Recent False Claims Act Lawsuits against Pharmaceutical and Wireless Companies Indicate Government’s Push to Reward Whistleblowers and Punish Corporations

The first False Claims Act (FCA) case from last week involved a large pharmaceutical company by the name of Warner Chilcott paying $23,000,000 dollars to settle claims that it defrauded the government.  A case that has been closely watched by our Los Angeles Employment Attorneys showed how three former employee whistleblowers blew the whistle on a company that paid physicians kickbacks to market its drugs in violation of California’s insurance laws.  This case is different than the typical FCA case where the corporation defrauds the government directly.  Here, the pharmaceutical company promoted certain drugs and thereby defrauded insurance companies out of millions of dollars.  The government was able to use insurance laws and the anti-kickback statute to successfully bring its claims.

The second FCA case saw lawsuits filed by whistleblowers against the country’s largest wireless carriers.  This state court case brought in Sacramento is another in a long string of cases alleging that the wireless carriers overcharged governments by over $100,000,000 dollars.  In this instance, the companies failed to do as they promised in their contracts with the governments by not implementing cost-savings requirements.  The contracts required them to identify and inform the government customers of the lowest cost options known as Rate Plan Optimization.  Instead, the wireless carriers (Verizon, Spring, T-Mobile and AT&T) ignored this cost-saving requirements and indirectly cost taxpayers millions of dollars.   Our Sacramento employment attorneys’ offices are expanding along with other Northern California offices.  See more here and here on their most recent cases.

Interestingly, in 2015, California accounted for approximately 25% of all healthcare related FCA cases.  From the ones unsealed, the average settlement amount recorded is approximately $6,000,000 dollars per case.  What is prompting the increased whistleblowing activity is that, similar to federal laws such as Dodd-Frank, Sarbanes-Oxley, the Occupational Safety and Health Act, the federal FCA, and, most recently, the Patient Protection and Affordable Care Act, California routinely expands its own state FCA laws and develops protections for whistleblowers.  A “qui tam” FCA is a type of lawsuit that gives the plaintiff (or relator) bringing the action on behalf of the government a part of the recovery with the rest going to the government.   With increasing and more frequent monetary awards, relators are increasingly emboldened to continue reporting their employer’s misdeeds and indirectly save the taxpayers millions of dollars that would otherwise illegally end up with corrupt companies.  See these other blogs for related FCA information.

If you witnessed any potential fraudulent activity where there is underpayment to the government or non-refund payment to the government upon overpayment, prompt action is vital.  Contact the experienced employment law attorneys at Stephen Danz & Associates for a free consultation to discuss your circumstances and legal options.