MEDICARE FRAUD: Court Reverses Whistle-Blower Award
The 3rd Circuit U.S. Court of Appeals Wednesday vacated $42.3 million of a $52 million award to three whistle-blowers who helped the government prove fraud against drug giant SmithKline Beecham. The three-judge panel unanimously ruled that U.S. District Judge Donald VanArtsdalen "failed to show why the three deserved the largest whistle-blower award in history" and ordered him to hold additional hearings to "document what 'original' information the three provided to government investigators that justified the award under federal whistle-blower law," the Philadelphia Inquirer reports. The justices let stand VanArtsdalen's February 1998 award of $9.7 million as "partial payment" for the whistle-blower claim.
The Justice Department and SmithKline reached a $325 million- settlement in 1997 on charges that the company had "systematically defrauded the ... Medicare program when its lab unit billed the program for unnecessary and unauthorized laboratory tests." Under federal law, whistle-blowers in such cases could receive up to a quarter of the settlement. VanArtsdalen awarded the three former SmithKline employees almost 17% of the $325 million, but the government appealed, arguing that the three former employees "made only a minimal contribution to investigating the claims that comprised the bulk of its settlement." In Wednesday's reversing decision, U.S. Circuit Judge Samuel Alito wrote that if after further hearings, "the District Court determines that the relators were not original sources of information ... it may not award them any share of the proceeds" (Slobodzian, 3/2).