For Immediate Release - February 16, 2012

More Than $40 Million Recovered Under False Claims Act by AG Coakley’s Office in Fiscal Year 2011

Amount Greater than AG’s Annual Operating Budget for FY 11

BOSTON – More than $40 million was recovered under the False Claims Act by Attorney General Martha Coakley’s Office in Fiscal Year 2011 (FY 11), nearly tripling the $14.4 million recovered in 2010. The total FY 11 budget for the AG’s Office was approximately $37 million.

“The False Claims Act has been a critically important tool for holding companies responsible that defraud the Commonwealth and recovering taxpayer funds,” said AG Coakley. “In today’s tough economy every dollar we can recover helps ensure that these much needed funds are not wasted. We are tremendously proud of our success last fiscal year and are working hard to duplicate those efforts in 2012.”

The following cases or investigations were brought under the False Claims Act and resulted in recoveries for the Commonwealth, its agencies and municipalities:

  • In May, the operator of three Massachusetts municipal waste incinerators agreed to pay $7.5 million to resolve allegations that it committed multiple violations of the Hazardous Waste Management Act, the Clean Water Act and the Wetlands Protection Act. A majority of the funds were directed to the recovery efforts of individual municipalities.
  • A case against investment bank Morgan Stanley, involving the bank’s securitization of subprime mortgage loans, resulted in the recovery of over $23 million for the state pension fund, as well as more than $10 million in False Claims Act payments to the Commonwealth’s general fund.
  • In August 2010, CVS paid $2.65 million to the Commonwealth and to over 200 cities and towns in Massachusetts after an investigation revealed that the company was overcharging public entities for various prescription drugs under the compensation insurance system.
  • In November 2010, the United States Fidelity and Guaranty Company (“USF&G”) forfeited nearly $2.9 million of claims for payment from the Massachusetts Department of Transportation after an investigation of false claims by the AG’s Office.

Currently in Fiscal Year 12, the AG’s Office has taken further legal action under the False Claims Act and reached additional settlements. These actions include:

  • In January, the URS Corporation paid an additional $2.3 million to resolve allegations that it submitted false and inflated invoices to the Massachusetts Port Authority during the renovation of Logan International Airport.
  • In February, the AG’s Office filed a lawsuit against XL Specialty Insurance (XL) for failing to compensate the Commonwealth more than $3 million after a bridge in Grafton collapsed due to shoddy construction work. XL allegedly submitted false statements to avoid their obligations of a contract and performance bond with the Massachusetts Department of Transportation (MassDOT) in June 2007.

Passed in 2000, the False Claims Act authorizes the Attorney General to sue entities that submit false claims for payment to the state government or its political subdivisions on contracting and purchasing issues. The Public Protection and Advocacy Bureau in the AG’s Office enforces the False Claims Act. The cases or investigations mentioned above do not include those in connection with Medicaid fraud.

##########

Follow us on Twitter – View our Photos – Visit our Website