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Whistleblower Rewards

This archive displays posts tagged as including whistleblower rewards. You may also be interested in the following pages:

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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.

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.

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.

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.

Health Line Clinical Laboratories — Medicare Fraud/Unnecessary on Nonexistent Testing ($10 million).

One of our whistleblower attorneys led the representation of two whistleblowers who brought a qui tam action under the False Claims Act alleging the medical laboratory was charging for tests not performed or not necessary. For many of the tests involved, records suggested treating physicians had ordered over inclusive “747” panels, and the defense relied heavily on these order forms. The Department of Justice was persuaded the defendants’ conduct caused the unnecessary testing and intervened. Following the defeat of motions to dismiss and focused discovery the case settled for $10 million. The whistleblowers received 18% of the government recovery.

NEC — Government Contracting/Bribes and Kickbacks ($5 million).

One of our whistleblower attorneys was hired by the San Francisco Unified School District to pursue a False Claims Act case against NEC Business Network Solutions, a large supplier of computer systems under the government’s “E-Rate” program. E-Rate provided government subsidies for the purchase of computer equipment for school classrooms, seeking to bridge the “digital divide.” According to the complaint, NEC paid bribes and kickbacks to school officials, causing them to order excess equipment purchased with federal funds. One of the recipients of the illegal bribes was convicted and sentenced to 21 months in prison. Using a novel theory, the San Francisco school district “blew the whistle” on the company, and received an award of $5 million. See NY Times 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.

Visa/MasterCard — Antitrust Violations ($3 billion).

Two of our whistleblower lawyers were on the lead counsel team representing Wal-Mart, Sears, Safeway and a class of roughly 5 million U.S. merchants in this antitrust class action alleging various forms of misconduct by Visa and MasterCard in their rules governing the use and marketing of Visa/MasterCard branded credit cards and debit cards. After winning summary judgment on a majority of the claims in this action and on the eve of trial, the parties settled the case with the plaintiff merchants recovering more than $3 billion in damages and injunctive relief valued by the court at tens of billions of dollars. This landmark victory remains one of the largest antitrust settlements in U.S. history. See NY Times for more.
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