The $14 Million Mystery Whistleblower

Reuben Guttman Articles, Whistleblowers Blog

Where did all the dollars go? Despite the US federal closure, the SEC is paying an anonymous whistleblower $14 million nor has it disclosed the scheme. More information is needed, says Reuben Guttman.

WASHINGTON, DC — On the first day of the federal government shutdown, the United States Securities and Exchange Commission was sufficiently open for business to announce that a $14 million bounty would be given to an undisclosed whistleblower who reported an undisclosed scheme by an unnamed defendant.

The real story is not what was said, but what was not said.

I suppose that this is just one of these cases where the real story is not what was said, but what was not said. In thinking through what would be an appropriate analogy, I tried — but failed – to recall a time when a US prosecutor issued a press release saying “undisclosed criminal placed in prison for 15 years for undisclosed crime against undisclosed victim.”

Compliance programmes

Compliance enforcement is about deterrence by highlighting conduct that merits punishment. A compliance programme works when those contemplating crossing the boundaries into the areas of illegal activity see that others are punished for similar conduct. Surely, the public parade of insider trading prosecutions in the United States must have sent a message of deterrence to at least a few people willing to share tidbits of insider information with their friends and relatives.

Of course the other premise of transparency in enforcement is that where citizens understand what types of conduct violate the law, they have a perspective to evaluate questionable activity in their environment in order to determine whether the alleged misdeeds should be reported to regulatory authorities. Undoubtedly, transparency is also of value to defense lawyers who need information to counsel their clients on compliance with the law.

The US SEC doesn’t have the resources to make sure that publicly traded companies are not paying gratuities to officials in the farthest reaches of the globe.

None of this has anything to do with the merits of a bounty programme. In an era where multi-national corporations, some larger than small countries, transact business across the globe, regulators need help to enforce compliance with the law. The United States Food and Drug Administration will most likely never have the resources to monitor the 3,000 drug trials being conducted in China. The US SEC, with one examiner to every $12 billion in assets that it oversees, will never have the resources to make sure that publicly traded companies are not paying gratuities to officials in the farthest reaches of the globe in order to secure more business. The United States Environmental Protection Agency will certainly never have the resources to monitor supply chains in China, India and Bangladesh to ensure that components shipped into US markets are not contaminated with toxic materials.

Challenges of compliance enforcement

It is precisely because of the contemporary challenges of compliance enforcement that whistleblowers have become central to the compliance enforcement process. They come with diverse backgrounds, technical skills, language proficiencies and cultural sensitivities. They are a resource that regulators need to tap.

Those who criticize the bounty system argue that corporate internal compliance programs should be left to their own devices. The cold truth is that internal compliance programs do not work when the wrongful conduct permeates the corporation and officials at the highest levels are bonused based on revenue streams generated from unlawful conduct. Enron, Tyco and WorldCom undoubtedly all had compliance programs.

The concept of paying the bounty has integrity.

A bounty system rewards whistleblowers who have taken the time, worked with competent counsel, and enlisted appropriate experts to put together presentations to regulators that jump start cases. When the system works, as it has with the US government’s collection of $4 billion last year under the US False Claims Act, the compliance enforcement system is greatly enhanced. No doubt, there is room for improvement but the concept of paying the bounty has integrity.

Improving the system

Now to the question of improving the system. The SEC’s whistleblower programme is to some degree in its early stages. As they say in the United States, the jury is still out on whether it will be as successful as other bounty programs, including the False Claims Act, provided for by US law.

There may be in certain circumstances rationale for not disclosing the identity of an SEC whistleblower. One can imagine a situation where the whistleblower is not a US citizen and is outside the protective reach and enforcement of US anti-retaliation laws. On the other hand, when announcing these awards, the SEC should be clearer in divulging the name of the defendant and the scheme that lead to the resolution. This “lessons learned” component is central to compliance enforcement.

Once the government reopens for business, maybe this is something it should think about.

Reuben Guttman practices with Guttman, Buschner & Brooks PLLC in Washington DC.

Powerful Whistleblower Attorney: US Protection and Bounty System Helps Root Out Financial Scandal

Reuben Guttman Articles, Whistleblower News

This article was written by Lianna Brinded, Business Editor for the International Business Times on September 25, 2013.

One of the world’s most prominent whistleblower attorneys tells IBTimes UK about the differences between US and UK whistleblower protection.

