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Significant Whistleblower Settlements, First Half of 2011

Date Published
Sep 18, 2011

In 2010, the government settled eight separate False Claims Act cases for amounts in excess of $200 million each. The first six months of 2011 did not see any such “blockbuster” settlements-at least in terms of dollars involved-but did see the announcement of a large number of significant resolutions. Here are our choices for the five most significant settlements of 2011, so far.

  • Verizon Communications agreed to pay the U.S. Government approximately $93.5 million to settle a lawsuit brought under the False Claims Act alleging that the company improperly invoiced the Government Services Administration (GSA) for a variety of federal, state, and local taxes and surcharges in violation of government-wide voice and data telecommunications services contracts. According to the lawsuit, Verizon submitted false claims for reimbursement of property taxes, common carrier recovery charges, and unallowable surcharges that are not directly reimbursable under the GSA contracts.
  • Medline Industries, Inc. and The Medline Foundation agreed to pay the Government $85 million to resolve allegations that the company violated the False Claims Act by paying kickbacks to health care providers to incentivize them to purchase Medline products. The qui tam lawsuit was brought on behalf of the Government by Sean Mason, a former Medline employee. As a reward for disclosing the illegal conduct to the Government, Mr. Mason will receive a $23,375,000 share of the settlement.
  • Oracle America Inc. will pay the Government $46 Million to settle a qui tam lawsuit alleging that Sun Microsystems Inc., which Oracle purchased in 2010, violated the False Claims Act by paying illegal kickbacks to systems integrator companies to induce them to recommend Sun’s products to federal agencies. The allegations regarding the kickback scheme were first disclosed to the Government in a qui tam lawsuit filed in Arkansas in 2004. Since that time, the Government has conducted a much broader investigation of technology vendors that provide products to federal agencies that has resulted in settlements with six other companies.
  • Pharmaceutical manufacturers Serono Laboratories, EMD Serono, Merck Serono S.A., and Ares Trading S.A. have agreed to pay $44.3 million to resolve allegations in a False Claims Act lawsuit that the companies submitted improper claims for payment to Medicare and Medicaid in connection with the drug Rebif, an injectable used to treat multiple sclerosis. Serono allegedly paid illegal kickbacks to health care professionals in the form of consulting meetings, speaking engagements, expense reimbursement, education grants, charitable contributions, and sponsorships to induce them to prescribe Rebif to their patients. The qui tam lawsuit was brought on behalf of the Government by whistleblower Tim Amato, who will receive a $5.19 million share of the settlement as a reward for disclosing Serono’s misconduct.
  • The U.S. subsidiary of Belgian pharmaceutical giant UCB Pharmaceuticals has agreed to pay $34 million to settle two qui tam lawsuits asserting that the company violated the False Claims Act by illegally promoting its anti-epilepsy drug Keppra for off-label uses that were not medically accepted indications, such as treatment of migraines, bipolar disorder, and anxiety. The illegal marketing campaign ultimately resulting in improper claims for payment being submitted to Government health care programs. The whistleblowers will receive an approximately $2.8 million share of the settlement for reporting UCB’s unlawful conduct.
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