In Conclusion

Over the last thirty days, Fraud By The Numbers has spotlighted fraud schemes targeting government dollars and the financial markets. These 30 blog posts have evidenced the fraud-fighting impact of whistleblowers and whistleblower reward programs. The numbers reveal the truth about fraud.

Indeed, some trends have emerged. But what trend stands out? The answer: Relatively small groups of dedicated public servants have been tasked with fishing out fraud from the ocean of money moving through our government programs and financial markets. To assist these anti-fraud efforts, whistleblower reward programs have successfully encouraged private citizens to step forward with much-needed evidence and resources. However, if the goal is to expose more fraud, the numbers show that the nation needs to invest even more money into these proven programs.

Perhaps this line from the movie Jaws says it best: “You’re gonna need a bigger boat.” Or borrowing from history, they need to put out a call for a lot of little whistleblower ships to add to the fraud-fighting fleet.[1]

This is the third year that we have published Fraud by the Numbers. This project would not have happened without the vision and leadership of TAF Coalition Public Education Committee Chairwoman Kate Scanlan (Keller Grover LLP). We also wanted to recognize and thank all of our all-star contributors for their time researching, writing, and editing this year’s series:

– The Anti-Fraud Coalition Public Education Committee Members Tony Munter (Price Benowitz, LLP), Nick Mendoza (Murphy Anderson PLLC) Molly Knobler (DiCello Levitt), and Noah Rich (Baron & Budd, P.C.).

– TAF Coalition Members Roger Wenthe (Roger Wenthe, PLLC), MaryAnne Hamilton (Miller Law Group, PLLC), Jonathan Kroner (Jonathan Kroner Law Office), Jonathan Tycko (Tycko & Zavareei LLP), Emily Stabile (Phillips & Cohen), Matthew Beddingfield (Zerbe, Miller, Fingeret, Frank & Jadav LLP), and Jill Estes (Morgan Verkamp).

– The Anti-Fraud Coalition staff: Jeb White (President & CEO), Jacklyn DeMar (Director of Legal Education), James King (Director of Communications & Digital), Grace Swindler (Senior Counsel), and Tianyi Xu (Public Interest Advocacy Fellow).

Lastly, as the credits roll on this year’s series, we wanted to spotlight some of the statistical highlights from the last 30 days:

– Enforcement actions brought using information from meritorious SEC whistleblowers have resulted in orders for more than $6.3 billion in total monetary sanctions, including more than $4 billion in disgorgement of ill-gotten gains and interest.

– Last year, almost half of the government’s total FCA recovery came from one healthcare case in which the government elected not to intervene—United States ex rel. Bawduniak v. Biogen Idec Inc., which settled for $900 million.

– The National Highway Traffic Safety Administration paid a whistleblower $24 million after his information led to Hyundai and Kia recalling 1.6 million cars equipped with engines that were allegedly prone to cause serious safety hazards.

– Surveys show a positive trend in the likelihood that employees who witness misconduct will try to report it, increasing from 69% in 2017 to 86% in 2020.

– The state governments spent nearly $2 trillion on non-Medicaid purchases in FY 2021. These funds are vulnerable to fraud, and states with no FCA or a Medicaid-only FCA are missing the best tool known for fighting that fraud.

– Three recent spending bills—the Bipartisan Infrastructure Law (BIL), the CHIPS & Science Act (CSA), and the Inflation Reduction Act of 2022 (IRA)—injected $2 trillion dollars into the economy. If only 1% of these funds are lost to fraud, $20 billion will be stolen. 

– DOJ continues to pursue telehealth fraud schemes, as evident by a recently-announced law enforcement action that involved charges against 78 defendants and $2.5 billion in allegedly fraudulent claims.  

– A recent study found that: (1) private equity acquisitions in every studied healthcare setting have increased in prevalence; (2) these investments “were most closely associated with up to a 32% increase in costs for payers and patients”; and (3) private equity ownership was “associated with mixed to harmful effect on care quality.” 

– In recent years, 67% of all US physicians received payments from the pharmaceutical industry. This number climbed above 80% for such high-dollar specialties as oncology and orthopedic surgery.

– In FY2022, the Securities & Exchange Commission employed only 4,547 employees to monitor the $100,000,000,000,000 capital markets.

