SEC Issues Largest Award Ever at $278 Million, Federal False Claims Exceed $2.2 Billion for Fiscal Year 2022
The Security and Exchange Commission (SEC) released a press release on May 5th, 2023 to announce their largest ever award, over $278 million, regarding an unnamed case. The award is more than twice the size of the previous largest award, $114 million awarded in October 2020.
$278 Million SEC Whistleblower Award
The $278 million award was announced without stating the case. The confidentiality of whistleblowers is maintained by the SEC where possible, and they did not disclose any information that could reveal their identity.
Regarding the case, the Director of the SEC’s Division of Enforcement said:
“The size of today’s award – the highest in our program’s history – not only incentivizes whistleblowers to come forward with accurate information about potential securities law violations, but also reflects the tremendous success of our whistleblower program.
This success directly benefits investors, as whistleblower tips have contributed to enforcement actions resulting in orders requiring bad actors to disgorge more than $4 billion in ill-gotten gains and interest. As this award shows, there is a significant incentive for whistleblowers to come forward with accurate information about potential securities law violations.”
$114 Million SEC Whistleblower Award
The previous largest award, $114 million, was announced by the SEC in a press release on October 22nd, 2020. The total award was a result of $52 million awarded for an SEC enforcement, and an additional $62 million for “related actions by another agency”. The other agency is not named. The previous largest award was a June 2020 $50 million award.
At the time of the October 2020 announcement, the Chief of the Office of the Whistleblower said:
““The actions of the whistleblower awarded today were extraordinary. After repeatedly reporting concerns internally, and despite personal and professional hardships, the whistleblower alerted the SEC and the other agency of the wrongdoing and provided substantial, ongoing assistance that proved critical to the success of the actions.”
In Fiscal Year 2021, which begins October of the prior year, the SEC would announce a total of $562 million in awards.
Federal False Claims Exceed $2.2. Billion for Fiscal Year 2022
The Department of Justice (DOJ) released a press release in February announcing that False Claims Act Settlements and Judgements for the Fiscal Year 2022, which ended September 30, 2022, exceeded $2.2 billion. Three hundred and fifty one settlements and judgements comprised the total, which the DOJ noted was the 2nd highest number of settlements and judgements for a fiscal year. The DOJ also stated that total recovery from the False Claim Act exceed $72 billion.
Deputy Assistant Attorney General Boynton said:
“Protecting taxpayer dollars by preventing fraud and abuse is a critical priority for the Department of Justice. The large number of settlements and judgments this past year demonstrates that the False Claims Act remains one of the most important tools for ensuring that public funds are spent properly and advance the public interest.”
$1.7 Billion in Health Care False Claim Act Settlements and Judgements
More than three quarters of the $2.2 billion in settlements and judgements came from the healthcare industry, more than $1.7 billion. The DOJ listed the category as involving cases regarding drug and medical device and medical equipment manufacturers, home health and manage care providers, hospice organizations, hospitals, physicians and pharmacies.
The recoveries from False Claim Act awards go to restoring funds used by Medicaid, Medicare and TRICARE for products and services for families covered by these programs. The largest recovery was $260 million by the bankrupt Mallinckrodt ARD LCC, previously know as Questcor, regarding allegations of violating the Anti-Kickback statute with illegal co-pay subsidies and underpaying Medicaid rebates.
In addition to fraud and abuse allegations such as the Mallinckrodt settlement, the DOJ also targets “unnecessary services and substantive care”, or services that were medically unnecessary or not performed but billed to the government through government healthcare insurance programs. A list of major settlements and judgements can be seen in their press release.
FALSE CLAIMS ACT LAWYER
Schneider Wallace represents whistleblowers, whether the violation is against the federal government, state government, or a local government. Schedule a consult with our whistleblower law firm for a free and private legal consultation.
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