Expanded Corporate Crime Database Highlights Fraud by
Healthcare Companies and Banks
By Greg LeRoy, Good Jobs First
EDITOR’S NOTE: Billions of taxpayer dollars are paid to private companies by federal agencies, states and municipal governments for goods and services. Some of that money is lost due to fraud and abuse by these private contractors, often because government does not take simple steps to prevent corporate crime. Two examples: the state of Rhode Island, unlike Massachusetts and Connecticut has no statewide process to weed out bad construction contractors. And Charlestown lacks even the most rudimentary “Bad Actor Ordinance” to vet businesses before issuing them contracts or licenses. – W. Collette
Since the beginning of 2010, drug
manufacturers, hospital systems, insurers and other healthcare companies have
paid nearly $7 billion in fines and settlements to resolve cases in which they
were accused of defrauding the federal government.
Banks, led by Wells Fargo,
account for the second largest portion of False Claims Act penalties, with more
than $3 billion in payments. More than one-third of the 100 largest federal
contractors have been defendants in such cases during the seven-year period.
These are some of the key findings
that emerge from an expansion of Violation Tracker, a database of corporate
crime and misconduct produced by the Corporate Research Project of Good Jobs
First. It is available to the public for free at
With the addition of more than 750 cases relating to the 150-year-old False Claims Act and similar laws, Violation Tracker now contains a total of 112,000 entries from 30 federal regulatory agencies and all divisions of the Justice Department.
"The inclusion of False
Claims Act cases is another milestone in our ongoing effort to make Violation
Tracker a comprehensive data resource on corporate crime and regulatory
misconduct," said Philip Mattera, who heads the Corporate Research Project
and leads the work on Violation Tracker. Mattera noted that the database's
expansion plans include employment discrimination and wage and hour cases as
well as violations at the state level and in selected foreign countries.
Among the newly added cases
involving healthcare companies, the largest is the $784 million settlement the
Justice Department reached last April with Pfizer and its subsidiary Wyeth to
resolve allegations that they overcharged the Medicaid program.
DaVita
HealthCare Partners, a leading dialysis provider, was involved in the next two
largest cases, in which it had to pay a total of $800 million to resolve
allegations that it engaged in wasteful practices and paid referral kickbacks
while providing services covered under Medicare and other federal health
programs.
Wells Fargo accounts for the
largest banking-related penalty and the largest False Claims Act case overall
in the new data: a $1.2 billion settlement earlier this year to resolve
allegations that the bank falsely certified to the Department of Housing and
Urban Development that certain residential home mortgage loans were eligible
for Federal Housing Administration insurance, with the result that the
government had to pay FHA insurance claims when some of those loans defaulted.
Thirty-five of the 100 largest
federal contractors (in FY2015) have paid fines or settlements totaling $1.8
billion in False Claims Act-related cases since the beginning of 2010. The
biggest contractor, Lockheed Martin, paid a total of $50 million in four cases,
while number two Boeing paid a total of $41 million in two cases.
The database has also added new
search features, such as the ability to search by 49 different types of
offenses, ranging from mortgage abuses to drug safety violations. Users can
view summary pages for each type of offense, showing which parent companies
have the most penalties in the category. Penalty summary pages for parents,
industries and agencies now also contain tables showing the most common
offenses. Users can add one or more offense type to other variables in their
searches.
Among types of offenses, the
largest penalty total comes from cases involving the packaging and sale of
toxic securities in the period leading up to the financial meltdown in 2008.
The top-ten primary case types are as follows:
1. Toxic securities abuses: $68
billion
2. Environmental violations: $63
billion
3. Mortgage abuses: $43 billion
4. Other banking violations: $18
billion
5. Economic sanction violations:
$14 billion
6. Off-label/unapproved promotion
of medical products: $12 billion
7. False Claims Act cases: $11
billion
8. Consumer protection violations:
$9 billion
9. Interest rate benchmark manipulation:
$7 billion
10. Foreign Corrupt Practices Act
cases: $6 billion
Good Jobs First is a Washington, DC-based resource center promoting corporate and government accountability in economic development subsidies and smart growth for working families.
Its Corporate Research Project provides research
resources for organizations and individuals concerned about corporate
accountability. The initial version of Violation Tracker was supported by a
grant from the Bauman Foundation.