The only way to prevent and root out large scale financial and company scandals is by installing bounty programmes and protection systems that reward those who risk their careers to flag up wrongdoing, says one of the world’s most prominent whistleblower attorneys.

In the US, there are a number programmes, such as ones with the US Internal Revenue Service (IRS) and the Securities Exchange Commission (SEC) coupled with the protection through the Dodd-Frank Act, since 2010.

The programmes allow whistleblowers to not only be rewarded for information, depending on the significance of information and how much it results in recovery for the government or shareholders, but also protects them employer retaliation, such as dismissal or being investigated themselves.

However, the UK lags behind rewarding or protecting whistleblowers.

Reuben Guttman is one of the world’s most prominent whistleblower attorneys and a co-founder of Guttman, Buschner & Brooks PLLC in Washington DC. He has served as counsel in some of the largest recoveries under the False Claims Act and has recovered billions of dollars for the government from fraudulent mortgage assignments and a number of pharmaceutical firms.

In 2012, he represented one of the four main whistleblowers in a case against GSK that returned over $3bn to the government and here he speaks with IBTimes UK exclusively.

China’s Pharmaceutical Bribery Scandal is ‘Tip of the Iceberg’

Reuben Guttman Articles, Whistleblower News

Chinese authorities are cracking down on its pharmaceutical sector after officials revealed that four China-based senior executives at British drugmaker GlaxoSmithKline had channelled millions of pounds in bribes through travel agencies and consultancies.

Reuben Guttman is one of the world’s most prominent whistleblower attorneys who practice with Guttman, Buschner & Brooks PLLC in Washington DC. He has served as counsel in some of the largest recoveries under the False Claims Act and has recovered billions of dollars for the government from fraudulent mortgage assignments and a number of pharmaceutical firms.

In 2012, he represented one of the four main whistleblowers in a case against GSK that returned over $3bn to the government and here he speaks with IBTimes UK exclusively.

(Source: International Business Times at http://www.ibtimes.co.uk/articles/508530/20130924/gsk-china-pharmaceutical-scandal-bribery-whistleblower.htm)

See the full interview. . .

Patients suffer from drug industry’s chronic greed

Reuben Guttman Articles, Traci Buschner Articles, Whistleblowers Blog

By Reuben Guttman and Traci Buschner who practice with Guttman, Buschner & Brooks PLLC in Washington DC.

Commentary: Give Big Pharma a dose of strong regulatory medicine

Pfizer is paying the U.S. government and a number of states more than $450 million to resolve allegations that its subsidiary, Wyeth Pharmaceuticals, unlawfully marketed the immunosuppressant drug, Rapamune.

The two Pfizer (NYSE:PFE) whistleblowers who initiated the case, Marlene Sandler and Scott Paris, were pharmaceutical sales representatives who raised concerns through a lawsuit filed under the Federal False Claims Act that their company actively marketed Rapamune for purposes not approved by the FDA and paid kickbacks to doctors in order to increase sales.

The resolution of the Rapamune case is one more settlement in a long procession of cases brought against the pharmaceutical industry for unlawfully marketing drugs. Last year, GlaxoSmithKline (NYSE:GSK) paid (LSS:UK:GSK) more than $3 billion to resolve allegations of misbranding and kickbacks with regard to a number of drugs including the blockbuster asthma and COPD drug, Advair.

Meanwhile, Abbott Labs (NYSE:ABT) paid a total of $1.6 billion to resolve civil and criminal allegations with regard to marketing derelictions of its drug Depakote. And, as recently as April, Amgen (NASDAQ:AMGN) paid almost $25 million to settle claims that it had paid kickbacks to induce sales of its anemia drug, Aranesp.

These are only some examples; over the last decade, almost every major pharmaceutical manufacturer has been sanctioned either civilly, criminally, or both for unlawfully marketing their drugs.

More than money

Unfortunately, these cases are remembered for the money. The press thrives on resolutions that break new monetary barriers of recovery. The lawyers bask in this success of high-profile settlements. The regulators make claims at least hinting that compliance enforcement works.

Somewhere lost in the discussion is the patients.

Today, there are countless people whose drug regimens have been dictated at least in part by marketing agendas and not medical necessity. There are the elderly in nursing homes who are easy prey for the industry because they too often lack the ability to ask questions about their treatment, let alone provide the truly informed consent to allow it to occur. Too often they are placed on drugs because of protocols implemented by intermediary long-term care pharmacies, which are incentivized with payoffs by the pharmaceutical industry.

