Twenty years ago, we published an interview with Neil Getnick, a partner at Getnick & Getnick in New York.
At the time, the federal False Claims Act had been used primarily to combat defense procurement fraud.
During the interview, Getnick announced that his firm – Getnick & Getnick – was setting up a private economic crime unit to combat health care fraud.
“This would be a private unit designed to prosecute health care fraud on behalf of the federal government and in the name of the United States,” Getnick told Corporate Crime Reporter in 1992. (6 Corporate Crime Reporter 30 (17), July 27, 1992).
Getnick was about to catch a wave.
Over the next twenty years, Getnick secured major recoveries in a number of health care fraud cases including in 1997 against LabCorp ($187 million recovery), in 2007 against Bayer ($257 million recovery) and in 2010 against GlaxoSmithKline ($750 million recovery.)
Now, Getnick is positioning himself to catch the next wave – the internationalization of whistleblower cases.
“Our practice has expanded to focus on whistleblower cases under the SEC, CFTC, and IRS whistleblower laws as well,” Getnick told Corporate Crime Reporter in an interview last week. “We have recently launched a global anti-fraud and corruption unit focusing on international whistleblower cases.”
Will the Foreign Corrupt Practices Act (FCPA) whistleblower cases rival the health care fraud whistleblower cases in size and scope?
“It’s difficult to predict in terms of size and scope,” Getnick said. “But I do think that the FCPA whistleblower cases are going to have a fundamental impact on the way companies compete overseas. And as such, I believe these cases will take us into a whole new era.”
“When this work started some twenty years ago in the health care area, the focus was bringing cases that would affect and reform individual companies.”
“And then over time, that elevated to bringing cases that would affect and reform industries.”
“And now, going forward, we are talking about bringing cases that will affect and reform whole markets.”
“Five or ten years from now, we may look back and find that the SEC whistleblower law has been the great friend of American business, leveling the playing field in the global marketplace.”
So, we are going to be seeing U.S. based companies blowing the whistle on foreign based companies under the FCPA?
“That remains to be seen,” Getnick said. “One of the things I thought you would have seen by now is companies taking greater advantage of U.S. whistleblower laws on their own behalf. Some companies have done that. But I think you are going to see a major uptick when companies realize just how effective these laws can be particularly in an increasingly global marketplace that needs a level playing field if U.S. businesses are going to be able to compete effectively.”
Getnick also sees more international cases targeting pharmaceutical manufacturing practices.
“Perhaps one of the most important was our case against GSK in 2010, where we successfully targeted its largest pharmaceutical plant in the world for violating FDA current good manufacturing practices and selling adulterated drugs,” Getnick said.
“That was the first successful case under the False Claims Act to go after manufacturing violations as opposed to pricing frauds.”
“And between the two, manufacturing violations are far more serious, because they cross over into the area of patient safety.”
“One of the things we have seen since is that pharmaceutical manufacturing companies are moving their plants overseas. Increasingly, pharmaceutical manufacturing is taking place in India and China. As a result of that, even though those plants remain under FDA jurisdiction, it is far more difficult for the United States and its regulators to monitor and supervise the manufacturing quality in those foreign based plants.”
“The same laws that govern domestic cases, however, can be used for international cases. And as a result, it is going to be all the more important to be able to develop sources of information and reliable evidence about what is going on in these plants internationally in order to continue to maintain the highest standards of manufacturing for product that is being shipped all over the world, including to the United States.”
“To that extent, I believe we are going to see an internationalization of that aspect of the federal False Claims Act. While those pills may be manufactured overseas, once they enter into the United States and are sold to the Medicare or Medicaid programs, there is a sufficient nexus to assert jurisdiction in the United States under that law.”
Getnick said that his firm is teaming up with Luis Moreno Ocampo.
Ocampo recently stepped down at the conclusion of his term as the first chief prosecutor of the International Criminal Court. He served in that capacity for nine years.
“Mr. Ocampo understands how to develop such cases internationally, how to reach out to people to develop information, how to protect those people in the process of doing so, and how to develop evidence under some of the most difficult circumstances,” Getnick said.
“We are very encouraged. We believe that with our track record in developing whistleblower and business fraud cases and Mr. Ocampo’s track record in pursuing global justice, we have a very strong combination.”
“In addition to working cases in the arena of crimes against humanity, Mr. Ocampo is one of the world’s most significant anti-fraud and anti-corruption fighters, as he demonstrated first as a famed prosecutor and then as a private lawyer in Argentina.”
“Only last month, the World Bank turned to Mr. Ocampo to head up a commission examining the corruption of a $1.2 billion financed construction project in Bangladesh. We first came to know each other in the late 1990’s because his law firm in Argentina and ours in the U.S. were pursuing similar anti-fraud and corruption practices, using similar methodologies.”
While reaching out globally, Getnick is keeping an eye on his own backyard.
In the summer of 2010, the state of New York passed strengthening amendments to the New York False Claims Act. Getnick says that those amendments made New York’s the most robust such law in the country.
“In particular, what distinguishes that law from any other such law is that the tax bar was lifted,” Getnick said. “Under the federal False Claims Act and other state False Claims Acts, there is no provision to pursue tax cases in the qui tam context – there is no provision allowing the whistleblower and their counsel to pursue tax cases on their own with or without the government.”
“New York now allows that. In fact, the sponsor of those amendments, then state Senator Eric Schneiderman, went on to become Attorney General in 2011.”
“Upon taking office, he immediately set up a Taxpayer Protection Bureau in the Attorney General’s office to work alongside the Medicaid Fraud Control Unit.”
“So, now in the New York Attorney General’s office there is a specialized unit to pursue non-Medicaid False Claims Act cases – and in particular tax cases.”
“New York State has made a very simple change to its law. The law used to say – you cannot bring tax cases under the qui tam provision. Then, with a single word, that changed to read – as of the 2010 amendment – you can bring tax cases.”
[For the complete transcript of the Interview with Neil Getnick, see 26 Corporate Crime Reporter 43(12), November 5, 2012, print edition only.]