A federal judge has approved the DOJ’s request to divide the payouts from a $350 million qui tam settlement among six whistleblowers who filed claims. Under the False Claims Act, the award for bringing a claim on behalf of the government ranges between 15 and 30 percent of the amount recovered. Here, the whistleblowers may get over $50 million. While the total payment amount to the six whistleblowers must still be determined, the first two whistleblowers will ultimately share more than 95 percent of the proceeds. It clearly pays to file first.
The settlement resolves claims arising from Shire’s sales and marketing practices for a skin substitute product called Dermagraft. The six lawsuits all contributed to allegations that from 2007 through 2014 Shire paid physicians kickbacks, promoted the drug for various off-label uses not approved by the FDA and “causing the government to pay artificially high reimbursement for Dermagraft claims.”
The DOJ proposed to allocate the award to the whistleblowers with the first whistleblower receiving just over 55% of the total award, the second whistleblower receiving just over 40% of the total award, and with the four remaining whistleblowers dividing the remainder.
Both the DOJ and the Court agreed about the importance of the first-to-file rule and the fact that the first whistleblower identified the kickbacks with respect to Medicare and that the second whistleblower identified kickbacks with respect to the VA. Because roughly 95% of the total $350 million settlement value was driven by these two kickback schemes, the DOJ and the Court awarded the whistleblowers who first filed those claims with 95% of the bounty.
The third whistleblower identified kickbacks with respect to TRICARE and Medicaid and was attributed 3.5% of the award. The last three whistleblowers divided the remaining 1% of the total award since they alleged non-kickback theories of liability that contributed to roughly 1% of the total settlement amount.
A copy of the judge’s decision can be viewed here.