Qui Tam - Whistleblowers - Examples

Examples

• Joe Faltaous worked as a Neuroscience Sales Specialist for Eli Lilly for two years before resigning after expressing concerns about Eli Lilly’s practices. Joe complained of Lilly’s illegal marketing, promotion and sale of Zyprexa to children and in higher-than-recommended dosages to adults. Joe also complained that as part of the marketing and promotional schemes, Lilly encouraged physicians by means of monetary payments. In 2009, Faltaous and 9 other whistleblowers won a settlement with Eli Lilly in a civil qui tam action in U.S. District Court.

• Delma Pallares, who rejected offers to be put in the witness protection program, worked for American Grocers as a logistics manager and general merchandise manager from 1996 through 2003. She gained extensive knowledge of the daily operations of American Grocers, including how the food products were invoiced, valued, and weighed prior to shipping and, according to the complaint, how the company and its employees changed expiration dates and forged accompanying documentation. Ms. Pallares’s efforts in locating persuasive evidence led to this successful prosecution and enabled the U.S. Government to intervene.

• During her employment with ROTECH, Sheila Bell-Messier oversaw the operations of the company in twelve states. From 1995 to 2002, Bell’s responsibility grew from overseeing twelve locations to 220 locations nationwide. During this time she was the number one profit maker in the country. Bell took over the Medicare billing because of her great track record and success with cost efficiency. Bell later determined, however, that a significant percentage of patient files were not in compliance because they lacked the correct documentation. Bell also discovered that there was improper testing of oxygen patients. Bel instructed her billing department to “shut down the billing.” Compliance officers came to Texarkana. When they arrived, Bell told them the results of her audit. They informed Bell that they knew that they were significantly out of compliance. Bell told them that she “was not going to Medicare prison for ROTECH,” and refused to restart the billing. Bell was told that ROTECH was in the middle of a settlement agreement with the Government and could not do anything that might send the Government a “red flag” (i.e. allow the Government to recoup) to the Government and cost ROTECH more money. Rotech paid $2 million to settle civil charges that it engaged in false or fraudulent conduct in billing Medicare for durable medical equipment. The government declined intervention. This settlement netted the client and government about $1.78 million.

• On July 2, 2012 the British pharmaceutical company GlaxoSmithKline agreed to pay the U.S. government $3 billion to settle civil and criminal charges in the largest healthcare fraud settlement in U.S. history and the largest payment ever by a pharmaceutical company. The government investigation was launched largely on the basis of two separate qui tam cases brought by whistleblowers under the False Claims Act. The civil charges were settled for $2 billion of the total $3 billion resolution, a record number for civil settlements brought under the False Claims Act. GSK pleaded guilty to promoting drugs for uses not approved by the FDA, also known as “off-label” marketing, and to failing to report key safety data regarding a product. Others charges in the suit include false price reporting practices, Medicaid fraud, and paying illegal kickbacks to physicians.

• In April 2012, Alliant Techsystems Inc. agreed to resolve $36,967,160 settlement to resolve allegations that ATK sold dangerous and defective illumination flares to the Army and the Air Force. According to the government's allegations, from 2000 to 2006, ATK delivered LUU-2 and LUU-19 illuminating para-flares to the Defense Department. These flares, which burn in excess of 3,000 degrees Fahrenheit for over five minutes, are used for nighttime combat, covert and search and rescue operations and have been used extensively by American forces in Iraq and Afghanistan in the global war on terror. The government alleged that the flares delivered by ATK were incapable of withstanding a 10-foot drop test without exploding or igniting, as required by specifications, and that ATK was aware of this when it submitted claims for payment.

• In April 2012, AmMed Direct LLC has agreed to pay the United States and the state of Tennessee $18 million plus interest to settle allegations that it submitted false claims to Medicare and Tennessee Medicaid. The United States and Tennessee alleged that, from September 2008 through January 2010, the Antioch, Tenn.-based company submitted false claims to Medicare and TennCare for diabetes testing supplies, vacuum erection devices and heating pads. Prior to learning of the United States' and Tennessee's investigation, AmMed disclosed to the Medicare Administrative Contractors its failure to refund monies for returned supplies and began paying the refunds to Medicare and TennCare.

• In March 2012, LifeWatch Services Inc. has agreed to pay the United States $18.5 million to resolve allegations that the company submitted false claims to federal health care programs, the Justice Department announced today. The settlement resolves two lawsuits filed under the qui tam, or whistleblower, provisions of the False Claims Act. The two complaints allege that LifeWatch improperly billed Medicare for ambulatory cardiac telemetry (ACT) services. ACT services are a form of cardiac event monitoring that use cell phone technology to record cardiac events in real time without patient intervention. Traditional event monitoring requires the patient to press a button when he or she notices a cardiac event to record the cardiac rhythms. Medicare reimbursed ACT services at between $750 and $1200 and traditional event monitoring services at roughly $250 during the relevant time period.

