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Government trumpets recovery of $3 billion in health settlements

By Terry Frieden, CNN Justice Producer
  • Most of the money came from major health care fraud cases
  • Assistant attorney general credits a 1986 law encouraging whistle-blowers
  • The amount is for the fiscal year that ended September 30

Washington (CNN) -- Government lawyers have recovered a near-record $3 billion this year from health care fraud and other settlements, the Justice Department announced Monday.

Assistant Attorney General Tony West credited a record $2.5 billion in recoveries from huge health care fraud cases against giant pharmaceutical firms.

Only in 2006, when the federal government recovered $3.2 billion in total settlements, had recoveries previously hit the $3 billion mark.

Cases initiated by whistle-blowers deserve much of the credit for the government's success, West told reporters.

He pointed to the 1986 False Claims Act, which was updated this year to encourage whistle-blowers to disclose fraud to the government.

Under federal laws, successful whistle-blowers can recover between 15 and 30 percent of awards and settlements. This year, whistle-blowers pocketed a total of $385 million. Since 1986, the total recoveries for defrauding the government have exceeded $18 billion, and $2.8 billion of that amount was shared by whistle-blowers.

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The $3 billion total recovery for fiscal year 2010, which ended on September 30, includes $669 million from Pfizer to resolve claims the company allegedly promoted Bextra, Geodon, Zyvox and Lyrica for uses not approved by the Food and Drug Administration.

The settlement also alleged that Pfizer had illegally marketed several drugs, including such widely used products as Lipitor, Celebrex, Viagra, Zithromax and Zoloft. In that case, whistle-blowers pocketed more than $100 million.

Other major settlements this year included a $302 million agreement with AstraZeneca, a $192 million settlement with Novartis, and $100 million from Teva Pharmaceuticals for inflated drug prices.

The Christ Hospital in Cincinnati and the Health Alliance of Greater Cincinnati, of which Christ Hospital had been a member, ended up settling with the government for alleged illegal billing of Medicare and Medicaid for cardiac services.

West said many of the cases were several years in the making, and had been handled largely by career Justice Department lawyers working for both the Bush and Obama administrations.