Top 12 Whistleblower Cases of the Past Year
March 1, 2021
Taxpayer money is everywhere. And where there is money, there are people willing to cheat to get more than their fair share. Fortunately, there are also upstanding humans interested in calling out wrongdoers gaming the system and stealing tax dollars. Also fortunately, we have whistleblower rewards!
The primary law used to assist those blowing the whistle on bad behavior is the federal False Claims Act. The SEC also has a whistleblower program that has grown significantly over the past decade. The last year has brought a record number of whistleblower claims under the FCA and SEC programs. In 2020, the SEC received almost 7,000 whistleblower tips—a 31% increase from just two years prior, and a more than two-fold increase since the program’s inception. Stemming from whistleblower lawsuits, the SEC has awarded almost $700 million to over 100 individuals since issuing its first award in 2012.
How to be a whistleblower? Whistleblowers may be eligible for an award when they voluntarily provide original, timely, and credible information that leads to a successful enforcement action. Awards in a whistleblower case can range from 10 to 30 percent of the money collected when the sanctions exceed $1 million.
Whistleblower lawsuits vary. In every industry, the U.S. government pays private companies for goods or services. In healthcare, Medicare and Medicaid constitute half of payments to providers of medical services and goods. In the defense industry, hundreds of billions of government dollars are paid to private contractors. Beyond those fields, billions of government dollars go to everything from toilet paper and hand soap, to computers, extension cords and software, and everything in between. The government also supports many industries through subsidies, loans, and guarantees.
Below are details regarding the top awards under the FCA and SEC whistleblower programs over the past year.
- Settlement Date: June 4, 2020
- Defendant: Undisclosed
- Allegation: Detailed, firsthand observations of misconduct by a company that resulted in a successful enforcement action and the return of significant funds to investors.
- Total Settlement: Undisclosed
- Whistleblower Award: $50 million (at the time, the largest amount ever awarded to one individual under the SEC’s whistleblower program)
- Want more info about this case? //www.sec.gov/news/press-release/2020-126
- Settlement Date: July 10, 2020
- Defendants: Universal Health Services, Inc. and UHS of Delaware, Inc. (collectively, UHS), and a Georgia-based UHS facility, Turning Point Care Center, LLC
- Allegation: Billing federal healthcare programs for medically unnecessary inpatient behavioral health services, failing to provide adequate or appropriate services, and paying illegal inducements to program beneficiaries.
- Total Settlement: $122 million
- Whistleblower Award: $15.8 million.
- Want more info about this case? //www.justice.gov/usao-mdfl/pr/universal-health-services-inc-and-related-entities-pay-122-million-settle-false-claims
- Settlement Date: September 22, 2020
- Defendants: Contractors Bechtel National Inc., Bechtel Corporation, AECOM Energy & Construction, Inc., and Waste Treatment Completion Company, LLC
- Allegation: Overbilling the Department of Energy for work on the Hanford Waste Treatment Plant on craft labor performed by electricians, millwrights, pipefitters, and other skilled trades workers, including billing for unallowable and unreasonable idle time caused by management failures in scheduling work.
- Total Settlement: $57.75 million
- Whistleblower Award: $13.75 million
- Want more info about this case? //www.justice.gov/usao-edwa/pr/bechtel-aecom-us-department-energy-doe-contractors-agree-pay-5775-million-resolve-0
- Settlement Date: January 20, 2020
- Defendant: Boston Heart Diagnostics
- Allegation: Entering into multiple quid pro quo arrangements with doctors that order its tests, recruiting doctors to have them promise that their patients would never have to pay a deductible or co-payment, and offering free dietician counseling services in exchange for the doctors’ ordering (via Medicare) an expensive panel of laboratory tests.
