Washington, D.C. - "In 1986, I joined with Senator Charles Grassley in a bipartisan effort to revive the False Claims Act as a weapon against fraud against the federal government. With the support of President Reagan, we created strong disincentives for government contractors to engage in fraud and strong incentives for whistleblowers to bring to the attention of the Justice Department fraud that was undetected by program administrators.

 

"A decade and a half later, we can see that the Act and its whistleblower provisions have been extraordinarily successful. Since 1986, the federal government has recovered over $10 billion from fraudulent government contractors. The whistleblower provisions account for over $6 billion of this amount.

 

"While the False Claims Act applies to all federal government programs, it has proven particularly effective in the health area. A report being released today by the Taxpayers Against Fraud Education Fund demonstrates conclusively that for every $1 it invests in investigation and prosecution of Medicare fraud, the federal government is getting $9 back for the Medicare Trust Fund. That rate of return would shame most venture capitalists.

 

"Even more importantly, this $9-to-$1 ratio understates the value of the FCA to the federal government. As economist Jack Meyer, the author of the report, makes clear, FCA settlements with some firms in the health industry have deterred other firms from engaging in similar behavior. We know this has resulted in savings to Medicare; we just don't know how large those savings are.

 

"The Congress is now in the midst of a major debate on a Medicare prescription drug benefit. Our nation's elderly need and deserve comprehensive prescription drug coverage. With the FCA and its whistleblower provisions in place, both the elderly and the nation's taxpayers can be confident that potential fraud will be deterred. They can also be confident that if fraud occurs, it will be detected and stopped.

 

"As successful as the FCA has been, there is always room for improvement. The TAF Education Fund has also released a report on the FCA and Medicaid fraud by Andy Schneider, one of the nation's leading experts on this program. His report finds that, for various reasons, we are not fully realizing the potential of the FCA in identifying and deterring fraud against Medicaid. I hope my colleagues in the Congress, as well as the responsible officials in the Department of Justice and the HHS Office of Inspector General, will consider his recommendations for improvement. With California and other states under such extreme fiscal pressure to cut back on eligibility and benefits, we should be doing more than we are to stem the loss of federal Medicaid dollars to fraud."

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