A record $90 million False Claims Act settlement for the government as a result of a whistleblower lawsuit by a Keller Grover client was among the cases highlighted by the U.S. Department of Justice in a recent announcement touting its 2021 recoveries under the Act. 

On Feb. 1, Acting Assistant Attorney General Brian M. Boynton announced DOJ had recovered more than $5.6 billion from False Claims Act settlements and judgments in the 2021 fiscal year, the largest amount since 2014 and the second-largest amount recorded in the Act’s history.  

The False Claims Act was originally signed into law in 1863 to help combat fraud by suppliers to the U.S. government during the Civil War. It incentivizes whistleblowers to report a fraud on the government by rewarding them a percentage of the amount the government successfully recovers because of the whistleblower’s FCA case. The law also provides protection against retaliation. 

“Ensuring that citizens’ tax dollars are protected from fraud and abuse is among the department’s top priorities,” Boynton said. “The False Claims Act is one of the most important tools available to the department both to deter and to hold accountable those who seek to misuse public funds.”

The vast majority of 2021 recoveries — $5 billion — stems from fraud in the health care industry, DOJ said. Defendants in these cases included drug and medical device manufacturers, managed care providers, hospitals, pharmacies, hospice organizations, laboratories and physicians. 

In its announcement, DOJ highlighted the case of Kathy Ormsby, Keller Grover’s whistleblower client who, together  with the government, settled False Claims Act allegations against Sutter Health for $90 million in August of 2021. 

The settlement marked the largest False Claims Act settlement against a hospital system involving allegations of fraud on the Medicare Advantage Program and the second-largest Medicare Advantage fraud settlement ever.

Ormsby alleged that Sutter Health knowingly submitted inaccurate and unsupported medical diagnosis codes to the Centers for Medicare & Medicaid Services, or CMS, which inflated its Medicare Advantage reimbursements. 

Under the Medicare Advantage Program, CMS pays insurers on a per member, per month or capitated basis. CMS then calculates and increases payments to insurers through a risk adjustment system in which payment increases are based in part on the beneficiaries’ health status, paying more for sicker members and members with costlier health conditions. As such, insurers are required to submit accurate, properly documented diagnosis codes. 

In his comments on the DOJ’s 2021 recoveries, Boynton reaffirmed that Medicare Advantage Program (Medicare Part C) fraud remains an “important priority” for the DOJ.

Boynton also said the government has recovered more than $70 billion since 1986, when Congress passed key whistleblower provisions to the False Claims Act. Congressional leaders are considering another update to the law, the False Claims Amendments Act of 2021, which would be the first amendment to the Act since 2009.   

Whistleblowers play an important role in reporting fraud against the government. With more than 30 years of experience litigating fraud and employment cases, Keller Grover is uniquely positioned to represent whistleblower clients. The firm has recovered billions for its clients.

We are here to help those who want to report wrongdoing. For advice about how to handle suspected fraud, contact Keller Grover for a free and confidential consultation.