By: Christopher A. Parrella, Esq., CPC, CHC, CPCO
Parrella Health Law, Boston, Ma.
A Health Law Defense and Compliance Firm

The False Claims Act (FCA) is an essential weapon in combating fraud against the government, but as recent rulings show, it doesn’t guarantee relators a share of settlements unless specific conditions are met. On July 24, the Tenth Circuit denied a former Amgen employee’s attempt to secure a share of the $762 million settlement that the federal government reached with Amgen, Inc., a landmark case emphasizing the complexities and hurdles relators face in qui tam actions.

Background of the Case

Samuel May, who had previously worked for Amgen USA Inc, filed a qui tam lawsuit against the company in 2010, accusing it of making false statements to the Food and Drug Administration (FDA) and promoting its drug Aranesp for unapproved uses. This whistleblower action was brought under the FCA, which allows private individuals (relators) to sue on behalf of the government and potentially receive a portion of any settlement or judgment.

However, the United States government opted not to intervene in May’s lawsuit. In 2012, a federal court in California dismissed May’s action, citing insufficient evidence to proceed. That same year, Amgen resolved ten separate qui tam actions involving other relators by agreeing to pay a $762 million settlement, covering allegations that the company misbranded certain drugs. This settlement included civil damages, criminal penalties, and forfeitures.

May’s Pursuit of a Relator’s Share

Undeterred by his initial setback, May pursued a relator’s share of the $762 million settlement. In 2017, he filed a complaint in the U.S. District Court for the District of Colorado, demanding between 25% and 30% of the settlement amount. However, the district court dismissed his complaint, and the Tenth Circuit upheld this dismissal in 2021.

May’s argument centered on the claim that his original qui tam action had “facilitated” the federal government’s recovery from Amgen, implying that he deserved a portion of the proceeds. When these efforts failed, he turned to the U.S. Court of Federal Claims, asserting a Fifth Amendment takings claim and arguing for a contractual right to a relator’s share. Yet again, his claims were dismissed, and the Federal Circuit affirmed this dismissal in a nonprecedential opinion.

The Latest Ruling from the Tenth Circuit

Returning to the Tenth Circuit, May argued that the district court had previously granted him “equitable relief” by creating an implied-in-fact reward contract. However, the Tenth Circuit decisively refuted this claim, stating that no such “reward contract” existed. The court reiterated that May had not established a contractual relationship with the federal government and was not a party to the settlement agreement.

Moreover, the district court had already determined that May’s qui tam action was unrelated to the claims resolved in the 2012 settlement. As the Tenth Circuit concluded, “May has failed to demonstrate any right to payment” from the Colorado district court action.

Implications for Future Relators

This case, United States ex rel. May v. United States, No. 23-1323 (10th Cir. July 23, 2024), highlights the stringent standards relators must meet to qualify for a share of settlements under the FCA. The ruling underscores that filing a qui tam action alone does not entitle a relator to a portion of subsequent settlements unless a direct connection between the original claims and the settlement is established.

Conclusion

The Tenth Circuit’s decision serves as a reminder of the hurdles involved in pursuing FCA claims. Relators must not only present robust evidence but also ensure that their claims are directly tied to any government recovery. This case serves as a crucial precedent for those considering blowing the whistle on corporate misconduct, highlighting the importance of understanding the legal intricacies of FCA actions.

If you have any questions or comments or you’d like to discuss your potential whistleblower set of facts, please contact Parrella Health Law at 857.328.0382 or Chris directly at cparrella@parrellahealthlaw.com.

Christopher Parrella, ESQ, CPC, CHC, CPCO, is the founding partner of Parrella Health Law in Boston, Mass. The firm focuses exclusively on healthcare defense and compliance matters. Chris also travels the country on behalf of a wide range of healthcare organizations, lecturing on a variety of health care enforcement and compliance topics. Chris is one of a handful of health care attorney’s that are also Certified Professional Coders (CPC) and is a member of the AAPC’s National Legal Advisory Board and Ethics Committee.  He is also a Certified Professional Compliance Officer (CPCO) and Certified in Health Care Compliance (CHC.)