Whistleblower Lawsuits: Astronomical Settlement Figures Are Common
UPDATED: February 26, 2020
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Whistleblower lawsuits that are filed on behalf of the government for fraudulent activity are generally complex in nature and usually take a bit longer to resolve than other lawsuits due to the time it takes to sort through government contracts and regulations. While a handful of cases go to trial, most settle ï¿½ and for astronomical figures.
Examples of recent settlements
For examples of recent Qui Tam settlements, we went to an expert ï¿½ Larry Golston, an Alabama attorney whose firm represents clients in Qui Tam litigation, as well as consumer fraud and bad faith insurance litigation. He provided the following examples:
There was one recent case in which the government settled with the drug industry who was overpricing drugs that they were selling to the federal and state governments. They were supposed to be giving discounts per their contract with these governmental entities. However, they came up with a very complex pricing scheme whereby they never actually gave the price reduction ï¿½ and actually inflated the cost of the drugs. The government sued them and recovered several billion dollars.
There are numerous eight, nine and ten figure cases within the healthcare industry and Medicare. People recoup hundreds of millions of dollars in cases where a hospital or a nursing home is involved. Cases in which home health companies that over-bill and misrepresent charges to Medicare are also becoming more prevalent.
Punitive damages ï¿½ with a twist
Golston says that the False Claims Act provides for a minimum of $5,000 and maximum of $10,000 for each violation. He explained the importance of that provision:
Thatï¿½s important because the violations are for each fraudulent act. For example, letï¿½s say you have a contractor who contracts to supply the military with rifles. Now, if each of those rifles is defective, then each time that the contractor bills the government for a shipment of rifles ï¿½ thatï¿½s one violation. One could also argue that each rifle constitutes a violation.
While those arenï¿½t technically punitive damages, they can also be hit with treble damages, which is three times the amount of the governmentï¿½s actual charges. So, letï¿½s say the government spent $20 million for those defective rifles. Three times that amount is huge ï¿½ not to mention the additional damages for each violation.
The whistleblowerï¿½s percentage
The whistleblower, or relator, gets a percentage of what the government recovers by way of a settlement or verdict. Golston explained:
The relaterï¿½s percentage will vary depending on whether the government decided to intervene or decline. If the government intervenes, the relater gets less ï¿½anywhere from 15% to 25% of the recovery. If the government declines to intervene, the relaterï¿½s percentage goes up because the he or she is obviously going to do more work. In that situation, the relater may get anywhere from 25% to 35%.
While thereï¿½s no hard and fast rule on the number of cases that the government takes on, I would say that it probably declines more than it accepts because of the sheer volume of the number of clients that they probably get every single day. That number is huge. Taking into consideration the governmentï¿½s limited resources, they canï¿½t get involved in every single case.
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