Court Awards 24% Relator’s Share In False Claims Act Case

A recent False Claims Act decision illustrates the lengths at which the government will sometimes go to minimize a relator’s share, even though without relators, there would usually be no recoveries at all.[1. See James B. Helmer, Jr., False Claims Act: Whistleblower Litigation, Ch. 1.IV, “Sooner or Later You Will Fight with Your Government” (6th ed. BNA Bloomberg 2012).]

Relator Peggy Ryan filed a qui tam False Claims Act case against Endo Pharmaceuticals, Inc., alleging that Endo engaged in off-label marketing of the drug Lidoderm.[2. United States ex rel. Ryan v. Endo Pharms., Inc., 2015 U.S. Dist. LEXIS 91714 at *3 (E.D. Pa. July 15, 2015).] After a nearly nine year investigation, in February 2014, Endo agreed to pay $171.9 million to settle Relator Ryan’s case.[3. Id. at *4.] Relator Ryan sought a 24% share of the award, but the government argued that she was entitled to no more than 19%.[4. Id. at *4-5.] The government argued a lower relator’s share was warranted because the relator’s participation was not “extraordinary,”[5. Id. at *14.] because the case was not tried,[6. Id. *14-15.] and due to the large amount of the settlement.[7. Id. at *9.] The court correctly rejected all of these arguments.[8. Id. at *10-16.]

Regarding Relator Ryan’s participation, the court noted that she not only “provided the spark for the investigation, but that she nurtured the flame at the darkest times when the possibility of a favorable outcome seemed most remote.”[9. Id. at *10.] During the nine year investigation, Relator Ryan provided the government with access to the inner workings of the defendant since she was still employed by Endo, providing evidence that the government would not have otherwise obtained.[10. Id.] She wore a wire for three years, recording over 200 hours of conversations at her workplace.[11. Id.] In those conversations, Relator Ryan captured upper-level management personnel admitting Endo’s off-label marketing of Lidoderm. She also significantly assisted the government in crafting and targeting its discovery by naming Endo personnel who would have certain documentation and should be interviewed, explaining where documents could be found, and giving input into what questions Endo personnel should be asked.[12. Id. at *12.] Relator Ryan also provided the government with substantial documentary evidence of the fraud.[13. Id. at *12-13.] The court found the government’s attempt to limit the relator’s share based on Relator Ryan’s level of participation to be unjustified.[14. Id. at *14.]

The court rejected the government’s argument that a 24% share was not warranted because the case did not go to trial as “counter-intuitive and without statutory support.”[15. Id. *14-15.]

Finally, the court rejected the government’s argument that the large size of the settlement warranted a lower share as contrary to the explicit language of the statute which contains no language limiting a relator’s share on such basis.[16. Id. at *16.] The court astutely noted that had Congress intended the size of the award to serve as a measuring stick for the relator’s share, it could have easily done so. Additionally, the court found no legal precedent limiting a relator’s share based on the size of the award.[17. Id.] Rather, courts have rejected that argument.[18. Id. (citing United States ex rel. Merena v. SmithKline Beecham Corp., 52 F. Supp. 2d 420, 434 (E.D. Pa. 1998), rev’d on other grounds, 205 F.3d 97 (3d Cir. 2000); United States ex rel. Johnson-Pochardt v. Rapid City Reg’l Hosp., 252 F. Supp. 2d 892, 903 (D.S.D. 2003) (citing United States ex rel. Alderson v. Quorum Health, 171 F. Supp. 3d 1323, 1335 n.37 (M.D. Fla. 2001)).]

Helmer, Martins, Rice, & Popham, Co., L.P.A. does not represent any parties to this case. But as one of the handful of firms that has represented relators in share disputes with the Department of Justice, we understand the difficulties of these battles.

Helmer Martins was counsel for Relator Chet Walsh in a relator’s share dispute with the Department of Justice in which he was awarded a 22.5% share on a $59.5 million civil settlement. Helmer Martins was counsel for Relator Chet Walsh in a relator’s share dispute with the Department of Justice in which he was awarded a 22.5% share on a $59.5 million civil settlement. Learn more about the Relator Walsh case. Helmer Martins was also counsel for Relator Alfred Pedicone in a relator’s share dispute with the Department of Justice. Relator Pedicone was awarded a rare 30% share of a $2.4 million dollar settlement. Helmer Martins was also counsel for Relator Alfred Pedicone in a relator’s share dispute with the Department of Justice. Relator Pedicone was awarded a rare 30% share of a $2.4 million dollar settlement. If you would like more information or have any questions, feel free to contact us.