Justice Department Nabs Record $3 Billion From Health Care Fraud Settlements

According to Modern Healthcare, the Department of Justice took in $4.9 billion in collections and settlements through the False Claims Act in fiscal year 2012 — an all-time high, largely bolstered by over $3 billion in collections from health care firms.

The False Claims Act encourages whistleblowers to report fraudulent activities undertaken by private actors against the U.S. government. This past fiscal year, the Justice Department received its highest-ever haul from health care firms engaging in Medicare fraud and pharmaceutical companies promoting drugs for off-label use not authorized by the FDA:

Top among the healthcare settlements in 2012 was GSK’s agreement to pay $1.5 billion in civil remedies to resolve charges, without admitting liability, in allegations that it promoted Paxil, Wellbutrin, Advair, Lamictal and Zofran for off-label uses, as well as making false statements about the safety of Avandia and paying kickbacks to doctors to prescribe Imitrex, Lotronex, Flovent and Valtrex.

GSK’s civil payments were part of a $3 billion “global” settlement with federal and state governments that also included criminal fines and pleas and an unusual corporate integrity agreement that changed how the company compensates sales staff and executives.

Also in 2012, the Justice Department reported collecting $441 million to resolve allegations that Merck illegally marketed the painkiller Vioxx, which was pulled from the market in 2004. That settlement, which came without an admission of wrong-doing, was part of a $950 million resolution that involved criminal and civil fines and settlements.

Fraud in government health care programs has been a consistent target of the Obama Administration in an effort to protect consumers and lower wasteful health spending. Doctors regularly overbill Medicare through shoddy, fraudulent procedures such as “self-referring” their patients and “upcoding” the complexity of the services they provide patients in order to reap undeserved profits.


But the biggest settlements from the past fiscal year’s False Claims Act collections stem from pharmaceutical companies engaging in unlawful and misleading drug promotions — a practice that was upheld by a federal appellate court on Monday and may soon head to the Supreme Court.