JUSTICE RECOVERS RECORD $1.6 BILLION IN FRAUD PAYMENTS
HIGHEST EVER FOR ONE YEAR PERIOD

WASHINGTON, D.C. - The United States collected a record $1.6 billion in civil fraud recoveries during the past fiscal year, Assistant Attorney General Robert D. McCallum, Jr. of the Justice Department's Civil Division announced today.

"Taking a firm stand against those who defraud the government is always critical, and is especially so at this time," said Assistant Attorney General McCallum. "Taxpayer dollars should be spent on goods and services honestly provided, and benefit only those who are truly deserving and entitled. When they aren't, those dollars must be recovered. Our nation's security, health, and financial stability depend on it. This new record demonstrates the Department's continued commitment to pursue those who defraud the United States, whether by providing defective products, billing for phantom services, or otherwise misusing public funds for private gain."

Nearly $1.2 billion of the Department's settlements and judgments related to cases filed under the federal whistleblower statute, which allows individuals who disclose fraud to share in the government's recovery. To date, whistleblowers have been awarded over $210 million for cases resolved in the past fiscal year (October 1, 2000 - September 30, 2001).

Health care fraud cases once again topped the list of annual recoveries, totaling more than $1.2 billion. This amount includes the $745 million settlement with HCA-the Healthcare Company for numerous fraudulent schemes which allegedly pervaded the nation's largest chain of for-profit hospitals. The Department also recovered $104 million from Quorum Health Group for submitting alleged false cost reports to Medicare for hospital expenses, and $103 million from Vencor, a major nursing home chain, for alleged false claims to Medicare, Medicaid and TRICARE, the military's health care program, for, among other things, long term care alleged to be inadequate.

"The cost of health care fraud is immense, both in terms of taxpayer dollars and the quality of care provided," said Assistant Attorney General McCallum. "Although the vast majority of health care providers are honest and provide the highest standard of care, we cannot allow those who aren't to deplete critical federal funds or to endanger those who depend on federal health care programs. Ferreting out fraud in the health care system remains one of the Department's top enforcement priorities."

After health care, the largest category of fraud recoveries involved oil and other minerals extracted from public lands. The Department recovered more than $194 million from companies alleged to have underpaid royalties for such rights, in addition to $230 million recovered last fiscal year. This year's recoveries include $110 million from Shell, $40 million from Texaco, $13 million from Kerr-McGee, $8 million from Burlington Resources and $7-7.5 million each from Exxon, Phillips Petroleum and Shell.

The Department's record level of recoveries for fiscal year 2001 also includes the following:

• $27 million from National Healthcare Corporation for alleged false claims to Medicare, resulting from inflating the amount of time spent caring for nursing home patients;
• $22.5 million from the University of California for alleged false claims by UC's five teaching hospitals for reimbursement under Medicare and other federal health insurance programs for services purportedly performed or supervised by faculty physicians rather than by residents without supervision, and for upcoding - the improper assignment of diagnostic codes for the purpose of increasing reimbursement amounts;
• $16 million to resolve claims that several research hospitals unlawfully charged Medicare and other federal health care programs for surgical procedures using experimental cardiac devices;
• $15.7 million from Contech Construction for alleged false claims for providing pipe in connection with a Department of Transportation contract that did not conform with contract specifications;
• $14 million from Bayer, including $6.2 million on behalf of 45 states for their share of Medicaid payments for prescription costs allegedly inflated by the company's fraudulent practices; and
• $9 million from Gateway for allegedly failing to pass along to the government price reductions required under a multiple award schedule contract for computers and components.

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