Contract to Share Qui Tam Awards is Enforceable

In Fair Lab. Practices Assocs., et al., v. Riedel, et al., the United States District Court for the District of New Jersey ruled that a contract providing that two parties share potential qui tam awards is enforceable.

Plaintiffs Fair Laboratory Practices Associates (FLPA) and NPT Associates are both Delaware partnerships formed for the purpose of prosecuting qui tam actions. Defendant Hunter Laboratories, LLC is a California limited liability company in the commercial reference laboratory business; and Defendant Chris Riedel is Hunter’s sole managing member.

In 2005, Plaintiffs FLPA and NPT filed a qui tam action against Quest Diagnostics, Inc. and Unilab Corporation in the Southern District of New York (New York action). Shortly thereafter, Defendants Hunter and Riedel filed a qui tam (false claims) action against Quest, Unilab, and others in California state court (the California action).

DaVita to Pay $450 Million to Settle Wasted Medication Allegations

On June 24, 2015, DaVita Kidney Care, a division of DaVita Healthcare Partners and one of the largest U.S. kidney dialysis providers, agreed to pay the U.S. government nearly half a billion dollars to settle allegations brought by two former employees that it violated the False Claims Act by intentionally wasting dialysis medications in order to receive higher Medicare payments.

In 2007, two whistleblowers – Dr. Alon Vainer and nurse Daniel Barbir – brought a qui tam action against DaVita after observing that DaVita was throwing out good medicine for which it then billed Medicare. In March 2011, the Justice Department decided not to intervene in the case, but the whistleblowers continued to litigate the case. This settlement is one of the largest recoveries in which the Justice Department did not intervene. The whistleblowers are entitled to 25% to 30% of the nearly half a billion dollar settlement. DaVita’s settlement comes on the heels of two other recent settlements by the company: one in 2014 for $350 million for alleged kickbacks, and one in 2012 for $55 million for the alleged overbilling of a drug.

Canada’s Securities Commission Adopts U.S. Whistleblower Reward Framework

The Ontario Securities Commission (OSC), Canada’s regulatory agency for securities, has backed proposed legislation that draws directly from the U.S. whistleblower reward program. On June 9, 2015, the CBC, Canada’s national public broadcaster, reported that the OSC, which is similar to the U.S. Securities and Exchange Commission, held a roundtable to discuss proposals to protect and reward corporate whistleblowers.

OSC commissioner Mary Condon specifically stated that the proposed legislation takes from the “apparent successes” of the U.S. whistleblower reward program. Since the U.S. whistleblower reward program was enacted, the number of investigations and findings of corporate wrongdoing increased significantly. As a result, the U.S. recovered hundreds of millions of dollars in taxpayer money, and whistleblowers received rewards as high as tens of millions of dollars.

Fourth Circuit Interprets ADAAA Broadly in Overturning Summary Judgment

The U.S. Court of Appeals for the Fourth Circuit, in a recent case on appeal from the Eastern District of North Carolina, interpreted the 2008 Amendments to the Americans with Disabilities Act (ADAAA) broadly and reversed the district court’s grant of summary judgment in favor of the defendant. The opinion contains a number of holdings favorable to ADA plaintiffs, including: 1) that the EEOC’s interpretation of what constitutes a “major life activity” under the ADA deserves Chevron deference from the courts; 2) that reasonable accommodations may include the restructuring of a plaintiff’s job, including the trading of some duties; and 3) that an employer’s retrospective addition of reasons for termination may bolster evidence of pretext on a retaliation claim.

In Jacobs v. N.C. Admin. Office of the Courts, a former deputy clerk at the courthouse in New Hanover County, North Carolina asked that her employer accommodate her social anxiety disorder by reassigning her from providing customer service at the front counter of the courthouse to a job which would require less personal interaction. The employer waited three weeks before acting on the request and then terminated the deputy clerk.

Two Senators Launch Bipartisan Whistleblower Protection Caucus

In February 2015, Senators Chuck Grassley (R-Iowa) and Ron Wyden (D-Oregon) announced the Whistleblower Protection Caucus, signaling that whistleblower protection is a topic on which politicians on both sides of the aisle can agree. Grassley, a long-time advocate for whistleblower rights, initially announced plans to form the Caucus in April 2014.

The purpose of the Caucus is to bring together like-minded Senators who can shed light on the need for ongoing whistleblower protections. The Caucus will focus on enforcement of whistleblower protections and creating a culture that understands and respects the right to blow the whistle on wrongdoing.

South Carolina Holds FCA’s First-to-File Rule Overcome by Previous Voluntary Dismissal

The United States District Court for the District of South Carolina held that the False Claims Act’s (FCA) first-to-file rule requires that another complaint must be pending. Thus, the voluntary dismissal of an earlier-filed complaint clears the way for subsequent complaints, and no comparison of content of the complaints is necessary to allow the later-filed case to proceed.

The FCA’s first-to-file bar provides that when a private person brings an FCA action, “no person other than the Government may intervene or bring a related action based on the facts underlying the pending action.”