Judge blocks Justice Department effort to shortchange whistleblower


“Graffiti” derived from a work by John Taylor (CC) at Flickr.com

When the U.S. Department of Justice accepted a $192.7 million settlement from Endo Pharmaceuticals for “a decade’s worth of fraud that ripped off Medicare and Medicaid for over $700 million dollars,” it left Endo with a generous profit from the alleged wrongdoing. But, when it came to rewarding the whistleblower who built the government’s case, Justice put on its Ebeneezer Scrooge spectacles and offered her “barely more than the minimum 15% required by law.”

Rejecting DoJ’s argument that large fraud settlements justify smaller whistleblower awards, U.S. District Judge Robert F. Kelley responded that  “the Government’s interpretation is contrary to the explicit language of the statute.”

“Peggy Ryan wore a wire, risked her career, and invested 9 years of her life in this fight. Her lawyers had millions of dollars tied up in this litigation. Nothing would have happened if a whistleblower had not stood up, spoken up, and lawyered up.” (AllGov.com)

Kelly ordered DoJ to pay Ryan 24% of the settlement ($33.6 million), a bit less than the 25% maximum, based on her contribution to the case.

Patrick Burns, co-Executive Director of Taxpayers Against Fraud Education Fund, criticized the government’s concept of justice.

“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.”

Two other whistleblowers also filed qui tam suits against Endo:  Max Weathersby, an Endo sales rep, and Gursheel Dhillon, a physician. Judge Kelly determined that the two were ineligible to receive part of the award under the False Claims Act’s “first-to-file rule.”

On its website, the Justice Department issued the following statement about the settlement.

Pharmaceutical company Endo Health Solutions Inc. and its subsidiary Endo Pharmaceuticals Inc. (Endo) have agreed to pay $192.7 million to resolve criminal and civil liability arising from Endo’s marketing of the prescription drug Lidoderm for uses not approved as safe and effective by the Food and Drug Administration (FDA), the Justice Department announced today. The resolution includes a deferred prosecution agreement and forfeiture totaling $20.8 million and civil false claims settlements with the federal government and the states and the District of Columbia totaling $171.9 million. Endo Pharmaceuticals Inc. is a Delaware corporation headquartered in Malvern, Pa.

Of the $192.7 million settlement, $34.2 million will be divided amongst the states and the District of Columbia.

Ryan was represented by attorneys with James Hoyer Newcomer & Smiljanich LLP.

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Photo Credit:  “Graffiti” derived from a work by John Taylor (Creative Commons–Attribution license) at Flickr.com.