovered By Federal Government,
Attorney Timothy J. McInnis Reports

NEW YORK CITY - Individuals and businesses who blew the whistle on contract, program and other schemes to defraud the federal Government were awarded nearly $170 million in fiscal 2005, according to New York City Attorney Timothy J. McInnis, Esq., whose national legal practice concentrates on representing whistleblowers by filing fraud-against-government cases under Qui Tam provisions of the False Claims Act.

Some $1.1 billion was recovered by the Government via whistleblower claims in the fiscal year that ended in September 2005, according to U.S. Department of Justice statistics, and 2006 is shaping up to be even bigger, said McInnis, a former federal prosecutor who handles whistleblower-revealed fraud in all types of Government programs and purchasing.

The False Claims Act, which dates back to the Civil War, was substantially strengthened in 1986 to better reward and protect whistleblowers who bring knowledge of fraud to the Government via attorneys like McInnis.
Individuals and entities who defraud the Government by claiming federal funds to which they know they aren't entitled are liable for three times the Government's loss and penalties up to $11,000 for each false claim, McInnis explained.

"Relators," who bring so-called qui tam suits, can receive up to 30 percent of the amount recovered by the Government if authorities do not intervene. If the Government agrees to take over, or "join" a whistleblower case, relators can receive up to 25 percent of the total amount recovered, explained McInnis, who heads the Fifth Avenue-based McInnis Law

For the first three months of 2006 more than $1 billion has been recovered by the Government in whistleblower cases, according to Washington, D.C.-based Taxpayers Against Fraud ("TAF"), a national organization of whistleblower lawyers who support the False Claims Act. McInnis serves on TAF's six-attorney Advisory Committee.

The $1.1 billion in 2005 qui tam recoveries represents nearly 80 percent of more than $1.4 billion in total settlements and judgments for the fiscal year. Since the False Claims Act was strengthened in 1986, approximately $15 billion has been returned to the U.S. as a result of qui tam suits, according to a November 2005 U.S. Department of Justice news release.

TAF President Jim Moorman has called continuing prescription drug fraud "breathtaking." In a January 2006 Corporate Crime Reporter article he noted that, "Only 14 cases have been settled [in 2006], but they have returned over $3.44 billion to the U.S. Government. Over 150 cases, involving more than 500 drugs, are now under investigation."

In health care fraud The Department of Health and Human Services received the biggest recoveries, attributable to its Medicare and Medicaid Programs. Other 2005 recoveries were made to the Office of Personnel Management, which administers the Federal Employees Health Benefits Program, the Department of Defense for its TRICARE insurance program, the Department of Veterans Affairs, and the Railroad Retirement Board, according to the Department of Justice release.

Besides health care, 2005 recoveries were made by the Department of Defense, for procurement fraud accounting for more than $112 million. Nearly $42 million in settlement and judgment awards were recovered from PriceWaterhouseCoopers, L.L.P., for alleged false claims for travel expenses in connection with contracts with numerous federal agencies. Nearly $31 million was recovered from Harvard University and its agents in connection with a United States Agency for International Development agreement to advise Russia in its transition to a market economy.

Among significant whistleblower rewards and recoveries in 2005, according to the Department of Justice, were:

• Five whistleblowers who received $12.6 million from a $327 million settlement with HealthSouth Corporation. The $327 million settled allegations of fraud against Medicare and other federally insured health care programs, outpatient physical therapy services, hospital overbilling, and billing Medicare for unallowable expenses;

• $310 million from Gambro Healthcare for false claims for Medicare and Medicaid in connection with dialysis services;

• Ven-A-Care of Florida Keys, Inc., a small home-infusion company, and its principals received awards from $140 million GlaxoSmithKline paid to settle allegations of fraudulent drug pricing and marketing that resulted in inflated claims to Medicare, Medicaid, and other federally funded health care programs; and

• $138.5 million paid by AdvancePCS, a subsidiary of Caremark, Inc., a pharmacy benefit management business, to resolve allegations that AdvancePCS exacted kickbacks, disguised as administrative fees and sales and service agreements, from drug manufacturers in exchange for marketing their drugs to providers reimbursed by federally insured health programs; and other allegations.

Peter Keisler, Assistant Attorney General in the U.S. Department of Justice's Civil Division, lauded whistleblowers who come forward with information on Government program fraud and stated, in the news release, the Department's "unwavering commitment to root out government fraud and to ensure that citizens' tax dollars are well spent."

Sen. Charles Grassley (R-Iowa) and Rep. Howard L. Berman (D-Cal.), who sponsored the 1986 amendments that strengthened the False Claims Act were also lauded by Keisler, who called the Act, "the government's primary weapon to fight government fraud.

"Without this important legislation strengthening the Act and, in particular, the qui tam provisions which give ordinary citizens the courage and protection to blow the whistle on government fraud, such recoveries would not have been possible."

"Qui Tam" is the start of a Latin phrase describing a type of lawsuit that pays a bounty to citizens who sue successfully on behalf of the Government. The full phrase is "qui tam pro domino rege quam pro si ipso in hac parte sequiture," which translates roughly as "Who sues on behalf of the King as well as for himself." In a qui tam suit, the party bringing the suit (the "relator"), does not need to have suffered some type of harm, he or she needs only to possess and be willing to divulge important information, McInnis explained.

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