While Healthcare Fraud Cases Grow, Defense Fraud Cases Decline

The modern success of the False Claim Act stems largely from whistleblowers filing cases involving healthcare fraud. That success stands in contrast to a decline in cases filed alleging fraud committed in the defense industry.

The Department of Justice attributes more than $48 billion in settlements and judgements to cases whistleblowers have filed since the False Claims Act was amended in 1986. Those amendments effectively restored the right of whistleblowers to file cases on the government’s behalf. This $48 billion comprises the majority of funds collected by Civil Fraud Actions in the modern era of the Act.

The overall growth in False Claims Act cases brought by whistleblowers and the collections associated with those cases is substantial. Here are the numbers from the last 30 years showing growth both in money returned to the taxpayers and in cases filed:

DOJ reports new cases filed and recoveries on the same line per year. Recoveries actually come in for the year for cases filed in previous years, so a correlation requires looking at broad periods of time. Inflation is a factor in amounts collected over a long period of time, which is not accounted for here.

Healthcare related cases predominate the field. Historically, claims filed for fraud committed against the Department of Health and Human Services account for 76.7% of the funds recovered by cases filed by whistleblowers, and that figure may understate the true impact of healthcare cases.1

Here’s how whistleblower activity for HHS cases has grown over time:

By contrast, whistleblowers have not been as successful in addressing fraud on the Department of Defense. The numbers reveal a decline in cases filed and relatively little monetary recoveries resulting from matters involving the DOD over time:

The last ten years of recoveries from the defense industry as a result of cases brought by whistleblowers is equal to slightly more than one tenth of a percentage of the $1.1 trillion FY 2021 Defense Budget, and both recoveries and cases filed have declined.

Although, the False Claims Act was enacted and amended in order to address DOD fraud, the numbers demonstrate that it has not been deployed often or with much success to fight defense industry fraud in recent years.

Written by Tony Munter of Price Benowitz. Edited by Jacklyn DeMar of Taxpayers Against Fraud and Regina Poserina of Cohen Milstein Sellers & Toll PLLC. Fact checked by Julia-Jeane Lighten of Taxpayers Against Fraud. Graphics made by James M. King of Taxpayers Against Fraud.

1. 76.7% of the total recoveries in whistleblower cases reported since the Act was amended is attributed to Health and Human Services cases by DOJ. $36,999,895.627 of $48,221,339,535. But other agencies also collect for healthcare cases. For example, Tricare cases are reported by the Department of Defense. So, the total share of healthcare claims is likely even higher than DOJ and HHS report, and the amount of defense contracting fraud collected is less than the DOD collections reported.