False Claims Act Update & Alert

  

Taxpayers Against Fraud Education Fund
March 17, 2005
   

Contact: Jim Moorman, President    
202-296-4826   x 22      




More Transparency Needed at DoJ
Sen. Grassley Seeks
True Numbers from
DoJ Fraud Fighters



Sen. Charles Grassley (R-IA), Chairman of the Senate Finance Committee, has introduced legislation that would require the Department of Justice to submit semi-annual reports about fraud settlements under the False Claims Act. The legislation is prompted by a lack of clear reporting on the amount and nature of False Claims Act settlements from the U.S. Department of Justice.

"It's a bit odd that it is going to take an Act of Congress to get the Department of Justice to report out meaningful numbers on what it is actually doing to combat fraud," notes Jim Moorman, President of Taxpayers Against Fraud Education Fund, a nonprofit public interest organization working to promote the False Claims Act.

"DoJ numbers in the False Claims Act arena are presented without context.  DoJ says it has collected over $12 billion in fines and settlements since 1986 from companies committing fraud against the U.S. Government, but we really have no idea at all if we are making progress in the war against fraud.  We don't know how these recoveries compare with the amount of fraud against government programs.  In fact, we don't even know what percentage was recovered of the money stolen in the very cases that were settled."

The slow speed and tenuous nature of DoJ False Claims Act prosecutions has raised eyebrows in court as well as on Capitol Hill.  In a recent hearing involving a large prescription drug benefit management company, the presiding magistrate noted that federal prosecutors had moved at a turtle's pace. 

"I spent 21 years with the Department [of Justice], and I never saw a case yet that took [the U.S. Government] six years to decide whether to get in or get out.... It must be one devil of an investigation," said Tennessee magistrate Joe Brown.

In fact, notes Moorman, for a good chunk of that six-year period there is a pretty good chance that the government was not investigating at all.  "There's a tremendous backlog of fraud cases out there," says Moorman, "but DoJ is processing them at a snail's pace.  Cases routinely languish for years.  This is so despite the fact that False Claims Act prosecutions are bringing in $13 for every dollar spent on investigations and prosecutions."

In a recent letter to Attorney General Alberto Gonzales, Sen. Grassley noted that in his opinion "the Department [of Justice's] administration of the False Claims Act lacks vision, transparency, energy, authority, goals and resources -- almost everything a program should have to succeed."
 

"At a time when many States are struggling with their Medicaid budgets, Congress needs to know how effectively DoJ is in suppressing Medicaid fraud and returning money to the States."
- Sen. Charles Grassley

In a floor statement made while introducing the legislation, Sen. Grassley noted that the failure to report critical data on fraud recoveries has a very direct impact on policy decisions being made on Capitol Hill.  "At a time when many States are struggling with their Medicaid budgets and Medicare costs are soaring, Congress needs to know how effectively DoJ is in suppressing Medicaid fraud."

Taxpayers Against Fraud Education Fund notes that DoJ provides little information to back up its statistics.

"There were fewer than 100 False Claims Act cases last year," notes Jim Moorman.  "Inexplicably, the DoJ does not publish a list of the cases they settle or the amount they are settled for. Press releases are issued in a haphazard way, whistleblowers and their attorneys are frequently omitted in press announcements, and the scope of the actual fraud against the U.S. Government and the American people is left a complete mystery. The result is that this program remains undeveloped, unheralded, and painfully strapped for personnel."

The TAF Education Fund notes that its own informal but detailed listing of False Claims Act cases logged more than $170 million more in recoveries than reported by DoJ in FY 2004.

"We cannot explain it," says Moorman. "All we can tell you is that we have source information for the cases that we report."

Sen. Grassley's bill would require the Department of Justice's false claims act section to operate with more transparency than it has in the past. Among the questions the DoJ would be required to answer:

  • How long are False Claims Act cases being kept under seal?

  • How big is the backlog of cases waiting resolution, and what is the broad nature of these cases?

  • How effectively does DoJ capture the damages and penalties provided for by the act?

  • How effectively does DoJ use the tools provided by the False Claims Act, such as civil investigative demands?

  • How large are the frauds being perpetrated against the Government, and is the False Claims Act recovering enough of the stolen money?

Notes Moorman, "We feel quite strongly that accountability is not just for private industry, but for the Government as well. The American people have a right to know whether the government's premier anti-fraud law is working, how much money is being recovered, who the fraud-perpetrating companies are, and how much fraud is being left uninvestigated."