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Calling on the U.S. Supreme Court to resolve a tangle of inter-circuit conflicts about the federal whistleblower law, a federal judge in Philadelphia has ordered the government to pay more than $26 million to a man who helped recover $334 million in a settlement with pharmaceutical firm SmithKline Beecham. The Aug. 31 ruling by Senior U.S. District Judge Donald VanArtsdalen of the Eastern District of Pennsylvania restored to former SmithKline worker Robert Merena much of the $42 million originally awarded, the largest whistleblower award in U.S. history before it was set aside by the 3rd U.S. Circuit Court of Appeals earlier this year. (See United States ex rel. Merena v. SmithKline Beecham Corp.). In awarding the money, VanArtsdalen expressed his frustration about conflicting and ambiguous appellate interpretations of the False Claims Act, which allows a corporate insider to file under seal a lawsuit alleging fraud against a government program. If the information is deemed to have been nonpublic before the whistleblower made his claims, and the case leads to significant recovery for the government, the informer is entitled to up to 25 percent of whatever money the government recovers. VanArtsdalen wrote that confusion over what constitutes public disclosure of fraudulent activity and related elements of the qui tam law contributed to the seven-year duration of the SmithKline litigation. In a 45-page opinion in United States v. SmithKline Beecham, Judge VanArtsdalen wrote: There seems to be no unanimity, both among and within individual circuits, as to when claims are “based upon” public disclosures, what constitutes a public disclosure, when and under what circumstances a qui tam relator must first inform the government of the claims, the extent of the factual information that must be provided to the government . . . when a qui tam action must be filed where there has been a public disclosure, what are the requisites to be classified as an “original source,” when a claim is “primarily based upon” prior public disclosures and many other issues that arise under the statute. “These questions will continue to plague and perplex litigants and the courts,” the judge wrote, adding that “I believe that the number of qui tam actions will steadily increase as more and more programs become funded by federal money.” Whether the 3rd Circuit and possibly the Supreme Court will get the chance to take up VanArtsdalen’s plea now depends on the Department of Justice, which has 60 days from the decision to decide whether to appeal. A DOJ spokesman said no decision has been made on whether to appeal. In February, the 3rd Circuit vacated VanArtsdalen’s original award of $42.3 million to Merena and two other SmithKline whistleblowers, remanding the case for a detailed explanation of what each had done to deserve such a large portion of the settlement. This time, VanArtsdalen’s award — a total of $26,075,267 — all went to Merena, who two years ago was awarded the money to share with Charles Robinson Jr., a physician and medical director of SmithKline’s clinical laboratory in San Antonio, Texas, and lawyer Glenn Grossenbacher, who initially filed the whistleblower action under his name to protect Robinson’s identity. “We’re all very hopeful that this will be the end of this litigation,” said Merena’s attorney, Marc Raspanti of Philadelphia’s Miller, Alfano & Raspanti. Raspanti has represented Merena since the suit was filed seven years ago, and the firm has made whistleblower cases a specialty. John Clark, the San Antonio lawyer for Robinson and Grossenbacher, said he did not anticipate filing an appeal. Despite their fervent wish for the case to finally end, Raspanti and his partner, Gaetan Alfano, say they do not dispute VanArtsdalen’s assessment of the current state of the False Claims Act. Nor is the view any different from the defense side of the bar. Although the Supreme Court has upheld the constitutionality of the 1986 revisions to the False Claims Act that created the modern qui tam lawsuit, the high court “just has not seen the necessity or the importance to take up a lot of these varying interpretations,” said John Boese, a partner in the D.C. office of New York’s Fried, Frank, Harris, Shriver & Jacobson and author of a book on qui tam actions. Boese said it is not surprising that the False Claims Act has resulted in a range of appellate interpretations. “It’s not disputed that this was a terribly drafted law,” he said. He notes that the 1986 revisions were written by a congressional conference committee without significant input from the legal community or experts on government fraud cases. That problem has been made worse, Boese added, by the fact that relatively few appeals of qui tam cases have gone to the Supreme Court; most cases are settled by the Justice Department. Still, the SmithKline case could be one to eventually interest the high court if only because it combines in one case all the various qui tam disputes that have arisen separately among the circuits. The most significant of several claims at issue in the SmithKline case was the so-called automated chemistry scheme. Basically, the government alleged that the pharmaceutical giant’s laboratory unit, SmithKline Beecham Clinical Laboratories Inc., had systematically defrauded Medicare by billing the federal program for unnecessary laboratory tests that were added and “bundled” into a standard grouping of blood tests routinely ordered by physicians. The physicians were told the added tests would not increase costs to Medicare and other government programs. But after the tests were ordered, the lawsuit maintained, SmithKline’s labs “unbundled” the additional tests and billed Medicare for them separately. Merena, a suburban Philadelphia man who worked as a billings system analyst at the Collegeville facility, filed the qui tam action, followed by the Robinson-Grossenbacher case. Ultimately, the cases resulted in the 1998 settlement, and DOJ lawyers praised the value of the relators’ contributions to the success of the case. But Justice appealed when VanArtsdalen awarded the three men $42.3 million, maintaining that their contribution to the department’s own investigation was “minimal” because the DOJ had already launched a Medicare fraud initiative a year earlier. All sides agreed on an interim or partial payment to the three whistleblowers of about $10 million, later supplemented by an additional $2 million in interest. Last month, VanArtsdalen wrote that Merena deserved the new award, adding that “it is difficult to conceive of any case where an ‘original source’ could have been of greater help” to the government. The judge justified his decision to award the money only to Merena under a provision of the federal False Claims Act known as the “first to file rule.” He called Merena the “original source” of the information about SmithKline’s billing of Medicare for the unauthorized tests. VanArtsdalen also sternly criticized the Justice Department for persisting in its appeal. “I recognize that the government’s present litigation stance is that Mr. Merena helped very little and merely provided basically clerical assistance,” he wrote. But, he continued, “[I]n view of the many public accolades previously given him by the same government officials responsible for the prosecution of the case, I have trouble accepting or even rationalizing the government’s present position other than attributing it to an over-zealous attempt to lower the amount of the award rightfully due.” James Moorman, president of Taxpayers Against Fraud, a private group formed in the early 1990s to promote the False Claims Act and its use by whistleblowers, said he hopes the government decides to drop the appeal now. “It’s time for the Justice Department to drop this,” he said. “It’s bad for the department to be sending out a signal that if whistleblowers come forward they may well bust their chops.”

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