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Successes

Members of the Constantine Cannon Whistleblower Lawyer Team have been responsible for a string of major whistleblower successes over more than a decade, including the following:

DaVita — Medicare Fraud/Kickbacks ($400 million).

Two of our whistleblower attorneys led the representation of David Barbetta, a former financial analyst for DaVita HealthCare Partners, one of the largest providers of dialysis services in the United States. Mr. Barbetta brought a qui tam action under the False Claims Act against DaVita alleging the company violated the Anti-Kickback Statute by paying physicians to refer their patients to DaVita clinics for dialysis. According to the complaint, DaVita sold doctors shares of DaVita clinics at below fair market value, and purchased doctors’ interests in other clinics at above fair market value. The government joined the case, and alleged that DaVita had entered into these sweetheart deals with doctors, which gave the doctors returns of over 100%, and the doctors then steered their patients to DaVita clinics. In 2014, DaVita paid $400 million to settle the case, the largest stand-alone kickback settlement ever, and Mr. Barbetta received a whistleblower award of over $65 million. See Denver Post and Modern Healthcare for more.

Northrop Grumman/TRW — Government Contracting Fraud/Defective Products ($325 million).

One of our whistleblower attorneys led the representation of Robert Ferro, who was a scientist for a TRW Inc. subcontractor, in a qui tam action under the False Claims Act against Northrop Grumman (which has since acquired TRW). Mr. Ferro alleged TRW sold classified “spy” satellites to the government with defective components that caused the satellites to fail while on orbit. According to the complaint, when Mr. Ferro brought the defect to the attention of TRW engineers, he was threatened and directed not to reveal the information to anyone in the government. Northrop ultimately settled the case for $325 million, the largest ever whistleblower settlement by a defense contractor. Mr. Ferro received a whistleblower award of $48.7 million. See NY Times, Wall Street Journal, Washington Post and LA Times for more.

LA Dep’t. of Water & Power — Government Contract Fraud/Utility Overcharges ($224 million).

Four of our whistleblower attorneys led the representation of whistleblower Sam Barakat, as well as the County of Los Angeles, the Los Angeles Unified School District, and other government agencies in a whistleblower action against the Los Angeles Department of Water and Power. The plaintiffs alleged that the DWP had overcharged these schools and other public agencies for electric power over a ten-year period of time. The case involved a ground-breaking legal theory that had never been tested in court. It also involved dissecting elaborate cost accounting to demonstrate government customers had been overcharged relative to the true cost of service. Following a two-month trial, a verdict was returned against the DWP for $224 million. See LA Times, UT San Diego, and National Law Journal for more.

Northrop Grumman/TRW — Government Contracting/Overcharging ($111 million).

One of our whistleblower attorneys led the representation of Richard Bagley, a former chief financial officer for TRW’s Redondo Beach unit, in a qui tam action under the False Claims Act against Northrop Grumman Corp. and TRW Inc. for overcharging the Department of Defense on various military programs. Mr. Bagley alleged that the defendants shifted costs from private contract work to government contracts, engaged in unlawful accounting methods, and manipulated their financial data to collect millions of dollars in excess payments on Defense Department programs. The government joined the case, and the defendants paid $111 million. Mr. Bagley received a whistleblower reward of $27 million. See NY Times and LA Times for more.

Takata - Auto Safety ($1 billion)

Two former Takata employees, Mark Lillie and another man who chose to remain anonymous, provided extensive assistance to the U.S. government in its criminal case against Takata, the maker of defective airbags which exploded and claimed the lives of 22 people and set off a worldwide recall of nearly 100 million airbag inflators.  In January 2017, Takata pled guilty to wire fraud and agreed to pay $1 billion in criminal penalties stemming from the company’s fraudulent conduct in relation to sales of defective airbag inflators. The criminal action also resulted in three high-level Takata executives pleading guilty to wire fraud and conspiracy charges. The awards to the whistleblowers were the first ever made under the Motor Vehicle Safety Whistleblower Act, a federal whistleblower-reward program.  Read more here.

