U.S. Department
of Justice
Fraud Section Practice Areas
- Healthcare Fraud
- Procurement Fraud
- Defense Contracting Fraud
- Grant Fraud
- FIRREA/Financial Fraud
- Customs Fraud
- Conflicts of Interest
- Disaster Relief Fraud
- Cyber Fraud
Health Care Fraud
The Fraud Section investigates complex health care fraud allegations and files suit under the civil False Claims Act to recover money on behalf of defrauded federal health care programs including Medicare, Medicaid, TRICARE, the Department of Veterans Affairs (VA), and the Federal Employee Health Benefits Program (FEHBP). The Fraud Section works closely with the United States Attorneys’ Offices and often teams with HHS-OIG, state Medicaid Fraud Control Units, and other law enforcement agencies to pursue allegations of health care fraud.
The Fraud Section routinely handles nationwide cases involving a wide array of health care providers and suppliers, including pharmaceutical manufacturers, medical device companies, hospital chains, pharmacies, and physician practices. The matters pursued by the Fraud Section involve a broad range of fraudulent schemes that result in the submission of false claims to the federal health care programs, including paying kickbacks to induce referrals, billing for medically unnecessary or worthless services, promoting drugs and medical devices for non-covered uses, falsely inflating drug prices, and providing false information with respect to diagnoses and electronic health record capabilities.
To report health care fraud call 1-800-HHS-TIPS (1-800-447-8477) or submit a hotline complaint online.
To learn more about the work of the Fraud Section and see examples of specific cases, please click on the links below for more information:
Pharmaceuticals
Kaléo Inc. Agrees to Pay $12.7 Million to Resolve Allegations of False Claims for Anti-Overdose Drug
Opioids
Medical Devices
Pediatric Dental
Durable Medical Equipment
Electronic Health Records
21st Century Oncology to Pay $26 Million to Settle False Claims Act Allegations
Electronic Health Records Vendor to Pay $57.25 Million to Settle False Claims Act Allegations
Managed Care
Medicare Advantage Provider to Pay $270 Million to Settle False Claims Act Liabilities
Hospice
Crossroads Hospice Agrees to Pay $5.5 Million to Settle False Claims Act Liability
Hospitals
Laboratories
Nursing Homes and Skilled Nursing Facilities
SavaSeniorCare LLC Agrees to Pay $11.2 Million to Resolve False Claims Act Allegations
Vanguard Healthcare Agrees to Resolve Federal and State False Claims Act Liability
Behavioral Health
Universal Health Services, Inc. to Pay $117 Million to Settle False Claims Act Allegations
Procurement Fraud
The United States government awards contracts to support every function it serves. For example, agencies contract with private contractors for good and services, such as: weapons systems with state-of-the art technology; satellites and transportation into space; disaster relief; administrative services; international shipping; computers and information technology services; and everyday office supplies. The Fraud Section handles a wide array of procurement fraud matters, which can involve conduct at any stage of the contracting process. Cases have included violations of the Anti-Kickback Act, 41 U.S.C. §§ 8701-8707; violations of the Truth in Negotiations Act and other forms of defective pricing that inflate contract prices; as well as false representations to win contracts, such as falsely claiming eligibility for contracts set aside for small disadvantaged businesses or veterans. The Fraud Section also uses the False Claims Act to protect government supply chains from defective or counterfeit parts that can pose a risk to public safety, as well as recover money paid for goods and services that were not provided as promised or for inflated or other unallowable costs passed on to the government.
Example Cases
Defense Contracting Fraud
Cases involving defense contracting fraud often involve the same types of issues that arise in all procurement fraud matters; however, as the largest contracting agency with contracting needs worldwide, the Department of Defense faces unique challenges in protecting its procurement integrity. The Fraud Section uses the False Claims Act as a tool to combat fraud affecting the many Department of Defense military branches which are responsible for procuring weapons systems with state-of-the art technology (such as jets, helicopters, tanks, ships, and submarines), as well as food, fuel, and other provisions for military personnel serving at home and abroad. Since 2012, the Fraud Section has recovered close to $1 billion in matters involving defense contracting fraud.
Example Cases
Honeywell to Pay $3.35 Million for Alleged False Claims for Zylon Bullet Proof Vests
KBR Defendants Agree to Settle Kickback and False Claims Allegations
South Korean Engineering Company Pleads Guilty to Defrauding U.S. Army, Agrees to Pay $68.4 Million
Three South Korean Companies Agree to Plead Guilty and to Enter into Civil Settlements for Rigging Bids on United States Department of Defense Fuel Supply Contracts
ITT Cannon to Pay $11 Million to Settle False Claims Allegations for Untested Electrical Connectors
Grant Fraud
Each year, hundreds of billions of dollars are distributed, in the form of federal grants, to universities, local governments, organizations, and individuals. The Fraud Section represents federal agencies that encounter fraud in the award and administration of those grants. The federal grants at issue in Fraud Section cases may include, for example, scientific research grants from the National Institutes of Health, National Science Foundation, and the National Institute of Standards and Technology; Small Business Administration grants designed to provide financial assistance to small business concerns; Department of Education grants for education and teacher assistance; Department of Agriculture grants related to rural business development; and local/community development, crime prevention, or youth mentorship grants awarded by the Department of Justice’s Office of Justice Programs, among others. In handling grant fraud matters, Fraud Section attorneys work closely with Inspector Generals’ Offices and counsel from the affected agencies.
