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Thursday, October 6, 2016

Tools to fight corporate crime

Expanded Corporate Crime Database Highlights Fraud by Healthcare Companies and Banks
By Greg LeRoy, Good Jobs First 

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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.

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