A federal judge has ruled former Endo Pharmaceuticals Sales Representative Peggy Ryan is the sole whistleblower eligible for a portion of the company’s $193 million off-label marketing settlement, announced in February by the U.S. Justice Department. Ryan is represented by the James Hoyer Law Firm.
The order was issued by Senior Judge Robert Kelly of the U.S. District Court for the Eastern District of Pennsylvania. Judge Kelly granted Ryan’s motion for Relator’s Share and denied the requests of two other later-filed Relators, Max Weathersby and Gursheel Dhillon.
“Ryan supplied the Government with the initial notification of Defendants’ fraudulent activities and then proceeded to go to extraordinary lengths to provide further information to aid the Government in prosecuting the FCA (False Claims Act) action. In light of this contribution and legal justifications presented by Ryan, it is our holding that Ryan is the sole Relator eligible to receive the settlement award.” Judge Kelly wrote.
Judge Kelly said his decision was based upon “the extensive role Ryan played” and serves to “promote the intent of the FCA” which is “to provide incentives to relators to ‘promptly alert the government to the essential facts of a fraudulent scheme.’” He went on to say, “In the context of this objective, it is apparent that allowing multiple relators to share in the recovery for the same claim would drastically decrease the incentive for a ‘whistleblower’ to promptly bring a qui tam action.”
“In addition to filing the first Complaint in this matter, Ryan also provided extensive assistance in the investigation of Defendants’ fraudulent activities by serving as a confidential source in the Government’s covert criminal investigation of Defendants over a several year period beginning in 2005,” Judge Kelly also wrote in the Order.
He cited a statement submitted on Ryan’s behalf by the retired FBI agent with whom Ryan and the James Hoyer Law Firm worked closely throughout the investigation. “During the course of the investigation, Ryan provided the FBI with Defendants’ off-label sales and training materials, and with over two hundred (200) hours of recorded conversations with employees of Defendants concerning off-label sales.”
Click here to read Financial Writer Al Lewis’ story on Ryan and here for his article on The Wall Street Journal’s MarketWatch.
Returning Money to Taxpayers
Endo Health Solutions and its subsidiary Endo Pharmaceuticals, Inc. agreed to pay $192.7 million in February of 2014 to settle civil and criminal charges that stemmed from Ryan’s suit. Ryan alleged the company illegally marketed a pain treatment patch called Lidoderm for ailments far beyond its approved use.
The off-label marketing led to hundreds of millions of dollars in improper Medicaid and Medicare payments. This settlement serves to return a portion of that money to the taxpayer. From the total settlement, $21 million is allocated to resolve the criminal charges, and $172 million will go to settle civil charges under the state and federal False Claims Acts.
The Whistleblower
Ms. Ryan was an Endo sales person hired in 2002 to sell Lidoderm. She became concerned when the company pressured her to sell the drug off-label. The pain patch was only approved to treat symptoms of postherpetic neuralgia, a rare disease which is a complication of Shingles. “Lidoderm had not been proven safe or effective for other uses, but the company pushed me and all the other sales people to sell Lidoderm for everything from low back pain, to carpel tunnel syndrome to neuralgia, and I just did not feel comfortable doing that,” Ryan said.
After filing suit, Ryan was enlisted to aid the FBI in its investigation. She turned over hundreds of documents, internal voicemails, and even wore a wire for the FBI, recording hundreds of hours of conversations with supervisors.
“Peggy Ryan was a tireless advocate for the taxpayer,” said Chris Hoyer, Founding Partner of the James Hoyer Law Firm. “She worked closely with the FBI and Department of Justice for nearly a decade providing invaluable testimony and evidence.”
The Settlement
In addition to the monetary portion, the settlement also includes a deferred prosecution agreement, in which Endo admitted that it intended that Lidoderm be used for unapproved indications and that it promoted Lidoderm to health care providers for those unapproved indications, according to the Department of Justice. As part of the settlement, Endo agreed to enter into a Corporate Integrity Agreement (CIA) with the Department of Health and Human Services Office of Inspector General that requires the company to implement measures designed to avoid or promptly detect conduct similar to that which led to this resolution.
The False Claims Act
The False Claims Act allows private citizens to bring civil actions on behalf of the government in order to recover taxpayer money when fraud is suspected. Under the law, the whistleblower is entitled to a 15-30% share of a civil recovery. Ryan’s share of the settlement has yet to be determined.
“Whistleblowers, like Peggy Ryan, are to be commended for their bravery and perseverance,” Attorney Hoyer said. “It’s very easy for a private citizen who sees wrong-doing to look the other way, but Peggy didn’t do that. She did the right thing, and with her help, the taxpayers will now receive restitution from Endo Pharmaceuticals.”
