From the Field – Qui Tam Highlights in 2010:

News From the Whistleblower Action Network 

Whistleblower Action Network affiliate Steve Cohen of Cohen Law Group presented “Developing Laws to Root Out Fraud to the IRIS Serbian Delegation on May 13, 2010. Cohen engaged an audience of Serbian government officials, journalists, and leaders of NGOs active in the movement against fraud and corruption. His presentation focused on how to use whistleblower laws to ferret out fraud in their home country.

Whistleblower Action Network affiliate Tim Terry of The Terry Law Firm presented six times throughout February and March to the National Contract Management Association (NCMA) members who specialized in the government contracting area for a wide variety of governmental and private entities. Terry presented throughout California, Utah, Washington, and Arizona. The presentation consisted of a “nuts and bolts” discussion of the False Claims Act, the role of whistleblowers, financial protection and so forth. Terry also made a similar presentation in Phoenix to the Arizona chapter of the Certified Fraud Examiners in May.

Recent News from Washington

• New Consumer Protection Agency Created

Congress has authorized a new Consumer Financial Protection Bureau. President Barack Obama has named Harvard Professor Elizabeth Warren as a special advisor in charge of overseeing the agency. As the brainchild of the bureau, Warren will guide the bureau but a director has yet to be named.

• New Whistleblower Regulations for the SEC and the IRS

New regulations were introduced for both the SEC and the IRS this year. This provides a new opportunity to combat fraud and corruption within our financial system.  The regulations are quite new, but represent an important step in the federal government’s commitment to false claims cases.

• New Civil Frauds Unit Focuses on Financial Fraud

President Obama created an interagency task force committed specifically to combating financial fraud of all types. With teams working form an array of fields and professions against financial fraud, the government has dedicated even more resources to helping whistleblowers and their lawyers expose fraud.

A Year of Record Recoveries

This past year has seen some of the largest recoveries ever recorded for False Claims Act cases. Through November, in 2010 alone, the federal government has recovered over 3.1 billion dollars as a result of qui tam cases initiated by private whistleblowers and their lawyers brought under the False Claims Act. These figures do not include the amount of money recovered by the states, which are usually also involved in and benefit from qui tam cases.

Since 1986, when Congress amended the federal False Claims Act, whistleblower led qui tam recoveries to both the states and the federal government now total over 28 billion dollars.

Significant Health Care Qui Tam Cases

• Allergan Pays  $600 Million Dollars To Settle Botox Off Label Marketing Qui Tam

Pharmaceutical giant Allergan settled a $600 million dollar qui tam case regarding the off label marketing of Botox. The company was charged with providing workshops and dinners, as well as paying doctors to promote it’s off label usage. The settlement includes $375 million in criminal fines and $225 million in civil fines, $12 million going to the intervening States. Five whistleblowers and their lawyers were vital to the exposure of the fraud, and will share an award of 37.8 million dollars.

• GlaxoSmithKline Pays $750 Million, Largest Whistleblower Award To Date

A single whistleblower and her lawyers share a $96 million dollar award for the exposure of systemic deceit in relation to product contamination and dosage irregularities at a plant in Puerto Rico. The fraud impacted 19 different medications, including the popular Paxil and Avandia.

Other Significant Qui Tam Cases

• Financial Aid Lender Pays $55 Million in Damages

In a case settled regarding the gross overpayment of government money to educational lender NelNet, the company was ordered to pay $55 million in damages to the federal government. The scheme was revealed by a single whistleblower, who realized that NelNet and other lenders were exploiting a loophole that guaranteed a certain amount of return on federally funded educational loans.

• Government Joins Qui Tam Alleging Mortgage Fraud Conspiracy

A case exposing orchestrated Mortgage consumer fraud with 14 defendants was announced in October.  Allegedly, sellers, lenders and appraisers conspired to commit mortgage fraud resulting in the sale and default of 17 residential properties in the state of New York. All 17 loans, which underwrote the properties, defaulted within months of closing, exposing the Department of Urban Housing and Development (HUD) to millions of dollars in losses. The complaint seeks damages via the False Claims Act.

Exposing fraud in new areas like these is integral to the federal government’s efforts to recover lost taxpayer money resulting from the financial crisis.