Education Management Corp. - For-profit college student recruitment violations ($80 million)

Education Management Corporation (EDMC), a Pittsburgh-based operator of for-profit educational institutions, agreed to pay more than $80 million to settle a False Claims Act lawsuit brought by a whistleblower represented by attorneys at Constantine Cannon.   The settlement was the largest settlement to date in an FCA suit involving the U.S. Department of Education.  The whistleblowers, Lynntoya Washington and Michael T. Mahoney, provided extensive evidence that EDMC had for years paid its recruiters incentive compensation based upon how many students they enrolled, regardless of whether the students were suitable candidates, while steadily concealing its illegal practices with repeated false statements to state and federal authorities. Read more here and from the DOJ.

Office Depot — Government Contracting Fraud/Best Pricing ($68.5 million).

One of our whistleblower attorneys led the representation of David Sherwin, a former business manager at Office Depot. Mr. Sherwin brought a qui tam action under the False Claims Act against Office Depot alleging the company overcharged over one thousand California public agencies, including schools, for office supplies. According to the complaint, Office Depot promised its public agency customers Office Depot’s “best” pricing when in fact it charged them millions of dollars more than they would have paid under other, more favorable Office Depot contracts. In addition to representing Mr. Sherwin, one of our attorneys also represented numerous public agencies that joined the case. Office Depot ultimately settled the case for $68.5 million, and Mr. Sherwin’s estate received a whistleblower award of $23 million. See LA Daily News for more.

Tyco — Government Contracting Fraud/Noncompliance with Industry Standards ($60 million).

One of our whistleblower attorneys led the representation of Nora Armenta and dozens of California municipalities in a qui tam action under the False Claims Act against Tyco International, Mueller Co., and the James Jones Company, alleging they sold waterworks parts to municipal water systems that were made with 40% more lead than allowed by industry standards. According to her complaint, Ms. Armenta repeatedly warned her superiors that the parts were for drinking water, but was ignored. The defendants settled the case, but only after 13 years of litigation, including three successful appeals that reversed unfavorable trial rulings. The defrauded municipalities received $60 million, and Ms. Armenta received a whistleblower reward of $15 million.

Hanson Aggregates — Government Underpayments on Public Resource Lease ($48 million).

Two of our whistleblower attorneys led the representation of a whistleblower in a qui tam action filed under the California False Claims Act alleging underpayments (or “reverse false claims”) under a public resource lease. Specifically, the three defendants, which were engaged in dredging and selling sand and gravel from public lands, were alleged to have paid the State of California less than what was owed by under-reporting the quantity of the sand and gravel removed, as well as its value. Dubbed the “sand pirates” by the media, the defendants allegedly “sold” the sand to affiliated companies they set up, and used artificially deflated prices from those purported sales, instead of the prices paid in real third party transactions when calculating and reporting royalties due the State. Critical issues concerning the proper interpretation of the related leases and related accounting issues were resolved in favor of the government following a seven week trial, in which one of our whistleblower lawyers served as lead trial counsel. The case settled before the next trial phase. California recovered $48 million in combined settlement payments and price adjustments. The whistelblower, a tugboat captain, received a whistleblower award of 30% of the government’s recovery. It was the second-largest recovery for a whistleblower under California state law. See California AG Press Release and Oakland Tribune for more.

ATK — Government Contracting Fraud/Defective Product ($37 million).

One of our whistleblower attorneys led the representation of Kendall Dye, an engineer with what was formerly ATK Thiokol and is now ATK Launch Systems, who brought a qui tam action under the False Claims Act against ATK for selling defective flares to the United States military. According to the complaint, company testing revealed the flares could accidentally ignite if dropped from a height of as little as 11 inches. The flares burn at thousands of degrees, and are capable of burning through the hull of a ship, creating a significant safety risk. The government joined Mr. Dye’s case, and ATK ultimately settled for $37 million, with Mr. Dye receiving a whistleblower reward of $9 million. See NY Times for more.
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