Deloitte Poll: Nearly Two Thirds of Business Professionals Expect Uptick in Recovered Government Funds

Jan 27, 2010, 09:00 ET from Deloitte

NEW YORK, Jan. 27 /PRNewswire/ -- A majority of business professionals (64 percent) polled during a recent Deloitte webcast think the Fraud Enforcement and Recovery Act will be effective in increasing the total dollar amount the government will recover under the False Claims Act.

The federal Fraud Enforcement and Recovery Act of 2009, enacted in May, significantly expands the scope of the False Claims Act (FCA), the statute that imposes liability on businesses and people for knowingly making false statements or false claims for payment of government funds.

"The Fraud Enforcement and Recovery Act has improved incentives for whistleblowers and provided additional resources to federal enforcement agencies, all totaling more than $500 million," said Yvonne Craver, partner, Deloitte Financial Advisory Services LLP.  "With greater government emphasis on increasing transparency and decreasing fraud, executives and boards need to pay closer attention than ever before as to how the Economic Stimulus funds they're accepting are spent.  Claiming ignorance is never an option -- particularly when taxpayer dollars are concerned."

Respondents indicated their greatest concerns under the Fraud Enforcement and Recovery Act's enforcement changes are: an expanded universe of companies potentially liable for FCA violations (24 percent); increased consequences of failing to return overpayments to the government (13 percent); extended whistleblower protections to non-employees (12 percent); and revived government ability to use Civil Investigative Demands (11 percent).  

"As a result of this economic downturn, we've entered a new age of oversight.  Government regulators appear to have an overwhelming desire to get to the bottom of what happened in this crisis so we can avoid similar instances in the future," said David Williams, CEO of Deloitte Financial Advisory Services LLP.  "As such, companies should consider expanding their company risk management structures to help equip themselves for the new regulatory climate."

Approximately two-thirds (66 percent) of respondents were unaware that private qui tam plaintiffs -- or whistleblowers -- can bring suits under the FCA on behalf of the U.S. government against companies misusing government funds and keep a share of recovered funds.

Respondents expect that the financial services (44 percent) and healthcare and life sciences (23 percent) industries will see the highest increase in litigation resulting from increased Fraud Enforcement and Recovery Act, as well as FCA enforcement activity.

More than 800 business professionals from the banking and securities, consumer and industrial products, energy, resources and power, financial services, health care and life sciences, public sector technology, media and telecommunications and manufacturing industries responded to the online polling questions during an October 2009 Deloitte webcast, titled "The False Claims Act and FERA: The New Era of Oversight."

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SOURCE Deloitte