U.S. District Court for the Eastern District of Michigan: After $30M False Claims Act settlement, counsel warns of client’s new challenges
by Douglas J. Levy
Dolan Media Newswires
DETROIT, MI -- In representing a pharmaceutical agent in a federal False Claims Act lawsuit, Monica P. Navarro asserted that one of General Electric Co.’s biomedical subsidiaries was overbilling the government.
On Dec. 28, 2012, Judge John Corbett O’Meara of the U.S. District Court for the Eastern District of Michigan approved a $30 million agreement to settle all claims against GE Healthcare and its radiopharmaceutical drug Myoview.
Navarro’s client, James Wagel, will receive $5.1 million as part of his reward for being a “relator,” as he had knowledge of fraud and filed the lawsuit on the government’s behalf. He’s still working for a competitor.
And it’s at this point, she said, when Wagel needs to be extra cautious -- even with solidified rules against retaliatory actions in place.
“Even though the [False Claims Act] statute has a provision that protects you against retaliation, all that gives you is a lawsuit,” said Navarro, special counsel to Frank Haron Weiner PLC in Troy. “It doesn’t pay the mortgage after you’re fired, after you’ve been blackballed in the industry.”
In United States of America ex rel. Wagel, et al. v. Amersham Biosciences, et al., Wagel contended that from 2000-03, Amersham Biosciences, a division of GE Healthcare, was encouraging health care providers to dilute doses of Myoview so that more doses were available per vial. This would, in turn, increase the amount of patient-ready doses, and caused the Medicare program to reimburse for those doses at artificially inflated rates.
Wagel heard about the alleged scheme, and filed a qui tam suit in 2006. The government got involved, with the U.S. Assistant Attorney General, the Department of Justice and U.S. Attorney Barbara L. McQuade of the Eastern District of Michigan signing on.
Navarro said that at the time the lawsuit was filed, amendments to solidify retaliation provisions -- to assure whistleblowers wouldn’t be retaliated against -- hadn’t taken place, and it was unsure whether Wagel would be protected by them if he were successful in court.
But when the False Claims Act was amended as part of the Fraud Enforcement and Recovery Act of 2009, it was ruled that stipulations under 31 U.S.C. § 3730(h) are retroactive, and Wagel would be covered.
“In the past, the statute only protected employees; it didn’t protect independent contractors, for example,” Navarro said. “So if you were a physician working at a hospital, you’re not an employee, and if you see fraud and you want to report, you would not be protected by the False Claims Act. Now you are. In addition, the statute of limitations for retaliatory causes of action has been extended to three years.”
‘Do we really want this guy?’
In this case, Wagel blew the whistle on what GE Healthcare was doing, even though he wasn’t working for them. That’s not to say, however, that Wagel can breathe easy.
“[H]e is a whistleblower, and it can cause him to be unsettled,” Navarro said. “Because let’s face it -- fraud has been with us forever, and fraud follows the money, and there’s a lot of money in pharmaceuticals. One day, the conduct that’s exposed could be GE, the next day it could involve a different company.
“Let’s say he wants to change jobs and go to another company that may have had experience with the False Claims Act. They’ll go, ‘Well, do we really want this guy?’
“I think, generally speaking, and this is what I tell my clients, you kinda need to walk on water going forward,” said Navarro, who teaches federal civil litigation at The Thomas M. Cooley Law School.
“Because you cannot give people any reason to be able to justify taking adverse employment action against you for something else, but using it as a pretext. They always have to be looking over their shoulder, so they have to perform at 200 percent, not 100 percent, in order to shield themselves from a pretexual adverse act.”
Dealing with stigmatizingJ. Joseph Rossi of Drew, Cooper & Anding in Grand Rapids said that a qui tam suit can have an indirect effect on the relator in that he or she may feel “stigmatized, ostracized or pressured in other areas in their job where they weren’t before.”
Even if a business admits to wrongdoing, he explained, its plan is to circle the wagons and chastise that whistleblower for what’s perceived as disloyalty to the business, Rossi said.
“That’s a definite risk and, frankly, a very good argument for compensating relators who risk that by coming forward with legitimate claims. They are literally risking their careers,” he added.
Patricia A. Stamler of Bloomfield Hills-based Hertz Schram PC said that all of her relator clients, whether successful or not in whistleblower claims, haven’t had troubles finding work in their respective fields following qui tam suits.
“What I counsel people on is, you have to be cognizant of the strain that you’re going to be under, to the extent that you’re capable of moving out of the organization and finding another location to work,” she explained. “But it’s not always possible.”
Navarro recalled a case involving allegedly improper radiology practices at a West Michigan hospital. The dollar amount being defrauded wasn’t high enough in the government’s view, and federal intervention was denied.
Navarro tried to get the case dismissed without lifting the seal, arguing that the plaintiff was still an employee at the hospital and was vulnerable to the fallout. The government refused, and so did the court. So the employee left his job, because the job atmosphere changed significantly for him.
“They didn’t outright fire him, but they definitely froze him out,” Navarro said.
Weeding out ‘bounty hunters’
Wagel’s $5.1 million reward is a safety net, Navarro said, in that relators need security when coming forward with such claims “in the event that things go south for them, which happens very, very often.”
At the same time, Rossi said, the client must be aware that public perception of the relator when the award is given could lean toward skepticism: did the relator do it for altruistic purposes or for being a “bounty hunter”?
For example, he said, the “Wikileaks” whistleblower is much different than a False Claims Act relator.
“Sometimes people lump them all into the same category,” Rossi said. “One is reporting specific federal financial fraud; the other has different motives.”Nonetheless, Navarro said, it’s all about righting a wrong.
“You hope it would have a prescriptive effect in that it would cause companies to realize, you can’t do this,” Navarro said. “But companies still do it very often, and you still have to prove that they did it.”
Counsel for GE Healthcare -- John N. Gallo, Michael C. Andolina, and Paul E. Kalb, all of Sidley Austin, LLP -- did not respond to Michigan Lawyers Weekly’s requests for comment.
In a statement, GE Healthcare said it was “pleased to have reached a resolution in this long-standing case. Origins of this issue date back to 2000-03, or more than a year before GE Healthcare acquired the manufacturers and distributors for the Myoview product.”
A Verdicts & Settlements report on United States of America ex rel. Wagel, et al. v. Amersham Biosciences, et al. can be found at www.milawyersweekly.com.