It’s one of the largest false claims cases in the country.
More than forty California government entities have joined a lawsuit filed by a whistleblower against Verizon, AT&T, Sprint, and T-Mobile.
The case alleges that the wireless companies overcharged government customers by more than $200 million.
The wireless companies are alleged to have ignored two cost-saving requirements included in the master contracts under which California state and local government customers purchased wireless services.
The whistleblower is a company called OnTheGo Wireless, a company that pioneered something called – rate plan optimization.
Rate plan optimization is a computerized service that analyzes individuals’ usage patterns quarterly and identifies the least expensive service or rate plan for each phone or user.
Selecting the rate plan that best matches usage patterns reduces costs by 20 percent to 30 percent over the term of a contract.
The lawsuit alleges that although the master contracts with the government required it, the wireless carriers did not prepare or provide rate plan optimization reports.
Verizon is being represented by Matthew Rosengart of Greenberg Traurig in Los Angeles.
AT&T is being represented by John Richter of King & Spalding in Washington, D.C.
Sprint is being represented by Will Ashworth of Williams & Connolly in Washington, D.C.
T-Mobile is being represented by Steve Koh of Perkins Coie in Seattle.
And OnTheGo Wireless is being represented by Wayne Lamprey at Constantine Cannon.
“The lawsuit is based upon contracts with public entities,” Lamprey told Corporate Crime Reporter in an interview last week. “These are contracts developed by something called the Western States Contracting Alliance (WSCA).”
“WSCA is a cooperative purchasing organization where a lead state will develop a contract to save the time and energy required by all the state entities that are members of WSCA. WSCA developed a model contract for wireless services. Included in that contract was a requirement for rate plan optimization. And reports were required each quarter that covered every subscriber and device. The contracts required service at the ‘lowest cost available.’”
“The core allegation in the lawsuit was that the carriers agreed to these contracts and these terms in order to gain entry to the government marketplace, but then failed to provide the rate plan optimization.”
Lamprey filed an amended complaint last week.
How is the amended complaint different from the original complaint?
“It is substantially more detailed,” Lamprey said. “As a whistleblower lawyer, you bring the case with information provided to you by the client. And then you are able to obtain through your own investigative efforts more information. In this case, we had 45 entities that chose to intervene. And we then had a period where we could work with our clients and get a more detailed look at what they had received and where optimization services were not received. And with that information we were able to make more detailed allegations in the complaint.”
“The amended complaint lays out the absence of optimization reports and some occasions where some of the plaintiffs complained about not receiving optimization reports and some of the pseudo optimization reports they received along the way.”
Constantine Cannon has one of the largest false claims practices in the country.
How many false claims cases is the firm currently handling?
“It is some dozens,” Lamprey says.
What percentage of the cases that come in the door do you end up taking? And what is your filter like?
“We have a strong volume of intakes each week and each month,” Lamprey says. “We have people specifically assigned to deal with that intake, try to sift through it and find the cases we want to do. As cases progress through that process, we add to the team evaluating a given case. We have only had that process in place for six to nine months at this point. It’s hard for me to be definitive about it. But we are certainly taking fewer than one in 50. And it might actually be closer to one in 100 that we actually take.”
Do you believe that the false claims laws are the most potent anti-corporate crime, anti-fraud weapon in the government’s arsenal?
“As a former federal prosecutor and now whistleblower lawyer in the private sector, I would say it is the most potent because it combines the public and the private players. If you are a federal prosecutor, you have a range of laws you can charge under. The false claims law is one, but it might not be the most potent. You have wire fraud and mail fraud and other criminal statutes that might be easier.”
“The thing about the False Claims Act is that it encourages people in the private sector to come to you with these cases. It’s the most potent in the sense that it is motivating the public to bring the cases to the prosecutors.”
There historically have been a few large firms that focus on it, then a number of smaller players.
“It has become a much more mature bar. Ten years ago, there were relatively few lawyers focused on false claims whistleblower work. Now there are a significant number of them around the country. There are also now a large number of firms that have done a little bit of it and a lot of practitioners have heard about it and want to dip their toe in it. They will contact us about referring cases to us or wanting to partner up with us.”
“Now there are a good number of firms around the country focused on and devoted to this kind of practice. The success of the False Claims Act has spurred the creation of other whistleblower programs – notably the IRS and SEC whistleblower programs. Other agencies are following suit. Of course, the qui tam provisions make the false claims acts stand out – from the IRS and SEC programs.”
“But we have seen a major shakeout and maturing of the false claims bar at this point.”
Does that mean it is going to continue to grow?
“You will continue to see some growth, but it will be relatively modest at this point.”
How many big false claims firms exist — similar to yours?
“A handful at most. I’m trying to be conservative there. I don’t honestly know if there are other firms that have 17 lawyers devoted to false claims work. There might be.”
Why did you decide to join Constantine Cannon last year?
“Eric Havian and I were colleagues at the U.S. Attorney’s Office,” Lamprey says. “I moved to Constantine Cannon with two other people – Anne Hartman, who was a partner of mine at Goodin, and Eric Havian of Phillips & Cohen. Eric and I had practiced together both at the U.S. Attorney’s office, and we did a couple of false claims cases.”
“We thought it would be tremendously fun and rewarding to practice together. We had lunch at one point and decided to try and make a move.”
“Constantine Cannon was a great fit for us. They had already moved into the whistleblower arena. They offered us the opportunity to open their San Francisco office with great resources and backing. And we have done that and we have assembled what we think is a fantastic team here now.”
[For the complete q/a format Interview with Wayne Lamprey, see 30 Corporate Crime Reporter 14(12), April 4, 2016, print edition only.]