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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:

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.

Unitrans International Inc., Anham FZCO, et al. — Government Contract Fraud ($45 million)

Our attorneys represented Rory Maxwell, John Bush, and Supreme Foodservice GmbH in a qui tam action under the False Claims Act against Unitrans International Inc., a privately held Virginia defense contracting company, and Anham FZCO, an associated Dubai Free Zone company, for making false certifications of compliance with the U.S. sanctions regime against Iran to induce the U.S. Defense Logistics Agency and the U.S. Army to award Anham wartime contracts to provide food and transportation to U.S. troops.  Our whistleblower clients also alleged Anham knowingly and falsely represented construction progress on its Bagram warehouse in related bid proposals to the government.  In December 2019, Unitrans agreed to pay $45 million to resolve criminal and civil allegations related to this alleged misconduct, which includes $27 million to resolve our whistleblower clients’ False Claims Act allegations.  Read more about the case at the Department of Justice website here and in The Washington Post here.

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.

Freedom Health, Optimum Healthcare - Medicare Risk Adjustment ($32.5 M)

Two of our whistleblower lawyers led the representation of the late Dr. Darren Sewell, M.D., the former chief medical officer and vice president of special projects for two large health insurers and operators of Medicare managed healthcare insurance plans based in Tampa, Florida. Dr. Sewell brought a qui tam case under the False Claims Act against Freedom, Optimum and Mr. Pagidipati alleging that they improperly gamed a feature of the Medicare Advantage program known as risk adjustment, or risk scoring, by fraudulently inflating their members’ risk scores and the corresponding risk adjustment payments they received from CMS, and that they fraudulently induced CMS to allow them to expand their health insurance offerings into new counties in Florida and the Carolinas by falsely representing that they had a sufficient network of doctors, clinics and hospitals available to serve their enrollees in the expanded service areas when they had no such networks in place. The Government joined the case and in 2017, defendants agreed to pay $32.5 million to settle the matter. The Government and the whistleblower are in the process of negotiating the amount of the relator’s share of the Government’s $32.5 million recovery that Dr. Sewell’s estate will receive. See NPR, DOJ for more.

JM Eagle — Government Contracting Fraud/Noncompliance with Industry Standards ($22.5 million).

Two of our whistleblower attorneys led the representation of whistleblower John Hendrix, a former engineer at JM Eagle, as well as dozens of public agencies, in a two-month jury trial in Los Angeles against JM Eagle, the largest PVC pipe maker in the world. The jury returned a 50-page verdict finding that, over a ten-year period, JM Eagle had falsely represented its compliance with industry standards related to long term strength and durability of its PVC pipe. The pipe is buried deep underground in hundreds of municipalities around the nation. The damages phase of the case has not yet been held. However, a co-defendant in the case, Formosa Plastics, paid $22.5 million to settle its own potential liability, and Mr. Hendrix received a whistleblower reward from that settlement. See NY Times and Corporate Crime Reporter for more.

Ocean Carriers — Government Contracting Fraud/Prohibited Charges.

Two of our whistleblower attorneys led the representation of a whistleblower who brought a qui tam action under the False Claims Act against two ocean carriers alleging they included in their government invoices charges specifically disallowed under the government contract. The ocean carriers did not have direct contracts with the government and submitted their invoices to parties who in turn presented them to the Department of Defense. Although the government declined to intervene because of uncertainties created by the lack of direct interaction between the defendants and the United States, our whistleblower lawyers pressed ahead, defeating multiple motions to dismiss and aggressively moving forward with discovery. The action settled with both defendants, and the whistleblower was awarded 28% of the government’s recovery. See Pacific Business News and Ship and Bunker News for more.

Zwanger-Pesiri Radiology – Medicare and Medicaid Fraud ($10.5M).

Two of our whistleblower attorneys led the representation of Linda Gibb and Donna Geraci, former billing specialists at Zwanger-Pesiri Radiology in Long Island, New York. Ms. Geraci and Ms. Gibb brought a qui tam action under the False Claims Act (FCA) against Zwanger-Pesiri, alleging the company defrauded the government by performing unnecessary testing, charging for services not performed, and using uncredentialed physicians. The government joined the case, and in 2016, Zwanger-Pesiri paid $8.1M to settle civil allegations in the FCA case, as well as $2.4M in related criminal forfeiture. Ms. Geraci and Ms. Gibb received a whistleblower award of $1.25M collectively. See DOJ for more.

Cisco Systems, Inc. – Government Contract Fraud/Non-Conforming Product ($8.6 million)

Constantine Cannon represented whistleblower James Glenn against Cisco in the first cybersecurity whistleblower case ever successfully resolved under the False Claims Act. Cisco Systems, Inc. agreed to an $8.6 million settlement to resolve allegations it knowingly sold vulnerable video surveillance software to federal, state and local government agencies, exposing government systems to the risk of unauthorized access and the manipulation of vital information. The whistleblower, who worked in Europe for a Cisco partner, had reported critical security vulnerabilities in the software to Cisco, but Cisco had continued to sell the technology to government entities, including the District of Columbia and 15 states, despite the fact that the software failed to comply with FAR procurement standards that require basic cybersecurity controls, including those set forth by the National Institute of Standards and Technology.  Read more: Press Release; Whistleblower Insider

Rose Cancer Center — Medicare Fraud ($5.7 million).

Two of our whistleblower attorneys co-led the representation of Kristi Beeson who reported Medicare fraud violations at her former employer Rose Cancer Center in Mississippi. Ms. Beeson, who was a laboratory technician for the clinic, brought a qui tam action under the False Claims Act against the clinic alleging, among other things, unqualified technicians performing bone marrow biopsies, diluting chemotherapy drugs, and doctoring patient records to conceal the clinic’s fraudulent Medicare billings. The physician who owned and ran the practice, Dr. Meera Sachdeva, plead guilty to various Medicare fraud violations, forfeited $5.7 million, and is now serving a 20 year prison sentence for her crimes. Ms. Beeson, along with three other whistleblowers, collectively received a whistleblower award of $525,000 for their efforts in exposing the fraud. See Clarion Ledger for more.

Northrop Grumman — Government Contracting Fraud/Failure to Test ($12.5 million).

One of our whistleblower attorneys led the representation of Allen Davis, a former quality assurance manager at Northrop’s Navigation Systems Division facility in Salt Lake City, who brought a qui tam action under the False Claims Act, alleging the defense contractor failed to test properly certain commercial parts it supplied for navigation systems in warplanes, submarines and space equipment. Northrop ultimately settled the case for $12.5 million with Mr. Davis receiving a portion of that amount as a whistleblower award. See Reuters for more.

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