2012 Safety, Security and International Affairs

Michael Hertz

Recovered billions of dollars from perpetrators of fraud against the federal government through innovative use of the False Claims Act.

To many in the legal community, Michael Hertz is known as “Mr. False Claims Act” for his leading role during the past quarter century in using this important federal law to combat fraud against the federal government.

Hertz is widely credited with shaping the way the False Claims Act and its whistleblower provisions have been interpreted and used, has been instrumental in defending the constitutionality of provisions and has been a relentless advocate of the government’s interests.

“The United States is a different place because of Mike Hertz,” said Tony West, the Department of Justice’s acting associate attorney general. “He’s been one of the most important litigators when it comes to false claims litigation.”

The False Claims Act is the single most important civil remedy used to recover the billions of dollars stolen through fraud from the U.S. government. Under the False Claims Act, those who knowingly submit or cause others to submit false claims for payment of government funds are liable for three times the government’s damages plus civil penalties.

From 1984 through 2007, Hertz led the Civil Division’s Fraud Section, using the False Claims Act to recover billions of dollars for the government from the health care industry, defense contractors and others. In 2007, he was promoted to deputy assistant attorney general for the Commercial Litigation Branch, the Civil Division’s second largest component with approximately 285 attorneys.

In this capacity, Hertz today has oversight of the fraud unit he previously headed, and is responsible for all government litigation involving federal contracts, grants, loan disputes, bankruptcy proceedings, international trade, patent and copyright infringement issues, and other legal proceedings in both foreign and domestic courts.

One day he might be managing a customs fraud case involving pirated goods, and the next day is dealing with claims against foreign governments. Hertz also led the government effort to establish a settlement framework that has resolved claims by more than 70 percent of the nuclear power industry arising out of the government’s inability to provide a storage facility for spent nuclear fuel.

“He has a tremendous ability to slice through complicated issues and get to the heart of the matter. It’s a great skill. When others get mired in details, he gets straight to the point,” said Joyce Branda, a Justice Department colleague. “He has a blend of institutional knowledge and creative insights.”

Earlier in his career, Hertz was instrumental in creating the “global settlement” model successfully used today to investigate and resolve large fraud cases. He understood that the government would benefit by bringing together the department’s civil attorneys and criminal prosecutors, and other government agency personnel to negotiate with defendants, so those defendants could deal with all their legal liabilities to the government in a comprehensive fashion.

His leadership has been most notable in use of the False Claims Act to combat health care fraud. In 1994, he helped secure a $324 million landmark settlement with National Medical Enterprises to resolve allegations that the company illegally paid kickbacks to psychiatric and substance abuse hospitals in more than 30 states.

Many successful initiatives followed, including cases involving fraud in the blood lab testing industry, hospital chains, national nursing home chains and the pharmaceutical industry. To date, the pharmaceutical initiative has involved over 150 separate investigations and resulted in more than $8.5 billion in federal False Claims Act recoveries.

In 2006, Hertz presided over the record $565 million procurement settlement with Boeing. Hertz also worked on a sensitive government investigation involving a highly classified program, personally meeting with the director of national intelligence to coordinate the government’s litigating position and ultimately obtaining $325 million from a defense contractor.

In announcing this 2009 settlement, Hertz said it “demonstrates that defense contractors will be held accountable and that the government will aggressively pursue all allegations of misconduct in the procurement process.”

Branda described Hertz as “the staunchest defender of the taxpayer you could find.”

Hertz said he has dedicated his career to protecting the government’s interests, fighting fraud and recovering lost money, but has always operated on the principle of “doing what is right.”

“I’m free to make decisions adverse to the U.S. government if it is the right thing to do,” said Hertz. “The U.S. wins its point when justice is done.”