The False Claims Act encourages individuals with knowledge of fraud against the Government to file a court action seeking damages for the fraud. It does this by promising a bounty. The relator receives a percentage of the amount recovered in a false claims case. But there is a constant tension between encouraging plaintiffs to bring cases alleging fraud and protecting defendants from frivolous cases. The January 11, 2011 decision in United States ex rel. Folliard v. Hewlett-Packard Co. illustrates how the requirement that a plaintiff include all of the details of an alleged fraud in the initial complaint helps strike this balance.
The Justice Department’s most recent fraud statistics are worth checking out if you follow enforcement of the False Claims Act. The federal government is reporting that it collected over $3 billion in judgments and settlements in False Claims Act cases resolved through the end of Fiscal Year 2010. About 80 percent of the recoveries were in cases initiated by qui tam relators, who themselves recovered more than $386 million.
As you might have guessed, most of the settlements and judgments involved health care fraud. Cases in which the Department of Health and Human Services was the primary client agency represented more than $2.5 billion, or about 83 percent of the total. Fraud cases involving the Department of Defense represented only 8 percent of the total–$261 million. Since it was announced on October 26, 2010, we assume that the $750 million GlaxoSmithKline settlement is not included in the total.