False Claims Act debate riles Judiciary chair, business rep

CHARLESTON – West Virginia’s House Judiciary Committee on Tuesday heard more than 90 minutes of testimony and question-and-answer from a group funded and run by successful whistleblowers and law firms, which led to snippy exchanges between a business group and Judiciary Chairman Tim Manchin.

Patrick Burns, co-director of the pro-False Claims Act group Taxpayers Against Fraud, appeared before the committee to lobby for House Bill 4001, also known as the “Fair Claims Act.” The bill would establish a law similar to the federal False Claims Act and establish payment provisions for whistleblowers who bring successful FCA lawsuits.

Listed as sponsors of the bill are nine democrats, including Manchin and three fellow personal injury lawyers.

Burns said the core of the bill is simple – “If we incentivize integrity, we’ll get more of it,” he said.

“When fraudster companies are engaged in theft through deceit, this is often a core part of their business practice,” Burns added. “When employees come to them or go to the government, they are universally isolated, humiliated and terminated.”

Twenty-nine states and the District of Columbia have versions of the False Claims Act.

When Burns was through speaking, Manchin announced that the five remaining speakers would have five minutes apiece.

Chris Hamilton, the chairperson of the West Virginia Business and Industry Council, remarked that the 1 hour, 40 minutes given to Taxpayers Against Fraud was disproportionate to the time allotted to the remaining speakers.

Manchin responded that he had asked Hamilton before the hearing how much time he would need, and that Hamilton said he’d only need a few minutes.

Hamilton countered that yes, he had said that “before the hearing.” During his testimony, he suggested the Legislature seek a jobs impact report that studies the FCA’s possible effects.

“Let’s see where it shakes out, if it’s gonna create jobs or we’re gonna risk losing jobs,” he said.

“We amass a public hearing and bring in a national organization (TAF) whose members are set to gain financially over this bill, not to speak to HB 4001 in detail but to generally talk in conceptual terms about the benefits of a False Claims Act?”

Hamilton then asked for an hour-and-a-half to be set aside in the future for him to respond to the assertions made by TAF.

When he was finished, Manchin asked, “You sure you had long enough?”

Burns made no secret about who is funding and running his non-profit. He freely admitted that TAF’s biggest donors are whistleblowers who are attempting to “pay it forward.”

Under the federal False Claims Act, the federal government has the option to join a whistleblower lawsuit if it feels the suit has merit. The whistleblower earns a percentage of any recovery.

FCA claims can lead to major settlements and awards because a statutory penalty can be assessed for each false claim, and the total recovery can be tripled under the statute in an effort to deter wrongdoing.

Fiscal Year 2013 brought in the most recovery from FCA claims in the act’s history. The federal government accounted for $3.8 billion in settlements and judgments, though some judgments are being appealed.

TAF’s website thanks its highest monthly donors. On top are Cheryl Meads, a woman who was paid $96 million as a result of a whistleblower lawsuit she brought against pharmaceutical drug maker GlaxoSmithKline, and Dinesh Thakur, a New Jersey man who took in almost $49 million from his whistleblower case against Ranbaxy Laboratories.

Also listed as donors are several law firms that file lawsuits on behalf of whistleblowers. Burns added that TAF’s board of directors is composed of whistleblowers and whistleblower attorneys, as well as former judges.

Under West Virginia’s proposed FCA, whistleblowers would file complaints under seal and notify the Attorney General’s Office, which would then decide if it wanted to join in the suit.

Also, the State would receive a higher percentage of the recoveries from national whistleblower suits because it would have a law on the books that is equally as strong as the federal FCA, Burns said.

He added that because the cases are complex and take a long time to resolve themselves, plaintiffs attorneys are wary to bring any suit that does not have merit because they only get paid if they win the case.

Easy courtroom victories for the State could be a result, he argued.

“Whistleblowers and their attorneys do most of the work beforehand,” he said. “They bag it, they drag it and they mount it on the wall for government attorneys.”

Gary Zuckett, executive director of West Virginia Citizen Action Group, used his five minutes in support of TAF. He argued that businesses that are following the law should have nothing to fear.

But two members of the state Chamber of Commerce – president Steve Roberts and general counsel Brenda Nichols Harper – testified against it, as did Danielle Swan of the Defense Trial Counsel of West Virginia. Roberts said he found 15 flaws in the legislation.

Harper said the legislation “unfairly stacks the deck against West Virginia’s own businesses,” and that even persons who are committing the FCA violations while at work could collect whistleblower awards.

“I think that this bill provides litigation-for-profit,” she said.

From Legal Newsline: Reach editor John O’Brien at jobrienwv@gmail.com.