2010 Sets Record for Highest Whistleblower Lawsuit Settlements by Big Pharma
05/14/2011 - Riley Allen Law - Link to This Entry
Whistleblower lawyers often hear a similar misconception from people who come to them for advice on whether to file a whistleblower lawsuit: is it worth the risk of losing my career to uncover fraud that my company is committing on the government and taxpayers of the United States?
Based on the figures from 2010 showing the amount of money paid to the government by pharmaceutical companies accused of fraud and the rewards paid to those whistleblowers who turned them in, one would have to say it is worth the risk. This is especially true if you work in the pharmaceutical industry.
Based on information from those who track whistleblower settlements, pharmaceutical companies set aside over $4.5 billion in 2010 to settle whistleblower lawsuits, liability lawsuits from defective products and charges of fraud by the government. More than $2 billion of this was to settle whistleblower lawsuits and charges of fraud.
The whistleblower law, or False Claims Act, is a little-known law that has a huge effect at policing fraud against the government and taxpayers. Originally passed during the civil war to prevent fraud by military suppliers, it is now used mostly against defense contractors and medical companies who are paid in part by Medicare and Medicaid.
The whistleblower law allows any person who has evidence of a company receiving false payment from the government to file their own lawsuit and share in the award. The charges usually involve failing to provide services under a contract, charging for services that aren’t necessary, or promoting products such as drugs for uses other than what they were intended resulting in false charges to the government.
For example, GlaxoSmithKline paid $750 million last year to settle charges of substandard manufacturing of drugs which were paid for by Medicare. Drugmaker AstraZeneca paid $520 million to settle charges of off-label marketing of its drug Seroquel. And Novartis paid over $422 million to settle charges of false marketing as well.
Two things are clear from last years record amounts of whistlerblower lawsuit settlements: First, with whistleblowers receiving between 15% and 25% of the award amount, turning in companies that defraud the government is very lucrative; and Second, the fact that drug companies keep committing similar offenses and continue to pay record settlements must mean that they are making plenty of money from their habits.
In 2011, taxpayer watchdogs and whistleblower lawyers are hoping for even more government involvement. There have even been talks of prosecuting the executives from large companies who knowingly defraud the government, since the hefty fines aren’t deterring them.
Allen & Murphy Law handles a variety of consumer fraud cases, including those involving prescription drugs. Our Orlando personal injury and commercial litigation attorneys also work with clients involved in whistle-blower cases and Qui Tam cases. For more information about our practice or if you have a question about a potential case, please contact us.
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