• In November 2010, Special Agents from the Defense Criminal Investigative Service (DCIS) worked jointly with the U.S. Army Criminal Investigation Command, Major Procurement Fraud Unit on an investigation of Samir Itani. The Texas businessman has agreed to pay $15 million to settle federal allegations that he and his company cheated the government by selling old and potentially dangerous food to the U.S. military to supply combat troops serving in Iraq and elsewhere. Prosecutors had alleged that Samir Mahmoud Itani and his company American Grocers Ltd. profited from the Middle East conflict by ripping off taxpayers and shortchanging U.S. soldiers in the mess hall. According to the government, Itani's firm bought deeply discounted products whose freshness dates had expired or were nearing expiration. His workers then altered those dates and resold those supplies to the government for hefty markups, prosecutors alleged.

• In August 2009, The Boeing Company will pay the United States $25 million to resolve allegations that the company performed defective work on the entire KC-10 Extender fleet, the Justice Department announced today. The KC-10 Extender is a mainstay of the Air Force’s aerial refueling fleet in the Iraq and Afghanistan war theaters. The lawsuit alleged that Boeing defectively installed insulation blanket kits in KC-10 aircraft while performing depot maintenance at the Boeing Aerospace Support Center in San Antonio, Texas.

• In September 2009, a former Pfizer Inc. sales representative, John Kopchinski, was awarded $51.5 million for his role as a whistleblower in the investigation of Pfizer's marketing practices of Bextra. Pfizer pled guilty to various civil and criminal charges and paid in total $2.3 billion to the government. The case netted the largest criminal fine ever imposed in the United States for any matter, $1.195 billion, and the largest civil fraud settlement against any pharmaceutical company. Qui tam "relators" are not eligible to receive shares of criminal fines. The $102 million that was distributed between the six whistleblowers was calculated from the fines paid in the civil settlement. Kopchinski's allegations were the basis for the majority of Pfizer's assessed civil fine, hence the size of his share relative to the other whistleblowers. Kopchinski and his attorneys filed the False Claims Act complaint in 2004 and alleged Pfizer systemically violated the federal Anti-Kickback statute, 42 U.S.C. § 1320a-7b(b) and the off-label marketing provision within the Federal Food, Drug, and Cosmetic Act ("FDCA"), 21 U.S.C. §§301-97. The qui tam provisions of the False Claims Act were triggered by the reimbursement for Bextra through Federal and State government programs, including but not limited to Medicare and Medicaid.

• A hospital group based in McAllen, Texas, has agreed to pay the United States $27.5 million to settle claims that it violated the False Claims Act, the Anti-Kickback Statute and the Stark Statute between 1999 and 2006, by paying illegal compensation to doctors in order to induce them to refer patients to hospitals within the group. McAllen Hospitals L.P., d/b/a/ South Texas Health System, is a subsidiary of Universal Health Services Inc., a company based in Pennsylvania that owns hospitals and other health care centers around the country.

• In April 2009, the medical lab company Quest Diagnostics agreed to pay a $302 million settlement, the largest ever paid by a medical lab company for a faulty product. A subsidiary of Quest, Nichols Institute Diagnostics Inc., was charged with marketing and selling faulty blood test kits to medical testing lab companies over a period of six years, despite substantial evidence that the product obtained inaccurate results. The “qui tam” case, which was brought under the False Claims Act by a California biochemist, launched a large-scale federal investigation and resulted in the record-setting resolution. The whistleblower was awarded 18% of the $253 million civil settlement.

• In April 2009, the aerospace and defense technology company, Northrop Grumman, settled a lawsuit brought by a whistleblower and the US government alleging that the company sold faulty electronic equipment to the government for military satellites. The $325 million settlement remains the largest ever paid by a defense contractor in a qui tam case. Under the False Claims Act, which requires the government to award whistleblowers 15-25% of recoveries, the whistleblower Robert Ferro received $48.7 million for his participation in the case.

• In May 2004, Warner-Lambert agreed to settle claims brought in Franklin v. Parke-Davis by whistleblower David Franklin under the False Claims Act that the company had engaged in off-label promotion of the drug Neurontin. At the time, the $430 million settlement was one of the largest pharmaceutical settlements in history and the first off-label promotion case successfully brought under the False Claims Act.
• In October 2011, Pfizer agreed to settle all civil claims in a whistleblower suit brought under the False Claims Act in connection with off-label promotion of the drug Detrol. The settlement was $14,500,000.