On November 20, 2014, the U.S. Department of Justice ("DOJ") announced that its False Claims Act recoveries for Fiscal Year ("FY") 2014 reached a record-breaking $5.69 billion. This figure reflects both judgments and settlements in connection with the False Claims Act. The recordbreaking recovery reflects an almost 50% increase from last year's $3.8 billion recovery and a 16% increase from the prior record ($4.9 billion in FY 2012).

Of the $5.69 billion in FY 2014 False Claims Act recoveries, the DOJ collected approximately $5.4 billion from the financial and healthcare industries, which paid out $3.1 and $2.3 billion, respectively. The $3.1 billion collected from banks and other financial institutions stems from false claims related to federally insured mortgages and loans, while the $2.3 billion collected from the medical industry largely involved fraudulent Medicare, Medicaid, and TRICARE claims.

Of greater concern for contractors, however, is the large number of whistleblower actions filed by private citizens (or qui tam actions). Such actions accounted for $3 billion of the total FY 2014 recovery, and for the second straight year, whistleblowers filed over 700 qui tam actions in federal courts. This is a dramatic increase from prior years. For example, between 2006 and 2009, whistleblowers filed less than 400 qui tam actions annually. Although the last two years have seen record numbers, whistleblower suits have been growing steadily since 2007. Even when such suits lack merit, they can materially and adversely disrupt business by diverting personnel and resources from revenue-generating activities. A comprehensive risk management strategy can prepare even the smallest contractors and grant recipients to efficiently handle whistleblower actions.

Practice Updates

  • Our Government Contracts team recently scored consecutive wins for a pharmaceutical manufacturer at the GAO in multiple preaward and post-award protests, in which the U.S. Department of Veterans Affairs took corrective action in each of the protests, allowing the manufacturer to re-enter each of the competitions.
  • Another victory was scored for an information technology contractor in a pre-award protest of the U.S. Department of Health and Human Services' rejection of the contractor's proposal, where a U.S. Court of Federal Claims protest-related filing and a series of discussions with agency officials resulted in the agency taking corrective action by reinstating and evaluating the offeror's proposal.
  • In separate GAO protests lodged in connection with delivery of medical and dental services at Army National Guard bases, the procuring agency opted to take corrective actions.
  • Hilary Cairnie presented at the AID and International Development Forum Disaster Relief Summit 2014 on Wednesday, November 19, 2014. The presentation was titled "Building Successful Public Private Partnerships and Collaborations."

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