Each Fall, the Justice Department tallies its recoveries of taxpayer dollars that have been pilfered through fraud directed at federal programs. A year ago, DOJ proudly announced $3 billion in recoveries in False Claims Act cases, and a record $8.7 billion recovered in the three years starting in 2009.
Late this year, DOJ will announce that its fraud recoveries tripled from $3 million in FY 2011 to more than $9 million in FY 2012. This trend of increasingly large recoveries of stolen taxpayer funds proves once again the effectiveness of laws like the False Claims Act, which incentivize whistleblowers to expose fraud through its qui tam provisions.
Although health care cases account for the vast majority of FCA recoveries, growing areas include banking, mortgage, and pension fraud cases involving fraudulently obtained taxpayer dollars, as my colleagues at Taxpayers Against Fraud point out. States are also using their own false claims laws to recover stolen taxpayer funds.
In qui tam cases, private citizen whistleblowers (known as “relators”) file suit on the government’s behalf to expose fraud against taxpayer funds. The whistleblowers can receive 15-25% of the government’s recovery of stolen funds if the government prosecutes the case, and 25-30% if the government leaves it to the whistleblower to pursue the recovery.
Consider the history of False Claims Act recoveries that have totalled more than $39 billion since 1986, when Congress authorized meaningful rewards to whistleblowers:
According to DOJ statistics, in 1987 total FCA recoveries were just $86 million (with zero recovered in qui tam cases), but then began a steady climb upward. By 1994, fraud recoveries broke $1 billion for the first time, with $380 million attributable to qui tam cases. In most years since, the government has recovered more than $1 billion under the False Claims Act, and qui tam actions were responsible for the lion’s share. In 2006, DOJ set its previous record of more than $3.1 billion in settlements and judgments for fraud and false claims.
Sen. Charles Grassley (R-Iowa) has successfully urged Congress to repeat the FCA’s successes in combatting fraud by establishing the new IRS Whistleblower Program in late 2006, and the new SEC Whistleblower and CFTC Whistleblower Programs under the 2010 Dodd-Frank law. We have written extensively about the evolution of each program since they were created.
In a time of budget deficits, stopping fraud that drains taxpayer funds is a goal that any elected official should endorse. DOJ should take a bow for tripling FCA recoveries in FY 2012.