SOX legislation might be on everyone's minds in the financial sector, but it is more likely to be the False Claims Act in the healthcare sector. The False Claims Act allows American citizens, (whistle-blowers), whether affiliated with the government or not, to file actions against federal contractors claiming fraud against the government. This Act comes to bear when a health care provider charges such government programs as Medicaid or Medicare for products or services. The most frequent cases involve overcharging, but also ineffective or defective products can be the basis for fraud. Last year Pfizer grabbed the headlines with the largest financial settlement ever ($2.3 billion) for healthcare fraud. Now it is GlaxoSmithKlein’s turn, with a $750 million settlement, (by comparison a bargain). GSK now admits that it sold faulty batches of drugs to Medicare and Medicaid. Cheryl Eckard, a former GSK quality assurance manager, will receive the largest award ever awarded to a whistle-blower, $96 million. GSK fired her, when she opened up the quality investigation rather than put a lid upon it. That was very unwise of GSK as history has now shown. Since sales of most drugs are heavily supported by such government programs, that lesson (fraud is expensive) applies to most players.
