Whistleblowers Fight With Government Over Share of Recovery

Under federal law, a whistleblower (a “Relator”) is entitled to 15 percent to 25 percent of any amounts recovered by the government as a result of a qui tam action filed by the Relator (the “Relator’s Share”). As we have noted (Hello, Verizon. Please Deposit $93.5 Million To Resolve FCA Allegations), Verizon Communications recently paid the U.S. $93,525,410.96 to resolve allegations that it overcharged the General Services Administration on invoices dealing with government-wide voice and data telecommunications services contracts. The whistleblowers in that case were Stephen M. Shea and 2Probe LLC. Now, the whistleblowers’ dispute with the government over the amount they should receive has become public. Very public. 

Attorneys for Shea and 2Probe have filed papers discussing the battle. According to the filing, made by attorneys Mary Louise Cohen and Colette G. Matzzie of Phillips & Cohen LLP in Washington, D.C., after the Verizon action settled, the whistleblowers and the government were unable to agree on a Relator’s Share within the 15 percent to 25 percent range. Initially, according to the filing, the government “refused to pay” the 15 percent minimum up front,” which led Shea and 2Probe to file a motion to compel that minimum payment pending resolution of the final Relator’s Share; the government thereafter paid them 15 percent, without prejudice to their right to seek a greater amount through a motion.
 
The filing says that the parties participated in a mediation conference, but were unable to reach a resolution of the Relator’s Share award. The filing seeks court permission to file a Memorandum and supporting Declarations in support of a Relator’s Share in excess of 15 percent. As the filing points out, on the substance, the “legal and factual question” for the court to decide in awarding the Relator’s Share “will be the extent to which the Relator ‘substantially contributed’ to the $93.5 million settlement between Verizon and the United States. The award will be made in the statutory range between 15% and 25%. In this case, that range constitutes up to $9.35 million.”
 
Interestingly, the filing also contends that “[d]iscovery is appropriate because the Relator’s ‘substantial contribution’ is a question of fact.” The filing notes that existing case law supports discovery: “See United States ex rel. Taxpayers Against Fraud v. GE, 41 F.3d 1032, 1039-40 (6th Cir. 1994) (noting that there was “extensive discovery” related to the Relator’s share dispute); see also United States ex rel. Merena v. SmithKline Beecham Corp., 52 F. Supp. 2d 420, 429 (E.D. Pa. 1998) (suggesting that both the Relator and the Government conducted discovery before a “seven-day evidentiary hearing” to resolve, among other issues, the relator’s share award).”
 
Millions of dollars are at stake here. We'll continue to report on this as developments warrant.