In a blistering opinion critical of the U.S. Justice Department, a Tampa, Fla., federal judge said whistleblower James Alderson is entitled to 24%, or $20.5 million, of an April civil fraud settlement with Quorum Health Group, Brentwood, Tenn., because of his crucial role in the False Claims Act case against the company.
The Justice Department had offered Alderson, as a successful relator, the legal term for whistleblower, 17% of the $85.7 settlement. But in his ruling last week , U.S. District Judge Steven Merryday said that under law Alderson deserved a higher proportion of the settlement because Alderson, his lawyers and their hired experts provided vast assistance to the Justice Department, which was busy with its pursuit of a larger case against HCA-The Healthcare Co.
"Somewhat troubling," Merryday wrote, "is the adversarial relationship in which the United States and Alderson find themselves . . . Alderson tenaciously pursued this case at substantial personal, financial and professional cost."
James Moorman, president of the Washington-based Taxpayers Against Fraud, said the Merryday decision will be influential because it's the first complete judicial exploration of the relator fee award methodology.
"It's a really thorough treatment of the issues and a well-reasoned opinion," Moorman said. "I don't think the Justice Department will appeal the decision, but if it does, I don't think an appeals court will want to take the case. It's hard to see any grounds for appeal."
Merryday's 36-page, precedent-setting opinion establishes further guidelines for determining relators' share of recoveries, which under the False Claims Act can range from 15% to 25%. For example, the overall size of a recovery isn't relevant in determining the whistleblower's share; however, the whistleblower's contribution to the case should be considered, Merryday wrote.
The government initially valued the false claims alleged in Alderson's 1993 suit against Quorum at $10 million and did not join the case until October 1998. Quorum settled that and two other civil whistleblower lawsuits without admitting guilt to clear the slate for its $2.4 billion sale to Triad Hospitals, Dallas.
"The statutory share may appear in some quarters excessive or inequitable," Merryday said in his opinion. "However, Congress has chosen a mechanism calculated to encourage potential relators to undertake the risk and enervating hardship often attendant to (False Claims Act) litigation. Alderson took up the risk of litigating against prohibitive odds, persevered with his case under excruciating circumstances, and performed a distinctive and admirable service to his country, precisely as Congress intended in enacting the (False Claims Act)."
The Justice Department declined to comment on Merryday's opinion.
Alderson said he feels vindicated by the decision. A cost-reporting specialist, Alderson said he lost his job with a Quorum-managed hospital in 1990 after refusing to prepare dual sets of cost reports, and he subsequently lived in five cities in three states to continue to work in the healthcare industry. He since has devoted himself full time to pursuing a civil whistleblower lawsuit against HCA, Nashville.