1. Class Action
County Electric Membership Corporation Will Pay $98 Million to Settle Claims
Amount: $98,000,000
Type: Settlement
State: Georgia
Court: Cobb County Superior Court
Case type: Class Action – Profit Sharing
Case name: Shea v. Cobb EMC, No. 10:100353-48
Date: Oct. 10, 2013

Plaintiffs:
Joseph G. Shea (estate) (individually and on behalf of all other former EMC members similarly situated)
Philip Caltabiano (individually and on behalf of all other former EMC members similarly situated)
Claud Lamour (individually and on behalf of all other former EMC members similarly situated)
Dianne Brackin (individually and on behalf of all other current EMC members similarly situated)
James Hudson (individually and on behalf of all other current EMC members similarly situated)
Franklin Smith (individually and on behalf of all other current EMC members similarly situated)
Plaintiff attorneys:
Charles Gabriel (Pierce-Gabriel Partners), Roswell, and Paul Lawrence II (Waters & Kraus), Washington, D.C., for former EMC members.

David Cohen (Complex Law Group) and Hylton Dupree Jr. (Dupree & Kimbrough), Marietta, for current EMC members.

Defendant:
Cobb Electric Membership Corp.
Defense attorneys:
John H. Moore and Kevin Moore (Moore, Ingram, Johnson & Steele), Marietta.

Facts:
On Jan. 15, 2010, two former members of the nonprofit cooperative, Cobb Electric Membership Corp., Philip Caltabiano and Claud Lamour, and the estate of deceased member Joseph G. Shea filed a class action complaint against the EMC in a Cobb County superior court, seeking the “return of approximately $150 million in capital credits.” At the end of each year, the EMC places its excess revenue in a capital account, where it is assigned to the members based on how much electricity they used. The complaint alleged that the EMC had not returned capital credits since 1976, when it returned $500,000.
The complaint also alleged that, as of Dec. 31, 2009, capital credit accounts held by current members reflect allocations totaling $182.5 million, while accounts held by former members totaled $134.5 million, and that, “instead of using current year profits to repay former and long-term members of a first-in first-out (FIFO) basis, defendant uses at least a portion of its current-year margins to make rebates to current customers, thereby preferring its current members over former members.”
Cobb EMC moved to dismiss the complaint on various grounds, inter alia, the discretion vested in the cooperative to manage its own affairs.
In June 2012, the EMC announced the payment of $7.1 million in capital credits to members, who were customers from 1957 to 1971, mailing 38,000 notices to the eligible current and former EMC members, sending notices to their last known addresses. After 30,000 of those letters were returned due to bad addresses, EMC made other attempts to contact the 30,000 through advertising. There was a five-year window in which members could claim their credits, after which state law requires that the amounts either be turned over to the state or donated to a qualified charity.
In June 2012 a second group of plaintiffs petitioned to intervene, this one comprised of current EMC members and others similarly situated. In their complaint, the second plaintiffs alleged that “the slipshod rotation plan that prior EMC management has attempted to unilaterally foist upon the membership is antagonistic to both the former and current members alike. It is anemic, grossly inefficient and, if implemented, will result in the waste of millions of dollars of EMC money that will have to be donated to a charity under Georgia’s unclaimed property laws.”
Six years after the legal battle began, the parties settled for $98 million on Oct. 10, 2013, in a deal described as the largest known settlement in the county’s history. The money will go to the two classes, to be paid by a claims administrator.

Injury:
Former cooperative members of the nonprofit county electric membership corporation claimed a loss of profit-sharing due to the corporation using a portion of its current-year margins to make rebates to current customers, thereby preferring its current members over former members.
Current cooperative members intervened, inter alia, to object to the implementation of a $7.1 million payment to members, who were customers during the years 1957-1971, claiming that the effect of such implementation would result in the waste of millions of dollars of EMC money.

