National medical oxygen supplier Lincare recently settled Medicare fraud allegations for $20 million, a significant, though not earth-shattering, False Claims Act settlement.
The settlement was more remarkable, however, for the unusually high portion that went to the whistle-blowers and their counsel, $11 million of the total settlement.
That’s 55 percent of the total settlement amount, which is far above the 30 percent ceiling provided in the FCA’s award-sharing provision.
Of the $11 million, a group of five whistle-blowers shared $6 million of the award, and the remaining $5 million was slated to go to their counsel.
The inclusion of the attorneys’ fees as part of the actual settlement is also unusual. The FCA makes attorneys’ fees available to whistle-blowers through settlement and judgments, but an attorneys’ fee award is usually handled through a separate agreement from the actual FCA settlement.
Even if the Lincare attorneys’ fees are excluded, the relators’ own share of the remainder of the Lincare settlement is 40 percent ($6 million out of $15 million), still far above the 30 percent max share. So what’s behind the large whistle-blower share in the Lincare settlement?
A former Department of Justice prosecutor now in private practice said the multiple sets of whistle-blowers may have played a role in the unusually high award percentage, though the attorney said it was hard to say for certain why the award was structured as it was because the attorney wasn’t directly involved in the case.
The attorney agreed that the whistle-blower award percentage was high, and remarked that “it’s fairly unusual that the attorneys’ fees are being paid out of the settlement amount.” The attorney also noted that the DOJ didn’t sign the actual settlement agreement (though it did consent to dismissal of the FCA case action), as another unusual aspect of the settlement.
Brian J. Markovitz, with Joseph Greenwald & Laake PA in Greenbelt, Md., told me that the amount of the whistle-blowers’ award and attorneys’ fees “is certainly significant but the fees are probably just for the time put in to successfully prosecute the case.” Markovitz, who frequently represents whistle-blowers in FCA cases, pegged the high award percentage on the fact that there was a relatively large group of whistle-blowers and several law firms splitting the $11 million.
The government is still recovering “millions of dollars,” Markovitz said.
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