Whistleblower Employees Receive Share of Settlement in New Jersey False Claims Lawsuit

WhistleThe typical employer/employee relationship includes an expectation that an employee will, at a bare minimum, not actively undermine their employer’s business. Employers may have legal recourse, for example, against employees who misappropriate trade secrets or other proprietary or sensitive information. In some situations, however, the law encourages going public with information about a company’s activities, such as when the company is engaging in illegal activities. Employees who report unlawful activities by their employers are commonly known as “whistleblowers.” Federal and state laws protect whistleblowers against employer retaliation when they report alleged fraud involving government programs. A pharmaceutical company recently agreed to settle a lawsuit filed in a New Jersey federal court, alleging fraud against Medicare and Medicaid. U.S., et al. ex rel Corsi, et al. v. Omnicare, Inc., No. 1:14-cv-01136, complaint (D.N.J., Feb. 21, 2014). The whistleblowers will share a portion of the settlement, in addition to receiving damages for unlawful retaliation.

The federal False Claims Act (FCA) imposes civil liability for false claims submitted to the government, with damages of $5,000 to $10,000 for each violation. 31 U.S.C. § 3729. Most states have comparable laws for fraud against state programs. See, e.g., N.J. Rev. Stat. § 2A:32C-1 et seq. The FCA allows employees to recover damages for “retaliatory actions” by employers in response to protected whistleblowing activities. 31 U.S.C. § 3730(h).

The FCA also allows whistleblowers to file suit on behalf of the government against their employer for the actual alleged fraud. This means that the whistleblowers can claim a portion of the damages for the fraud claims, as well as their own claims for damages. This type of lawsuit is known as a “qui tam suit,” and the individual or individuals filing it are known as “relators.” Once a relator has filed suit under the FCA, the government has the option of intervening in the case.

The defendant in Corsi operates a nationwide chain of pharmacies. According to the complaint, the company provides prescription medications to about 1.4 million people residing in nursing homes and other long-term care facilities in 47 states. The relators worked for the defendant as pharmacists at a facility in Pennsylvania. They alleged in their complaint that the defendant defrauded the Center for Medicare and Medicaid Services (CMS) by billing the agency for different drugs than the ones it dispensed to customers. The company developed a system that, according to the complaint, “enabled [it] to submit millions of false…claims a year to CMS, to receive payment for those false claims, and to avoid paying back CMS for those overpayments, all while placing the safety of its patients at risk.” Corsi, complaint at 4.

The relators reported their concerns about the labeling system to management. After little to no action by the company, they claim that they “were abruptly terminated” in October 2013. Id. at 39. They filed suit under the FCA, with claims for unlawful retaliation, in the following year. Twenty-eight states, including New Jersey, joined the lawsuit, and the U.S. government intervened in the lawsuit in early 2017.

The U.S. Attorney’s Office for the District of New Jersey announced an $8 million settlement in May 2017. The relators will receive about $1 million each. This amount will consist of $1.4 million from the settlement, plus an additional $600,000 settlement of the retaliation claims.

If you need to speak to a whistleblower attorney regarding a dispute with a current or former employer in New Jersey or New York, contact the Resnick Law Group today online, at 973-781-1204, or at 646-867-7997.

More Blog Posts:

Federal Trade Secrets Law Grants Immunity to Employees Who Act as Whistleblowers, The New Jersey Employment Law Firm Blog, March 10, 2017

Former Employee Files Suit Under New Jersey Whistleblower Law, Claiming Employer Fired Her for Reporting Financial Misconduct, The New Jersey Employment Law Firm Blog, April 15, 2016

Former New Jersey Prison Official Awarded $7.7 Million in Whistleblower Lawsuit, The New Jersey Employment Law Firm Blog, January 4, 2016

Photo credit: Kate Ter Haar [CC BY 2.0], via Flickr.

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