DOJ fraud recoveries rise in FY 2014 – perhaps significantly

by Ben Vernia | October 4th, 2014

Although the Department of Justice typically reports civil fraud recoveries in January, based on press releases issued during the just-ended fiscal year, 2014 saw a significant uptick in the amount returned to federal programs and the Treasury. A series of massive mortgage-related recoveries account for much of the increase, but the lack of transparency in accounting for the Bank of America settlement proceeds prevents me from providing anything other than a high and low range.

At the low end (excluding all of the BOA settlement proceeds), DOJ has announced over $4.5 billion in settlements. At the high end (including $1.8 billion of the BOA settlement that DOJ described vaguely as “federal fraud claims”), the total rises to over $6.3 billion. This compares to $3.8 billion announced for FY 2013 (although, as I pointed out earlier this year, this amount included $900 million in judgments which were uncollected because of appeals). Overall, DOJ recoveries are set to rise between 56% and 118% over last year’s collections.

Once again, health care fraud cases account for the clear majority of the announced resolutions. Of the 64 reported recoveries, 46 (72%) were for health care fraud. Two-thirds of the $3.34 billion in health care recoveries came from a $2.2 billion multi-drug, multi-qui tam settlement DOJ announced in November with Johnson & Johnson. With that notable exception, there were few other off-label promotion cases involving pharmaceuticals. Nursing home and home health cases appear to be rising, as do medical device recoveries.

Conversely, Defense procurement fraud recoveries account for an increasingly smaller dollar amount – just over $30 milion in FY 2014. Just under 10% of the reported recoveries (6 out of 64) involved DOD.

The other big news in 2014 was the suite of three mortgage fraud settlements: BOA, Suntrust, and JPMorgan Chase. Although these totaled over $18 billion (with BOA’s $16.65 billion representing over 90% of this total), only a portion of BOA’s and Suntrust’s settlements were identified as civil fraud recoveries.

Other significant case types include the Postal Service (with two announced recoveries, and an ongoing, high-profile case involving cyclist Lance Armstrong), and the Small Business Administration, over its incentive programs.

The numbers reported here are from the press releases issued by Main Justice and those of U.S. Attorney’s offices which have been brought to my attention through various means. They do not include settlements by the Office of Inspector General of HHS (a subject of an upcoming post), or other – typically smaller – settlements achieved by AUSAs but not reported through Main Justice’s website

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