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The Perfect Storm: Disgruntled Former Employee Combined With the False Claims Act

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More and more, businesses that depend upon federal payments for goods and services – defense contractors, Medicare health care providers, those providing medical services to service personnel via Tricare, and the like – face a perfect storm when a disgruntled former employee combines his or her anger and/or desire for retribution with a powerful retaliatory weapon: the Federal Claims Act (“FCA”).

Qui Tam, Whistleblower Provisions

The perfect storm arises because the FCA contains powerful “qui tam,” or whistleblower provisions, that allow private citizens to file lawsuits on behalf of the Federal government to recover for alleged false claims paid to the employer. The private citizen can be awarded between 15-30 percent of the government’s recovery. The private citizen’s “share” can be enormous, since the FCA provides for triple damages for any proven violations.

$59 Million Payday for Two Whistleblowers

In late March 2016, the U.S. government reached a settlement with the large pharmaceutical company, Pfizer, whereby the firm agreed to pay $785 million to resolve allegations that a Pfizer unit overcharged Medicare for its heartburn medication Protonix. The case started as a qui tam lawsuit filed by a former company sales representative and a Louisiana physician. The government took over the lawsuit, and the Department of Justice actively participated in its prosecution. As a result of the settlement, the two individuals will share $59 million.

According to several reports, whistleblowers collected almost $600 million last year from whistleblower lawsuits. Whether or not a firm has engaged in wrongdoing, the potential sharing of such a large settlement is a powerful incentive for an employee or former employee who subjectively feels that he or she has been wronged.

Criminal Investigations Often Follow Whistleblower Lawsuits

Unfortunately, the qui tam/whistleblower lawsuit can merely be a “left jab” in the boxing match with the federal government. What often follows is a “right hook” in the form of a criminal investigation. Where the government decides to make such an investigation, the qui tam lawsuit is put on hold, but that lull isn’t good news, since an array of subpoenas, requests for documents, and other discovery efforts can be directed at anyone involved.

In a sense, the Department of Justice can use the possibility of criminal charges as leverage in the qui tam lawsuit and, alternatively, can use the qui tam allegations as leverage in the criminal investigation. Without aggressive, knowledgeable legal counsel, the business accused of wrongdoing can be buried, even if no wrongdoing has occurred.

Has a Disgruntled Employee or Someone Else Threatened Legal Action?

Oberheiden, P.C. has successfully represented clients in all sorts of federal fraud proceedings, including civil and criminal charges brought in conjunction with the Federal Claims Act. Among the firm’s attorneys are former federal prosecutors who understand the system and what it takes to develop a successful defense strategy. Located in Dallas, Texas, the Oberheiden, P.C. is a team of lawyers and courtroom warriors. The firm has the resources to provide the best defense possible. If you choose to work with us, we will use our decades of experience to help protect your vital interests. To start building your defense today, call (800) 701-7249 or contact us online now.

Orange County 714-294-2000
Los Angeles 310-873-8140
Detroit 313-888-8807
Nationwide 888-452-2503