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REMARKS AS PREPARED FOR DELIVERY 

ASSISTANT ATTORNEY GENERAL TONY WEST 
AMERICAN BAR AASSOCIATION EIGHTH ANNUAL NATIONAL INSTITUTE  
ON THE  
CIVIL FALSE CLAIMS ACT AND QUI TAM ENFORCEMENT  
WASHINGTON MARRIOTT HOTEL 
WASHINGTON, D.C. 
JUNE 3, 2010 
 
 
Thanks, Mike, for that introduction, and thank you for over three decades of dedication at
the Department of Justice. I also want to thank Joyce Branda, head of Civil Frauds branch, for
all her tireless efforts, and Dan Anderson, Assistant Director in Civil Frauds and a co-chair of
this conference. Mike, Joyce and Dan – I rely on each of them for their expertise, good
judgment and leadership to make real the Civil Division’s commitment to a strong, aggressive
anti-fraud agenda. I could ask for no better colleagues.

I also want to thank Jack Boese, also a co-chair of this conference, for his efforts
throughout the years in organizing this terrific and unique gathering.

I’m so pleased to have the opportunity to speak here today. Who would have thought 16
years ago, when this conference began, that hundreds of attorneys would gather for three days
every other year to discuss just one statute?

It’s a unique event, and an immensely valuable one that brings together advocates for
such diverse interests – defense attorneys and relators’ counsel, state and federal government
lawyers – all working towards a better understanding of the many issues we have in common
involving the False Claims Act.

And since the last time you convened, legislation has greatly increased the Act’s power
and effectiveness.

The Fraud Enforcement and Recovery Act of 2009, or FERA, signed into law last May,
ensures that the government is able to protect billions of dollars in TARP and stimulus funds
through FCA enforcement.

FERA also ensures that the FCA imposes liability for keeping an overpayment, not just
for submitting a false claim.

And FERA changed the law to permit the Attorney General to delegate the authority to
issue Civil Investigative Demands, or CIDs. That authority was delegated to me as the Assistant
Attorney General, and I’ve re-delegated it to the United States Attorneys around the country, to
ensure that we increase the Department’s flexibility and effectiveness in False Claims Act
investigations.


 
So FERA has increased the Department’s ability to combat fraud under the False Claims
Act in many ways.

As has the historic Patient Protection and Affordable Care Act, which clarifies that a
violation of the Anti-Kickback Statute is also a violation of the False Claims Act, so that all
claims resulting from illegal kickbacks are now prohibited.

And another key development that’s taken place since last you gathered here has been the
unparalleled focus of this Administration in fighting fraud on the American taxpayer.

As the Assistant Attorney General for the Civil Division, I oversee much of the federal
government’s civil litigation across the country, including the Justice Department’s efforts to
recapture billions of taxpayer dollars lost to fraud.

And since assuming this position just over a year ago, one of my key priorities has been
protecting consumers and protecting taxpayer dollars – as well as the integrity of government
programs that depend on those dollars – through aggressive civil enforcement action aimed at
fraud, including increased use of the False Claims Act.

This flexible enforcement tool offers us the opportunity to protect taxpayers, redress
fraud, and hold companies and individuals accountable in a variety of important ways.

Now, whenever we talk about enforcement it’s also important to make it clear we don’t
paint all companies with same broad brush; we know that most companies are doing the right
thing. They’re working hard every day to create jobs, develop products, and maximize
innovation.

They’re working to strengthen compliance efforts – and many of you in this room are
helping companies do just that. So we know that most businesses are honest participants in the
system.

Yet we also know that there are those who seek to take advantage of that system at the
expense of the nation’s taxpayers. And it is those actors who will draw our attention and bear
the consequences of our enforcement.

We will use the False Claims Act to protect the integrity of that important relationship
between the private sector and the government when it comes to the honest delivery of crucial
goods and services – benefits the American people have a right to expect to be untainted by fraud
– from pharmaceuticals and medical devices to military equipment; from healthcare to home
financing.

Our track record of success illustrates our resolve. Over the last six years, annual
recoveries have averaged $2 billion per year under the Act – since 1986, $24 billion has been
recovered.


 
And since January 2009, we have recovered nearly $4 billion under the False Claims Act
– an unprecedented amount in such a relatively short period of time.

So we intend to use this important tool to its fullest potential in the Civil Division, to
investigate, pursue and deter fraud in three primary areas: health care fraud; financial fraud,
particularly mortgage fraud; and procurement fraud.

Let me give you a brief overview of each.

First, health care fraud. We all know health care fraud is illegal. We know it drives up
the costs of health care – something we all pay for in higher premiums or, in some cases, reduced
coverage.

We also know that health care fraud can undermine the judgments of health care
professionals, in many cases putting patients’ health and safety at risk.

That’s why fighting health care fraud is a top priority for the Obama Administration, for
Attorney General Holder and for me.

And it’s also why President Obama elevated the focus of health care fraud to cabinet
level by creating last May something called HEAT: the Health Care Fraud Prevention and
Enforcement Action Team.

Chaired by Attorney General Eric Holder and Department of Health and Human Services
Secretary Kathleen Sebelius, HEAT has allowed us to marshal a vast array of federal health care
fraud resources and better deploy those assets in the battle against health care fraud.

