Judge Orders Near-Maximum Whistleblower Reward; Cites ‘Indispensable Contribution’

One of the key components of the success of the False Claims Act is its ability to incentivize whistleblowers to come forward by offering up to 30 percent of the total settlement in some cases. In today’s post, we examine an interesting holding by the U.S. District Court for the Eastern District of Pennsylvania, which upheld a 24 percent whistleblower reward over the Department of Justice’s strenuous objections.

In the case, which involves Endo Pharmaceuticals and rampant allegations of Medicaid fraud, the government opted to intervene – meaning the whistleblower’s maximum reward is capped at 25 percent. According to the DOJ, the relator did not deserve the near-maximum payout, and instead should have received something closer to 15 percent. However, the Court unabashedly disagreed, citing her ‘indispensable’ role in bringing the fraud to light, which ultimately saved taxpayers billions of dollars in wasteful fraudulent spending.

Details of the Court’s holding in U.S. ex rel. Ryan v. Endo Pharmaceuticals, Inc., et al.

The details of the underlying whistleblower lawsuit against Endo Pharmaceuticals and its colleagues involve the alleged off-label marketing of the Lipoderm patch for unapproved use.[1. http://www.taf.org/Ryan%20Award%20Decision.pdf] The relator, who worked as a pharmaceutical sales representative for the company, filed her lawsuit in 2005 after she felt she was being unfairly pressured to push the drug for the treatment of conditions not approved by the Food and Drug Administration. From there, she embarked on a ten-year journey of collecting evidence on behalf of the government, which the court described as remarkable.

Over the ten-year period, the Court pointed out that the relator recorded “hours of incriminating evidence,” and also gathered documents that, without her help, would have been unobtainable by the DOJ. The Court continued to chastise the DOJ for its “parsimonious position” that the relator deserved “barely over the statutory minimum,” and highlighted the fact that she “provided not only the spark for the investigation, but that she nurtured the flame at the darkest times when the possibility of a favorable outcome seemed most remote.”

Further, the Court pointed out, “What is ridiculous about DoJ’s parsimonious position when it comes to relator share is that while they are tight-fisted when it comes to rewarding integrity, they often pull their punches when it comes to fining fraudster companies.”[2. http://taf.org/blog/judge-awards-endo-whistleblower-greater-relator-share]

Lastly, the Court essentially ignored the government’s position that since the overall settlement against Endo Pharmaceuticals topped $192 million, the relator’s share should be smaller – presumably since she stands to receive a sizable sum regardless. The Court found absolutely no support for this in the language of the statute and explained that the express language of the statute requires a percentage of the overall resolution, regardless of its relative size. Specifically, “If Congress had intended limitations, like in the case of large awards, it would have explicitly included them within the statutory framework of the FCA. Congress’ silence on this issue compels rejection of the Government’s argument.”

For her valiant and unrelenting efforts, the relator in the case will receive more than $33 million.

Contact Berger Montague today

If you are aware of ongoing fraud and would like to discuss your information with a reputable whistleblower attorney, please do not hesitate to contact Berger Montague right away.