- Total Settlement: $28 million
- Whistleblower Award: $4.3 million
- Want more info about this case? //www.cpmlegal.com/news-28-Million-Settlement-in-Major-Whistleblower-Suit-Against-Boston-Heart-Diagnostics
Need a whistleblower attorney? Cotchett Pitre and McCarthy is one of the nation’s most successful and well-respected whistleblower law firms, representing individuals retaliated against by employers for raising concerns, and individuals reporting corporate fraud resulting in the waste of taxpayer money. For general information about CPM’s Whistleblower practice, see this link: //www.cpmlegal.com/practices-Whistleblower-Qui-Tam-False-Claims-California
Want to learn more? To learn more about the terminology of whistleblower law, including definitions of terms like whistleblower, “qui tam,” “relator” (very different from “realtor”), and the specifics of the timing and scope of governmental investigations, check out this link: //www.cpmlegal.com/practices-Whistleblower-Qui-Tam-False-Claims-California#FAQs
Pharma companies are under immense pressure to quickly develop and manufacture Covid-19 vaccines. ... [+] (Photo by CHANDAN KHANNA/AFP via Getty Images)
AFP via Getty ImagesPfizer’s PFE and Moderna’s announcements that each company has developed what seem to be effective Covid-19 vaccines have brought great rejoicing, but that news and the surge in Covid-19 cases increase the tremendous pressure on all vaccine developers to quickly produce world-saving measures.
As pharma races to develop and manufacture Covid-19 vaccines, whistleblowers are expected to play an important role in ensuring that vaccine manufacturers don’t succumb to the temptation to take unsafe shortcuts, exaggerate positive results, sidestep good manufacturing practices or fail to comply with sensitive handling requirements in distributing vaccines to the public.
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Whistleblowers have long been essential in policing the pharma industry and exposing misconduct that is hidden from regulators.
Two whistleblower cases – one settled and one ongoing – are particularly relevant as vaccine developers proceed rapidly and scale up production facilities in anticipation of manufacturing Covid-19 vaccines.
In one whistleblower case, GlaxoSmithKline paid $750 million to settle civil and criminal charges relating to whistleblower allegations that its manufacturing facility in Puerto Rico violated FDA regulations governing “current good manufacturing practices” (cGMP).
The whistleblower, who was a quality assurance manager, alleged in a “qui tam” lawsuit that GSK was manufacturing drugs that contained too much or too little of the active ingredients and that its Puerto Rico manufacturing operations failed to comply with mandatory requirements for sterile manufacturing and produced drugs that were contaminated.
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In the second whistleblower case, which is ongoing, a medical researcher filed a qui tam lawsuit against Roche Holdings in 2014 for claims involving Tamiflu, an oral antiviral prescription drug that Roche marketed and sold as a seasonal influenza treatment. The lawsuit alleges that the government purchased 50 million courses of Tamiflu based on false claims about the drug’s effectiveness.
Roche lost the latest round in the case in September when a federal district court judge denied the pharma company’s motion to dismiss. The lawsuit says that the federal government and state governments spent about $1.5 billion to stockpile Tamiflu as part of its Pandemic Influenza Preparedness Plan.
A number of major pharma companies have received substantial government funds for developing vaccines or for the purchase of vaccines once approved. These include Pfizer ($1.95 billion for 100 doses of the vaccine), Sanofi SNY partnering with GSK ($2.1 billion for development and purchase of 100 million doses) and Johnson & Johnson JNJ ($1 billion for development and purchase of 100 million doses).
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Smaller companies, such as as Moderna ($1 billion for development plus $1.5 billion for 100 million doses) and Novavax ($1.6 billion) also have gotten significant federal funding.
The federal government’s funding of vaccine development and its expected purchase of hundreds of millions of vaccine doses mean that whistleblowers who are aware of noncompliant practices involving a Covid-19 vaccine may be well positioned to file a qui tam lawsuit to stop the problems.
The False Claims Act allows private citizens who know of companies committing fraud against the government to file a qui tam lawsuit and recover funds on the government’s behalf. Whistleblowers are entitled to protection against employment retaliation and a significant reward if government funds are recovered. The GSK whistleblower was awarded more than $96 million.
The challenges of developing a vaccine, manufacturing it and distributing it around the world are immense. Serious problems that affect the safety and efficacy of the vaccine can occur at any step.
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Already some issues are popping up.
Reuters reported last month that US drug inspectors uncovered serious quality control problems at an Eli Lilly pharmaceutical plant in New Jersey that is ramping up to manufacture a promising COVID-19 drug. Lilly told the news agency that it has launched a “comprehensive remediation plan,” increased staffing at the site and was working “aggressively” to address all concerns raised during the inspection.
With almost 200 projects underway to develop Covid-19 vaccines, companies should pay close attention to legal and regulatory compliance. Whistleblowers will be essential watchdogs to ensure the validity of trial results and the efficacy and safety of desperately needed Covid-19 vaccines. The stakes couldn’t be higher.