Example Cases
FIRREA/Financial Fraud
The Fraud Section has a robust financial fraud practice, under both the Financial Institutions Reform, Recovery, and Enforcement Act (FIRREA) and the False Claims Act.
Enacted in 1989, as a result of the Savings and Loan Crisis, FIRREA authorizes the Department of Justice to recover civil money penalties for violations of certain predicate criminal statutes. These predicate statutes proscribe a diverse array of criminal misconduct, ranging from mail and wire fraud to bank fraud, bribery, false statements, and false documents. Under FIRREA, the Fraud Section has pursued some of the largest money penalty cases in Department history, including several matters related to the manufacture and sale of mortgage loans and residential mortgage-backed securities that contributed to the Financial Crisis. As part of its FIRREA investigations, the Fraud Section may coordinate with criminal authorities; prudential bank regulators like the Federal Reserve, Office of the Comptroller of the Currency, and Federal Deposit Insurance Corporation; and consumer and market regulators like the Consumer Financial Protection Bureau and Securities and Exchange Commission.
Under the False Claims Act, the Fraud Section has also made significant recoveries in matters involving financial fraud. Such False Claims Act matters may involve false or fraudulent claims to federal agencies to gain access to federally guaranteed loan programs, to the Federal Deposit Insurance Corporation as receiver for failed financial institutions, or to certain government sponsored entities or instrumentalities under federally funded initiatives or programs.
Example Cases
Wells Fargo Bank Agrees to Pay $1.2 Billion for Improper Mortgage Lending Practices
Customs Fraud
The Fraud Section routinely investigates and litigates matters involving the alleged evasion of customs duties by importers and their agents, and, since 2012, the Fraud Section has recovered more than $115 million in unpaid customs duties under the False Claims Act. These cases often involve the alleged evasion of antidumping duties and countervailing duties, which are designed to protect U.S. manufacturers from unfair competition abroad and prevent foreign companies from “dumping” products on U.S. markets at prices below cost. The Fraud Section has worked on matters involving a wide variety of products, including graphite electrodes, ultrafine magnesium powder, aluminum extrusions, carbon steel pipe fittings, and wooden bedroom furniture.
Example Cases
Conflicts of Interest
The Fraud Section has responsibility for investigating and prosecuting civil claims arising from alleged violations of conflict of interest statutes and the Ethics in Government Act of 1978, which was passed in the wake of the Watergate scandal and requires certain financial disclosures by federal employees. These matters often involve allegations of improper and undisclosed financial conflicts or allegations that employees have taken official action to benefit themselves, their family, or outside business interests. When investigating alleged conflicts of interest, Fraud Section attorneys work closely with counsel for the affected agencies, Offices of Inspector General, and other law enforcement agencies.
Example Cases
Former Bureau of Prisons Employee Agrees to Pay $50,000 to Resolve Anti-Kickback Act Allegations
Former USAID Senior Official to Pay Civil Penalty for Alleged Conflict of Interest Violation
Disaster Relief Fraud
The Fraud Section handles a variety of matters relating to alleged fraud in connection with federal disaster assistance provided by FEMA, many of which arise from whistleblower complaints filed pursuant to qui tam provision of the False Claims Act. In other instances, the Fraud Section receives referrals form FEMA or the Department of Homeland Security Office of Inspector General. Also, in September 2017, following Hurricanes Harvey, Maria, and Irma, the Deputy Attorney General announced a Department-wide response to combatting fraud in connection with federal disaster assistance funds. As part of this effort, the Fraud Section coordinates with National Center for Disaster Fraud (NCDF), as well as U.S. Attorneys’ Offices and numerous investigative agencies regarding potential referrals.
Example Cases
Hurricane Katrina Contractor Accepts $4 Million Judgment Under the False Claims Act
Cyber Fraud
With the growing threat of malicious cyber activity, federal agencies spend billions of dollars each year on contracts and grants involving cybersecurity protections to safeguard governmental information and networks. They also spend billions of dollars each year on acquiring highly specialized, classified, or otherwise sensitive equipment and services. The Fraud Section represents federal agencies that encounter fraud in the award and administration of those contracts and grants. The Fraud Section handles a wide array of cybersecurity matters that involve the submission of false claims to the government, such as failing to comply with required cybersecurity standards, misrepresenting cybersecurity controls and practices, failing to monitor cybersecurity systems, and failing to timely report cyber incidents and breaches. To investigate cyber fraud, the Fraud Section partners with United States Attorneys’ Offices and the Inspectors General for the relevant federal agencies.
The Fraud Section also uses the False Claims Act to enforce other federal requirements related to information technology and operational technology, including in the contexts of electronic health records and cloud computing, and involving overcharging or substandard products and services.
To report cyber fraud, contact the Inspector General for the federal agency that has been defrauded. The Council of the Inspectors General on Integrity and Efficiency has provided the reporting tool available here to help whistleblowers report fraud to the appropriate Inspector General.
Example Cases
Electronic Health Records Vendor to Pay $57.25 Million to Settle False Claims Act Allegations
Kansas Hospital Agrees to Pay $250,000 To Settle False Claims Act Allegations
Oracle Agrees to Pay U.S. $199.5 Million to Resolve False Claims Act Lawsuit