Judge Slaps Department of Justice for Minimizing False Claims Whistleblower Contribution

A federal judge in Philadelphia has taken the Department of Justice to task for minimizing a whistleblower’s contribution in a False Claims Act case that resulted in a $192 million settlement with Endo Pharmaceuticals and ended over a decade’s worth of fraud that ripped off Medicare and Medicaid for over $700 million dollars.

peggy ryan


“The whistleblower in this case wore a wire that produced over 200 hours of audio tape for the government, but Department of Justice offered only a sliver over the statutory minimum award,” said Patrick Burns of Taxpayers Against Fraud.

Judge Robert Kelly Sr. ruled that the whistleblower, Peggy Ryan, “provided not only the spark for the investigation, but … nurtured the flame at the darkest times when the possibility of a favorable outcome seemed most remote.”

Ryan’s lawyers argued that Ryan deserved a 24 percent share.

The government argued it should be 19 percent.

Judge Kelly sided with Ryan and awarded her a 24 percent share for their nearly 10-year ordeal.

The reward amounts to $33.6 million for Ryan.

Ryan was represented by the James Hoyer law firm in Tampa, Florida.

“Somewhere along the line, the folks at the Department of Justice decided that the bigger the fraud, the smaller the share should be that goes to the relator,” Burns said. “But that idea was not what Congress intended and is not in the law.  And guess what? Judge Kelly noticed.”

Judge Kelly ruled that “the Government’s interpretation is contrary to the explicit language of the statute.”

“The Court reads the statute to hold that the only measuring stick is the contribution of the relator,” Judge Kelly wrote. “If Congress had intended limitations, like in the case of large awards, it would have explicitly included them within the statutory framework of the FCA. Congress’ silence on this issue compels rejection of the Government’s argument” that a relator should get a smaller percentage in large case.

“Second, the Government has failed to include any legal precedent affirming this argument, and thorough research by this Court has failed to unearth any such support,” Jude Kelly wrote.

“Judge Kelly’s decision is not only a testament to Peggy’s commitment in this decade long case, but also reaffirms the value of all whistleblowers and the False Claims Act as the government’s most powerful tool in fighting fraud,” said James Hoyer Law Firm Managing Partner Chris Casper.

The judge called Ryan’s efforts “nothing short of extraordinary” in explaining his decision to give her close to the maximum award of 25 percent for a False Claims Act relator.

“Without the assistance of Ryan, the probability of the Government recovering any funds for the FCA violations would have been slim at best,” Judge Kelly wrote.

“Peggy Ryan wore a wire, risked her career, and invested 9 years of her life in this fight,” Burns said. “Her lawyers had millions of dollars tied up in this litigation. Nothing would have happened if a whistleblower had not stood up, spoken up, and lawyered up.”

“What is ridiculous about Department’s parsimonious position when it comes to relator share is that while they are tight-fisted when it comes to rewarding integrity, they often pull their punches when it comes to fining fraudster companies,” Burns said.

Burns notes that Endo Pharmaceuticals sold over $750 million worth of Lidoderm in 2010 and, according to Endo Pharmaceutical’s own employees, more than 90 percent of these sales were off-label.

“If the Department of Justice wants to increase the amount of more money flowing back to the U.S. Treasury, the way to do that is to hit the companies with more substantive fines,”  Burns said. “Endo Pharmaceuticals made billions of dollars by systematically and illegally promoting this drug off-label to both private insurance and Medicare and Medicaid patients.  Over 200 hours of taped conversation would have made for devastating evidence at trial. The Department of Justice held all the cards thanks to Peggy Ryan and her legal team, but instead of rewarding them with a top-end relator share, they dived to a number only barely over the statutory minimum.”

“The good news is that not only did Judge Kelly award Ms. Ryan 24 percent, but he explicitly called out the Department of Justice for making up reasons to give whistleblowers less,” Burns said. “That’s a win for whistleblowers, and America’s taxpayers, going forward, especially if it gets the Department to properly assess damages and statutory penalties on fraudster companies and individuals.”

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