– The combined annual budgets of the SEC and FDIC are only $4.6 billion, which is less than one-fourth of the $18.9 billion in equity traded on the New York Stock Exchange every single day.

– DOJ reports that only about $103 million of the $2.2 billion recovered under the FCA in FY2022 involved fraud on the Department of Defense. $103 million out of the $715 billion in military spending is approximately 11 thousandths of a percent (0.0011%). 

– In FY2021, twenty outpatient procedures accounted for nearly 40% of all Medicare Part B outpatient payments.

– Independent legislative agency MedPAC projects that this year’s overpayments to Medicare Advantage plans will top $27 billion.

– In FY2022, non-intervened FCA qui tam actions recovered more money for the US Treasury than government-initiated and intervened FCA qui tam actions combined.

– Healthcare has become a prime target for cyberattacks, with more than 300 data breaches in the first half of 2023 alone. A recent study raised particular concern about the cybersecurity vulnerabilities of software applications found in medical devices.

– DOJ reports that frauds involving cryptocurrency increased by over 183% year-over-year in 2022.

– The government has recovered more than $220 million over the past dozen years in customs-related False Claims Act cases.

– The losses from cryptocurrency cyber fraud, a major enforcement focus for the SEC, rose to $2.57 billion in 2022, from $907 million in 2021. And the global average cost of a data breach reached an all-time high of $4.45 million in 2023.

– In a recent white paper, the SBA’s Office of Inspector General reported that, out of the total of $1.2 trillion in PPP and EIDL loans, it had identified fully $200 billion as potentially fraudulent. 

– The American taxpayer is paying wildly different prices for the same drugs depending on which government program is the purchaser. For example, in 2017, the Veterans Administration paid an average of 54% less per unit of almost 400 brand-name and generic drugs than the Medicare Part D program.

– According to a GAO report, in 2022 the federal government contracted for $435 billion in services provided to civilian and defense agencies, as compared to $259 billion in products. Nearly $30 billion of the “services” were for healthcare services and another $29 billion were for services from the fraud-prone “engineering/technical” industries.

– A study of FCA relators found that 53.8% of the employee-relators reported the misconduct internally before reaching outside of the company. However, the companies responded most often by simply ignoring the report (more than 60%), and only 6% of the internal reports resulted in an internal investigation.

– According to an IRS report, the average amount of time it takes for IRS Whistleblower Section 7523(b) claims to go from the process of submission to payment sits at 11.24 years while the same cycle for Section 7623(a) claims is 9.79 years.   

– Of the 309,102 new federal civil cases filed in the U.S. in 2022, only 652 were FCA qui tam actions. This means that on average, less than 2 qui tam actions were filed nationwide each day, in a year in which the federal budget reached $6.27 TRILLION.

– In the thirty years from 1993 through 2022, False Claims Act qui tam actions have returned $50.1 billion to the US Treasury. This sum could cover a lot of governmental needs, such as the budget of the US Post Office for the next ten years.

– What would FCA recoveries look like without qui tam actions? In such a world, DOJ would have to investigate and initiate actions exclusively using the government’s own resources and sources of information. Based on historical data of government-initiated FCA actions, FCA recoveries would likely plummet by over 73% each year.

– Are FCA settlements the “cost of doing business” for some entities? Well, over the last 20 years, here are the number of settlements for these alleged serial FCA violators: Tenet Healthcare or its subsidiaries have settled at least 14 FCA cases. Pfizer or its subsidiaries have settled at least 18 FCA cases. Merck and Novartis and their subsidiaries have each settled at least 12 FCA cases. Boeing, one of the country’s most prolific military contractors, has settled at least 12 FCA cases. There seems to be a pattern here.

– DOJ filed 769 non qui tam FCA matters in the most recent three years reported 2020, 2021 and 2022, and two thirds more cases than the 460 cases DOJ filed in the previous 3 years 2017, 2018 and 2019.

Numbers don’t lie; fraudsters do.  See you again next year! In the meantime, follow our newsletter and Fraud in America.

Jeb White is the President & CEO at The Anti-Fraud Coalition

[1] In 1940 Winston Churchill famously gave the bold order, commonly called the request for Little Ships, to assemble “a large number of small vessels in readiness” to sail across the English Channel to rescue British troops pinned down at Dunkirk,