Result:
After six years of contentious fighting, the parties announced a preliminary $98 million settlement. The EMC set aside an estimated $34 million to be paid to individuals and businesses who were cooperative members up through the first half of 1988, with the remaining amount, estimated at $64 million, to go to reimburse cooperative members between the second half of 1988 through Dec. 31, 2012. Attorneys’ fees will also come from the $98 million.

Editor’s comment:
This report is based on articles published by the Fulton County Daily Report and the Marietta Daily Journal.


2. Federal False Claims Act
Medicare Whistleblower Case Ends With $48 Million Settlement
Amount: $48,260,000
Type: Settlement
State: Georgia
Court: U.S. District Court for the Northern District of Georgia
Case type: Federal False Claims Act
Case name: United States ex rel. Darity v. C. R. Bard Inc. et al., No. 1:06-cv-008-SCJ
Date: May 13, 2013

Plaintiff:
U. S. Justice Department ex rel. Julie Darity
Plaintiff attorneys:
Robert McAuliffe, senior trial counselor (U.S. Department of Justice); Sally Q. Yates, United States attorney, and Neelie Ben-David, assistant U.S. attorney (Northern District of Georgia), and Robert K. DeConti, assistant inspector general for legal affairs (Office of Counsel to the Inspector General, U.S. Department of Health and Human Services), for the United States.
Charles Cox, Macon; Marlan Wilbanks (Wilbanks & Bridges), Atlanta; Peter Chatfield (Phillips & Cohen), Washington, D.C., for Darity.

Defendants:
C. R. Bard Inc. and ProSeed Inc.
Defense attorneys:
Christopher A. Wray (King & Spalding), Atlanta, and John C. Dodds (Morgan, Lewis & Boccius), Philadelphia, for C. R. Bard Inc. and ProSeed Inc.

Facts:
In 2006, former contracts administration officer Julie Darity filed a qui tam case under the whistleblower provisions of the Federal False Claims Act, alleging that between 1998 and 2006, her employer, ProSeed Inc., a local subsidiary of international medical technology company C. R. Bard Inc., inflated the cost of brachytherapy seeds used to treat Medicare prostate cancer patients. The seeds, which are radioactive, are a treatment for prostate cancer. They are permanently implanted in the body at the site of a cancerous tumor to deliver a prescribed dose of radiation directly to the cancerous cells.
Darity, who worked for the company for 18 years, claimed that Bard used a portion of its excess profits to pay for kickbacks to medical centers in the form of research grants, medical equipment and hospital supplies. By paying kickbacks, Bard caused inflated and false claims to be submitted to Medicare in violation of the Act. Prior to filing her lawsuit, Darity complained about the kickbacks to her supervisors and through the internal compliance system with no success. The government joined the case after investigating the accusations.
Bard agreed to pay the federal government $48.26 million to settle the lawsuit. Darity will receive $10,134,600 of the government’s settlement proceeds under the provisions of the Act.
Federal prosecutors have said that they have decided not to prosecute the New Jersey-based medical technology firm or any of the company executives after Bard agreed to pay an additional $2.2 million in fines and agreed to refine company policies and procedures to prevent recurrences of similar illegal schemes. Prosecutors also declined to take action against the hospitals that received kickbacks.
Bard admitted to no wrongdoing in settling the case.

Injury:
The suit claimed that Medicare was defrauded of millions of dollars through kickbacks, which a medical technology company provided to medical centers and physicians to induce payment of inflated prices for cancer-fighting radioactive seeds that were passed along to Medicare for reimbursement.

Result:
C. R. Bard Inc. agreed to pay the United States $48.26 million to resolve allegations that it knowingly caused false claims to be submitted to the Medicare program for brachytherapy seeds used to treat prostate cancer in violation of the federal False Claims Act. The whistleblower will receive $10,134,600 of the government’s settlement proceeds.

Editor’s comment:
This report is based on an article published by the Fulton County Daily Report.