What Are The Rewards

Examples of Recoveries By Whistleblowers

by The Law Office of John F. Murphy

Phone 860.233-9946 John.Murphy18@comcast.net
Fax 860.523.5065

Your Reward

If the Justice Department enters the case begun by you, the whistleblower, and if the Government prosecutes the case and wins, the whistle blower is entitled to a maximum of 25% and a minimum of 15% of any funds recovered by the Government as a result of a verdict or settlement.

If the Justice Department elects not to participate and the whistle blower proceeds alone, the maximum award increases to 30 percent. Under certain circumstances the award can be as low as 10 percent, but in most cases, the whistleblower receives between 15 and 25 percent of the total recovery that the Government recovers from the cheater.

Fifteen to 25 percent of what? Damages can be set at as high as three times the amount of each instance of the proven fraud. Further, the statutory penalty for submitting a false claim is $10,000 for each false claim. The number of assertable False Claims is not measured by the number of contracts your employer has with the Government, but by the number of fraudulent acts committed under the contract. In other words, if the sale of ball bearings involves a thirty cent overcharge on one lot, that thirty cent overcharge is what is found in that one claim. The Government is entitled to treble damages for each false claim in each lot. (30 times 3 = ninety cents times the number of lots of ball bearings) plus a $10,000 fine for each false claim. As you can imagine, these figures begin to multiply exponentially. And your 15% to 25% of the recovery is based on the final figure the Government comes up with in its settlement or verdict, not the amounts you have listed in your original complaint.

Did You Know…

Because someone blew the whistle on defense contractors and medical facilities and pharmaceutical companies and a long list of other cheaters, the Justice Department has collected, between 1986 and September, 2004, more than $ 8.5 billion dollars.

In one case, the Trial Court awarded three relators (whistleblowers) $52,049,126 for their efforts in bringing a successful False Claims Case.

Rewards to whistleblowers

For Mislabeling; Medicare Fraud

Whistleblowers are rewarded for uncovering Medicare FraudBayer and GSK (GalaxoSmithKline) sold relabeled drugs to an HMO at deeply discounted prices, and then concealed this information in order to avoid their obligation to pay millions of dollars in additional rebates to the Medicaid program. The total payment by both Bayer and GalaxoSmithKline was $344 million. The Whistleblower George Courto, a former marketing executive at Bayer who is now deceased, filed the qui tam action against Bayer in 1999. The Relator’s share of the Bayer portion of the settlement was $34 million, which went to Courto’s estate.

For Laboratory Billing Practices; Medicare/Medicaid Fraud

In another Medicare/Medicaid case involving Smith Galaxo Kline and a whistleblower – in which a man named Merena blew the whistle on fraudulent laboratory billing practices – the Department of Justice received $333 million. After a seven day evidentiary hearing to determine the relator’s share, Mr. Merena was awarded $52,049,126.00.

For Work Not Done

United Technologies Corp. billed the Government for work on helicopters at the Sikorsky division which it hadn’t done yet. Mr. Keeth, the executive vice president, blew the whistle on this activity by beginning a lawsuit in the United States District Court. The Federal Government settled for $150 million. Mr. Keeth, the whistleblower, received $22,500,000.

Reporting fraud toward the government can be rewardingTeledyne, Inc., settled two false claims with the Government involving relays and systems for a total of $112,500,000. The Government accused Teledyne of faking the testing of components and of fraud in its accounting for costs. In the first case, a man named Stache from quality control and a man named Muelhasen, a test lab manager, received a total of $18,500,000.

In the second case, Teledyne inflated cost data and then certified that the data were accurate and current and complete. The data weren’t accurate and complete. A man named Kirchoff, the pricing specialist, and a man named Killingsworth, received a total of $4,600,000 for blowing the whistle.

For Unnecessary Tests, False Billings; Medicare Fraud

Damon Clinical Laboratories, Inc. fraudulently billed Medicare, Medicaid and CHAMPUS by bundling medically unnecessary tests not knowingly ordered by doctors. The Government recovered $83,700,000 and Jeanne Byrne, one of three whistleblowers, received $9,000,000.Whistleblowers can report activity like submitting false documentation and fraudulent billing to the government.

Blue Cross Blue Shield of Massachusetts paid $2.75 million after putting in false Medicare reports, inflating the number of claims it processed and exaggerating the speed with which claims were processed. Because of this fraudulent activity, it received larger Government reimbursements than it was entitled to. The relator was a former employee of BCBS Massachusetts and recovered $550,000.

Blue Cross Blue Shield of Michigan paid $27,600,000 in a Qui Tam action for submitting false documentation and fraudulent billing. The fraud occurred when the Government tried to review a specific set of audits and BCBS backdated their audits to hide what it had done. Mr. Flynn, a man who had performed audits for Blue Cross Blue Shield, blew the whistle and was rewarded $5,500,000.

For Misuse of Funds

The New York State Department of Social Services and New York State colleges paid $26.97 million for overbilling and misuse of funds it charged the federal Government for training of social workers. A former New York State employee received $4.05 million for blowing the whistle. (Note: This case was concluded before the separation of powers case that prohibited recovery from states or municipalities.)

