Counter-Fraud Tallies

Recoveries in suits and investigations of fraud against the U.S. federal government for the fiscal year ending September 30, 2002 exceeded a billion dollars for the third year in a row.

False Claims Act recoveries since the law was substantially amended in 1986 have now topped $10 billion --more than $6 billion of which was recovered under the whistleblower provisions of the Act.

In fiscal year 2002, the government's recoveries in civil fraud claims reached nearly $1.2 billion, a sum that includes investigations initiated by the government as well as suits filed by whistleblowers.

Health care fraud again accounted for the overwhelming majority of recoveries, totaling more than $980 million.

Recoveries associated with suits brought by whistleblowers, including non-whistleblower claims resolved at the same time, accounted for almost $1.1 billion in settlements and judgments during the fiscal year.

The whistleblower provisions of the False Claims Act allow individuals, known as "relators," to file suit on behalf of the United States against those who have falsely or fraudulently claimed federal funds, including Medicare, Medicaid, disaster assistance and other benefits, subsidies, grants, loans and contract payments.

Persons who file such qui tam suits can recover from 15 to 25 percent of any settlement or judgment reached in a case if the United States intervenes in the action, or up to 30 percent if they pursue it on their own.

Among the Department's largest recoveries in fiscal year 2002 are:

� $568 million from TAP Pharmaceuticals, a joint venture between Abbott Laboratories and Takeda Chemical Company, for alleged Medicare fraud.

� $87.3 million from PacifiCare Health Systems, for allegedly ripping off the federal employees health benefits program.

� $21.5 million from Unocal for allegedly underpaying the Department of Interior royalties owed for oil extracted from federal lands.

Godmother of the C-17

Druyun, who has referred to herself as the "Godmother of the C-17," will lead Boeing's missile defense business headquartered in Washington D.C.

Danielle Brian of the Project on Government Oversight (POGO) says that Druyun's hiring by Boeing Missile Defense Systems was one of "the most egregious examples in recent memory of the revolving door between the federal government and defense contractors."

"Ms. Druyun is now officially an employee of the company whose interests she so ardently championed while she was supposedly representing the interests of the taxpayers," Brian says.

While at the U.S. Air Force, Druyun was a staunch supporter of a December 2000 proposal to acquire additional C-17 cargo aircraft while sidestepping financial oversight for Boeing.

While the acquisition proposal would have been a financial bonanza for Boeing, it would have ultimately put billions of taxpayer dollars at risk.

Although the plan would have provided little or no benefit for the taxpayers, at the time of the proposal a Boeing news release quoted Druyun as saying the "program is very appealing to all parties involved: the Air Force, the commercial operators, the manufacturers and the American taxpayer."

A POGO investigation and subsequent media attention led to the abandonment of the deal.

Research Compromised

According to the article, industry support of biomedical research in the United States increased dramatically in the last two decades.

Industry's share of total investment in biomedical research and development grew from approximately 32 percent in 1980 to 62 percent in 2000, while the federal government's share fell.

The article reviewed original, quantitative studies on the extent, impact and management of financial conflicts of interest in biomedical research.

The researchers found that approximately one-fourth of investigators have industry affiliations, and roughly two-thirds of academic institutions hold equity in start-ups that sponsor research performed at the same institutions.

The researchers found a statistically significant association between industry sponsorship and pro-industry conclusions.

Industry sponsorship was also associated with restrictions on publication and data sharing.

"This review shows that financial relationships are pervasive and problematic," the report found.

-- Russell Mokhiber