Regular readers may recall Virginia’s 2012 settlement with Abbott Labs to the tune of $1.5 billion, which was and still is the largest qui tam/False Claims Act settlement anywhere. The case originated in the U.S. District Court for the Western District of Virginia as a qui tam action brought by Rueben Guttman and Traci Buschner. Now, a little over a year later, the benefits of this settlement continue to be felt all across the Commonwealth of Virginia. In the most recent example, the Bristol Herald Courier reported last week that the Commonwealth Attorneys for Smyth and Tazewell counties will receive a total of $1.3 million to be used for local law enforcement purposes.
It is important to note, for the legal geeks out there who may not be familiar with Virginia’s unique constitution, that Commonwealth Attorneys are constitutional officers elected by each county and city in the Commonwealth. The primary responsibility of the office is prosecuting criminal cases, and the office has no role in the prosecution or investigation of qui tam cases brought under the Virginia Fraud Against Taxpayers Act.
So why, then, are these offices sharing in part of the recovery of the Abbott Labs settlement? The answer to that question requires us to take a look at how such qui tam/false claims act recoveries are used to fund the governmental operations of the Commonwealth.
Regular readers may recall the Purdue Pharma settlement engineered by John Brownlee when he was U.S. Attorney for the Western District of Virginia. Back in 2009 I covered the grants made and how Virginia was able to use that money to fund important government operations during a period when most state governments were running record deficits.
In fact, since the Purdue Pharma settlement in 2007, the Virginia Fraud Against Taxpayers Act has been used to return more than $68 million to Virginia’s General Fund just through health care settlements. General fund revenues constitute just under half of the Commonwealth’s total budget — to be exact, General Fund revenues are 41.3 percent of the budget. These revenues for the most part come from direct general taxes paid by citizens and businesses in Virginia. Because general fund revenue can be used for a variety of government programs, these are the funds that the Governor and the General Assembly have the most discretion to spend.
Two points bear repeating here.
First, that is just the money returned to the General Fund. That $68 million does not include the money returned to other Virginia government agencies such as Virginia’s award-winning Medicaid Fraud Control Unit, who are largely to thank for the Abbott Labs and Purdue Pharma settlements. Second, that is just the money returned from the health care fraud cases prosecuted using the Virginia Fraud Against Taxpayers Act. It does not, therefore, include the tens of millions of dollars recovered cases like Commonwealth of Virginia ex rel. Nisar Siddiqui v. Navy Federal Credit Union in 2009 or in cases like Commonwealth of Virginia ex rel. FX Analytics v. Bank of New York Mellon.
And to think, some states still don’t have a false claims act statute…hard to believe right?
