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:
Pure Collection and Samantha Harrison – Customs Fraud ($908,100). Constantine Cannon represented whistleblower Andrew Patrick, who worked for Pure Collection from 2010 to 2014, first as a sales representative in its U.K. call center and then in its U.K. packaging department. Mr. Patrick’s qui tam, or whistleblower, lawsuit alleged that since 2007 the defendants fraudulently and systematically avoided paying U.S. customs duties on its goods shipped from the United Kingdom to customers in the United States. Pure Collection and the e-retailer’s acting CEO, Samantha Harrison, have collectively agreed to a settlement of $908,100 to the U.S. Government. This lawsuit was one of the first to be brought by a U.K. whistleblower in which the U.S. Government intervened and successfully resolved the whistleblower’s False Claims Act allegations. Mr. Patrick will be awarded 18 percent of the total settlement.
Freedom Health, Optimum Healthcare and Siddhartha Pagidipati ($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 and Whistleblower Insider for more.
Bay Sleep Clinic – Medicare Fraud/Unapproved Facilities, Unlicensed Technicians, and Physician Kickbacks ($2.6M). Constantine Cannon represented whistleblower Elma Dresser, a sleep technician and former Bay Sleep employee. Ms. Dresser alleged that Bay Sleep Clinic and associated businesses, a network of sleep clinics in the San Francisco Bay Area, fraudulently billed Medicare for sleep studies conducted by unlicensed technicians in unapproved locations; improperly dispensed durable medical equipment from unapproved locations using unlicensed technicians; and paid doctors for referrals in violation of the federal Anti-Kickback Statute. The government joined a portion of the case, and in 2016, defendants agreed to pay $2.6 million to settle the matter. For her significant contributions, the relator’s share award was almost 21% of the government’s recovery. See DOJ 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 Whistleblower Insider and DOJ for more.
Roof Systems of Maine – Government Contracting Fraud/Noncompliance with contract requirements ($439,500). Two of our whistleblower attorneys led the representation of Brian Emery, an experienced roofer and former subcontractor to Roof Systems of Maine. Mr. Emery brought a qui tam action under the False Claims Act against Roof Systems of Maine alleging the company defrauded the government by violating contract requirements and industry standards in roofing and siding work done on behalf of the Departments of the Army and Navy, and the National Guard Bureau. According to the complaint, Roof Systems systematically used inferior products and improper installation techniques at three building sites along the Maine coast. The government joined the case, and in 2016, Roof Systems paid $439,500 to settle the case. Mr. Emery received a whistleblower award of $79,110. See Whistleblower Insider and Morning Sentinel for more.
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 substantial whistleblower award that was within the 15% to 25% range set by law. See Denver Post and Modern Healthcare for more.
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 and San Mateo Daily Journal for more.
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 Whistleblower Insider and Clarion Ledger 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.
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.
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 and Salt Lake Tribune 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.
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.
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.
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.
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 and DOJ 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.
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.
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.