DoJ Hides Its Light Under a Barrel

DoJ issues press releases all year long that say one thing while, at the end of the year, they announce something else.

What’s going on?

Simple enough:  When DoJ announces a False Claim Act recovery, they put the total recovery into their headline; a recovery that includes state Medicaid recoveries and criminal penalties triggered by False Claims Act investigations.

When DoJ announces recoveries at the end of the year, however, they leave the criminal fines off the table, as well as the state recoveries.

Why?

Again, simple enough; when DoJ first started compiling FCA statistics more than 25 years ago, criminal fines associated with FCA cases were nonexistent, and there were almost no Medicaid recoveries.  DoJ False Claims Act statistics keeping remains an artifact of that era.

A classic example of the described phenomenon is the GlaxoSmithKline case announced earlier this year. DoJ’s July press release states that $3 billion was recovered in this case but, of course, $1 billion of this was a criminal penalty.

Of the remainining $2 billion, $1.043 billion was paid for off-label promotion of various drugs, and of this sum the federal share was $832 million, and the state share was $210 million.

In addition, GSK agreed to pay $657 million relating to false claims arising from misrepresentations about Avandia. The federal share of this settlement was $508 million, and the state share was $149 million.

Finally, GSK agreed to pay $300 million to resolve allegations of price-gouging, including $160,972,069 to the federal government, $118,792,931 to the states, and $20,235,000 to Public Health Service entities.

The bottom line: Of the $3 billion recovered to government solely due to whistleblower-initiated False Claims Act cases first filed by private attorneys, the federal government only booked $1.5 billion under the federal False Claims Act, and DoJ end-of-year statistics manage to “lose” the other $1.5 billion.

The result is the odd scenario we see today, where DoJ announced they had recovered $4.959 billion under the False Claims Act when, in fact, total recoveries to taxpayers from False Claims Act cases exceed $9 billion for the top 30 FCA case alone.

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