And there are several examples of how we’ve aggressively used the FCA to pursue
misconduct in the health care fraud context.

Just about one month ago, for example, the pharmaceutical company AstraZeneca agreed
to pay $520 million to federal and state taxpayers to settle claims that it illegally marketed the
anti-psychotic drug Seroquel for uses that were not approved as safe and effective by the Food
and Drug Administration. This is the largest amount ever paid by a company in a civil-only
settlement of off-label marketing claims.

AstraZeneca is just one example of the several mega-dollar settlements we’ve reached in
the past year in which we used the False Claims Act to play a major enforcement role. Another
was last summer, when Pfizer agreed to pay $2.3 billion – the largest health care fraud settlement
in the Department of Justice’s history.
Yet another was Eli Lilly, where the company agreed to pay $1.415 billion for illegally
marketing the anti-psychotic drug, Zyprexa.

And while it’s often the big dollar settlements that command the attention when it comes
to the False Claims Act with its provisions for treble damages, our use of this tool also signifies


 
that behind each resolution is our determination to protect the integrity of our public health care
programs and to ensure that those who are entitled to Medicare or Medicaid receive quality care.
They deserve no less.

That’s why I was particularly proud of our resolution in the Small Smiles case this past
year. In that case, we cracked down on a nationwide network of dental clinics that provided
unnecessary and frequently substandard dental care to needy children.

The stories were horrific—you may have heard a few: unnecessary tooth extractions that
resulted in healthy teeth being pulled; needless crowns and excessive baby root canals—one
child had 16 root canals in one sitting.

Children suffered because one company put profits over patients.

Through the False Claims Act, we settled the Small Smiles case for $24 million but
equally important we secured the company’s cooperation in our ongoing investigation into
individual dentists—investigations that could lead to a variety of outcomes, including possible
criminal referrals.

Now the second area we’ve been active in using the FCA has been in pursuing financial
fraud, in particular mortgage fraud.

Last November, President Obama created the Financial Fraud Enforcement Task Force,
bringing together over 20 federal agencies and state and local partners to share information and
coordinate enforcement efforts under the leadership of Attorney General Holder.

As a result, recoveries in this arena have increased from $15 million in 2008 to $52
million in 2009 and the first part of this year.

I am co-chair of the Task Force’s Mortgage Fraud Working Group—which includes


multiple agencies coordinating resources, sharing data, and working with state and local
authorities.

We’ve now held Mortgage Fraud Summits in three cities—Miami, Phoenix and Detroit—
where we’ve met with community members, industry reps, victims, other members of the public
and law enforcement. We’ve shared strategies and approaches that work, and identified those
that don’t.

And one thing we’ve seen demonstrated time and again is that the FCA can be a powerful
tool in combating this fraud.

So we’ve used the FCA to important effect in the mortgage fraud context already in the
last year.

In July 2009, for example, the Department settled a case against Beazer Homes USA, Inc.
– one of the largest home building companies in the country, with operations in at least 21 states


 
– and a wholly owned subsidiary for multiple fraudulent schemes including schemes affecting
FHA-insured mortgages.

The company agreed to pay $5 million up front, plus future contingent payments up to
$48 million, and agreed to a Deferred Prosecution Agreement.

The last area I would like to touch on is procurement fraud, where we have recovered
over $645 million since last year.

Ensuring that our military and procurement systems are protected from fraud is among
the most vital duties we have – indeed, it was this responsibility – ensuring Union soldiers
received quality goods on the battlefield from private contractors – that led President Lincoln to
push for passage of the original False Claims Act in the first place.

So true to its origins we’ve used the False Claims Act to pursue fraud in connection with
the wars in Southwest Asia.

Thus far, we have reached settlements in cases involving goods and services provided in
connection with the war effort amounting to $77 million.

And here at home, we have settled cases involving companies that manufactured and sold
Zylon fabric, the key ballistic material used in bulletproof vests, knowing it was defective at the
time they sold it to the government for use by federal, state, local and tribal law enforcement
agencies.

This was not only fraud, it was unconscionable because it unnecessarily put at risk the
lives of our men and women in law enforcement.

So far, we’ve obtained $47 million in FCA settlements and our investigation into the
companies, as well as individual executives, continues.

And just last week, the world’s biggest maker of storage computers, EMC Corporation,
agreed to pay $87.5 million to settle a lawsuit under the False Claims Act alleging that the
company made false representations to the government during contract negotiations, and
engaged in an illegal kickback scheme.

So that’s the broad overview. For me, though, these cases are about more than just
getting back the money. It’s about trust: the trust the American people have placed in all of us
to make sure that the goods we buy in their name; that the services we provide at their expense;
that the medical care we market through our public health care programs—that all of these are
free from the taint of fraud.

Because every health care dollar lost to fraud that we recover? That means more kids on
Medicaid will be able to see doctors for preventable childhood diseases.


 
Every HUD-FHA dollar lost to fraud that we recover? That means more families can
secure their piece of the American dream.

Every procurement dollar lost to fraud that we recover? That means our military
overseas and our law enforcement here at home receive quality gear they need to keep them safe
when in harm’s way.

And that’s why we’ll continue to use the False Claims Act going forward, in ways both
traditional and creative, to serve the best interests of the American people.

Thank you.

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