For Failing to Bond

Whistleblowers protect against safety risks while getting rewarded.General Electric Company agreed to pay the Government $7.18 million to settle a Qui Tam suit filed by Ian Johnson, an electrical engineer at the company’s Evendale, Ohio aircraft engine plant. General Electric was accused of failing to satisfy electrical bonding requirements in its contracts, thereby creating a safety risk in the engines of commercial planes and military aircraft such as the F-16 fighter and B-1B bombers of not having undergone proper testing for resistance to electrical interference. Although the Air Force and FAA found no safety problems, the company would still have been liable under the False Claims Act. Mr. Johnson, the relator (whistleblower who began the lawsuit) was rewarded with $1,700,000.

For Destroying Records

Teledyne allegedly missed jet engine parts under an Air Force repair contract and altered and destroyed records. Teledyne paid $4,750,000 and the relator Gerald Woodward got $831,250.

For Failing to Test

Hughes Aircraft Co. Inc. failed to perform tests on components used in military electronic equipment and paid $4,050,000. Margaret Goodearl, Ruth Aldred & Taxpayers Against Fraud received a total of $891,000.

Whistle-Blower gets reward
(Read the full New York Times article)

For Improper Tests

Air Industries Group improperly tested aircraft parts. The Government got $6,800,000 and the whistleblowers received $1,530,000.

For Overcharging

CSX Transportation, Inc. paid $5.9 million to the U.S. Government and 11 state Governments to settle a Qui Tam suit filed by A. David Nelson, a former CSX employee, in conjunction with Taxpayers Against Fraud, The False Claims Act Legal Center. Mr. Nelson accused CSX of defrauding federal and state governments by overcharging for materials used to maintain and repair railroad crossings. While working on an audit of certain certain transactions, Nelson discovered that CSX failed to obtain the lowest prices available for construction materials, as required by the U.S. Department of Transportation’s Rail Highway Crossing Program. CSX did not obtain materials through competitive bidding, established “shell” companies through which materials could be marked up and resold at higher prices, and inflated the number of person-hours required to wire equipment. Mr. Nelson was rewarded $1.18 million for blowing the whistle.

Overcharging the DOT is fraudulent activity that comes under the false claims act.General Dynamics Corp. paid $1,800,000 to settle a suit for overbilling the Government for testing F-16 fighters. Four former company employees who tested the jets at Edwards Air Force Base knew that General Dynamics billed the defense department for thousands of hours that were never worked by using falsified time cards from about 50 employees who regularly left the plant early. The four whistleblowers received $405,000.

Lockheed Martin, Inc. and the Martin Marietta Corp. overcharged the Department of Defense when it underbid on a contract then boosted research and development costs. Lockheed and Martin Marietta paid $5,300,000, and the relator, Jerry Mayman, received $795,000.

For Not Offering Discounts

Rubbermaid Commercial Products paid $887,000 because they didn’t offer the same regular discounts they were offering to other customers for food service, for waste baskets and other cleaning products. As a result, the Federal Agencies ended up paying higher prices on 16 Federal contracts. The whistle blower was awarded $185,000.

For False Certifications of Gearboxes

Falsifying landing gear charts is a dangerous kind of fraud that deserves to be reported.Lucas Industries, a British corporation and two U.S. subsidiaries (LWI) paid the Government $88,000,000 to settle a Qui Tam suit brought by Frederick Copeland, a machinist who formerly worked for the company. Copeland accused LWI of falsifying gear charts for a key component of the Navy’s F/A18 Hornet and major defects in gearboxes for the Army’s Multiple Launch rocket system. One of the subsidiaries, Lucas Western, pleaded guilty to 37 counts of making false certifications to the Department of Defense that gearboxes for Navy fighter jets and Army rocket launchers had been fully inspected in accordance with contractual requirements when they had not. The investigators had suggested that the gearboxes supplied by Lucas were responsible for aborted missions, system failures and engine fires. A criminal fine of $18.5 million was paid by Lucas Western, and Lucas Industries was barred from receiving new Government contracts. Mr. Copeland, the machinist who blew the whistle, received $18,480,000.

For False Diagnoses

Allied Clinical Laboratories, Inc. paid the Government $4.9 million to settle a Qui Tam suit which charged that it put in false claims for reimbursement for laboratory tests to Medicare. Medicare does not pay for “limited coverage” blood tests unless a physician certifies that they are medically necessary, and Allied Clinical had inserted false diagnoses into the diagnosis codes of many of the Medicare billings. Whether inflating research projects or communication fraud, blowing the whistle can be rewardingRamona Wagner and Jeanine Dehner, former billing clerks for the company, noticed this fraudulent activity. They blew the whistle and were rewarded with a 17 percent share of the proceeds – $833,458.

For Inflating Research and Development

FMC Corp inflated military contracts, including amounts for independent research and development, and paid the Government $13,000,000 to settle a Qui Tam suit. Robert Nearegarder, the whistleblower, received $2,860,000


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