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Two Big Qui Tam Cases Settle This Week, Reveal Nature of False Claims Lawsuits

Amendments to The False Claims Act in 1986 as well as Tennessee?s own Tennessee Medicaid False Claims Act (TMFCA) allow qualified whistleblowers to earn a portion of the government?s recoveries (called ?qui tam provisions?) when whistleblowers, known as ?relators,? appropriately report their company?s defrauding the government. Two examples of False Claims Act fraud found settlement in court and received media coverage this week for their substantial moneys awarded their whistleblowers who reported the fraud.

Military Contractor Fraud

A False Claims whistleblower led Justice Department officials to investigate from a company producing inferior-quality Kevlar cloth for our military?s combat helmets for the past 12 years. This military contractor fraud investigation led to a $2 million settlement after whistleblowers? testimony during the False Claims Act lawsuit revealed that the company under military contract was knowingly producing inferior quality goods that did not meet military specifications. Instead, they wove up to 10% fewer than the minimum safety standard of 35 x 35 strands of Kevlar in order to save on production costs and time, that is, stealing federal tax dollars to provide an unsafe product to our troops.

Defense Department officials have not presented any evidence of troop from these inferior materials, but this could be due to the helmets the cloth was used in being phased out.

The two relators for this case had previously approached management concerned about the lives they were endangering by producing the inferior Kevlar. When that didn?t work, they sued.
From qui tam provisions under the False Claims Act, the two will receive $406,350 of the government?s award.

Health Care Fraud

A district sales manager for Merck finally found completion to her 7 year False Claims lawsuit alleging billing fraud by the drug pharmaceutical maker. But the wait was worth it. Merck, the U.S.?s third largest drug pharmaceutical company, agreed to pay over $400 million in one of the largest sums ever collected by various state and federal governments. The qui tam relator will receive about $68 million.

The relator in the Merck?s lawsuit had inside information about corporate practices--information the government relies on when it contracts with or subsidizes an industry. This is especially true in the health care industries, where whistleblowers have helped recover just under $9 billion (and to the $1.4 billion benefit of the relator).

In Merck?s case, the whistleblower reported that the pharmaceutical company was using unfair pricing practices to overcharge Medicaid (tax funded healthcare for the poor).

Working with a False Claims Attorney

One whistleblower can make all the difference in the immediate lives of soldiers or in the tax dollars available for bona fide health care programs. Relators can earn upwards of 30% of the total government fraud recoveries--just for doing the right thing. As an added bonus, federal and Tennessee law protects False Claims whistleblowers from retaliation, even if their case is not won.

But protections and payoffs only come if you appropriately file your False Claims lawsuit.

To speak with either myself, Attorney Jim Higgins, or of HHP?s Tennessee government fraud specialists, fill out our quick online form or call our Nashville, TN offices at (615) 353-0930.

Full post as published by Tennessee Law Blog on February 23, 2008 (boomark / email).