DOJ Recovers Over $3.5 Billion from False Claims Act Cases in FY 2015

The Department of Justice announced today that it obtained more than $3.5 billion in settlements and judgments from civil cases involving fraud and false claims against the government in the fiscal year ending September 30, 2015.

This is the fourth year in a row that DOJ has exceeded $3.5 billion in cases under the False Claims Act, and brings total recoveries from January 2009 to the end of the fiscal year to $26.4 billion.

Of the $3.5 billion recovered last year, $1.9 billion came from companies and individuals in the health care industry. The next largest recoveries were made in connection with government contracts.

Government contracts and federal procurement accounted for $1.1 billion in fraud settlements and judgments in FY 2015, bringing procurement fraud totals to nearly $4 billion from January 2009 to the end of the fiscal year.

Significant cases include:

  • a $146 million settlement with Supreme Group B.V. and several of its subsidiaries for alleged false claims to the Department of Defense for food, water, fuel, and transportation of cargo for American soldiers in Afghanistan. Supreme Group affiliates Supreme Foodservice GmbH, a privately held Swiss company, and Supreme Foodservice FZE, a privately-held UAE company, pleaded guilty to related criminal violations and paid more than $288 million in criminal fines.
  • Lockheed Martin Integrated Systems, a subsidiary of Lockheed Martin Inc., paid $27.5 million and DRS Technical Services Inc. paid $13.7 million to resolve allegations that their employees lacked required job qualifications while the companies charged for the higher level, qualified employees required under contracts with the Army Communication and Electronics Command.
  •  VMware Inc. and Carahsoft Technology Corporation paid $75.5 million and Iron Mountain Companies paid $44.5 million. The government alleged that VMware and Carahsoft misrepresented their commercial sales practices, which resulted in overcharging government agencies for their software products and services sold through GSA’s Multiple Award Schedule. The government also alleged Iron Mountain misrepresented its commercial sales practices to GSA and failed to give certain discounts given to its commercial customers, as required to gain access to the vast federal marketplace available to contractors through the MAS.
  • U.S. Investigations Services Inc. settled a claim involving a contract with the Office of Personnel Management to perform background investigations of federal employees and those applying for federal service. The government alleged that USIS took shortcuts that compromised its contractually-required quality review and that, had the government known, it would not have paid for the services. USIS agreed to forego at least $30 million in payments legitimately owed to the company to settle the government’s allegations.

Most false claims actions are filed under the Act’s whistleblower, or qui tam, provisions that allow individuals to file lawsuits alleging false claims on behalf of the government. If the government prevails in the action, the whistleblower, also known as the relator, receives up to 30 percent of the recovery.

Whistleblowers filed 638 qui tam suits in FY 2015 and the department recovered $2.8 billion in these and earlier filed suits this past year. Whistleblower awards during the same period totaled $597 million.

For more information, see the DOJ release.

About William Van Huis

Bill Van Huis is a Senior Writer/Analyst for Wolters Kluwer Law & Business who tracks and analyzes new regulations impacting federal government contracting. He also follows court decisions involving bid protests and contract disputes. You can find his work in WK publications like Government Contract Reports and the FAR and DFARS Matrix Tools. Bill is a Certified Professional Contracts Manager, and he has a law degree from Southern Illinois University, where he graduated summa cum laude. Prior to joining WK, Bill worked both inside and outside state and local government in the areas of procurement and municipal finance. Bill also worked as a staff attorney for the Illinois Supreme Court.
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