Then there are the children whose doctors are either on the payroll of the industry or have been influenced by paid industry opinion leaders. With doses of anti-psychotics and anti-epileptics touted as mood stabilizers, too many children are dosed with drugs to change behaviors that in yesteryear would have been dealt with through less-invasive means.

Finally, there are patients, like those on Rapamune, who have life-threatening illnesses and must make decisions based on truthful information. They are in no position to distrust their physicians or the pharmaceutical industry that makes their drugs. On the edges of life itself, to do so would be to question those who provide any hope of recovery. This is what the industry marketers know.

Checkup and testing

Unlawfully marketing drugs is not just about the government or third-party payers paying for unnecessary products. It is about disseminating misinformation to those who have a window of time and opportunity to make critical medical decisions.

If our physician had committed the same derelictions, and paid fines to resolve civil and criminal penalties, it is a safe bet that we would be looking for another doctor. Yet we do not have the same choice, given the relatively limited number of companies that manufacturer drugs, which when used for proper purposes and in a proper manner can be life-changing, if not life-saving.

Pfizer has paid its fine to the Department of Justice and to the states. It is now time for Congress to take a hard look at the conduct of the pharmaceutical industry. Oversight by the FDA is not sufficient. A systemic marketing violation impacting thousands of patients is an exponential train wreck.

In this country, a train wreck warrants an investigation by the National Transportation Safety Board. There needs to be a similar board, perhaps a Pharmaceutical Safety and Investigation Board, which looks at derelictions like the one that occurred with regard to Rapamune and makes a full disclosure to the medical community.

The tragedy of the Rapamune case, and cases like it, is not the lost dollars to the government but the dissemination of misinformation through unlawful marketing that skews medical decision-making. For this injury, money alone does not set the record straight.

Guttman & Buschner Represent Whistleblowers in Justice Dept. $257 Million Civil Settlement with Wyeth over Unlawful Marketing of Rapamune

Reuben Guttman Articles, Traci Buschner Articles, Whistleblower News

Pfizer subsidiary pleads guilty to off-label marketing of powerful immunosuppressent Rapamune; settlement latest in series of major off-label whistleblower cases against Abbott, GlaxoSmithKline and Amgen

WASHINGTON, DC (July 30, 2013) – Leading whistleblower attorneys Reuben Guttman and Traci Buschner of Guttman, Buschner & Brooks PLLC represented two key whistleblowers behind a $257.4 million settlement announced today between drugmaker Wyeth Pharmaceuticals, a subsidiary of Pfizer, and the U.S. Department of Justice stemming from alleged marketing abuses of Wyeth’s powerful immunosuppressant drug Rapamune. The case was originally brought by  Marlene Sandler and Scott Paris, both of whom were sales representatives for the company.

Today’s blockbuster settlement of the whistleblower case was originally panned by the Justice Department, but raised the ire of a Congressional oversight committee in 2010.

The case, filed under seal in 2005 in U.S. District Court for the Eastern District of Pennsylvania, led to an investigation by the Justice Department and multiple states into abusive marketing practices related to Rapamune, which is primarily approved by the FDA for individuals following kidney transplants to help the body prevent organ rejection. On Dec.3, 2006, the DOJ filed a formal notice with the Eastern District declining to intervene in the case.

Guttman and Buschner continued to move forward with the case, and filed an amended complaint on behalf of the whistleblowers on May 24, 2010 ─ which spurred a formal inquiry by the U.S. House of Representatives Committee on Oversight and Government Reform, then chaired by U.S. Representative Edolphus Towns.

On Sept. 21, 2010, the Justice Department intervened in the case and transferred it to the U.S. the District Court for the Western District of Oklahoma in Oklahoma City, where an investigation was initiated with regard to claims brought by a third whistleblower.

The settlement agreement notes the broad scope of Wyeth’s alleged unlawful marketing of Rapamune for well over a decade, spanning from September 1999 to December 2011:

Wyeth (a) knowingly promoted the sale and use of Rapamune for uses for which it had not been approved by the United States Food and Drug Administration (FDA), including for use in connection with solid organ transplant patients other than kidney transplant patients, which were not medically-accepted indications (as defined in 42 U.S.C. § 1396r-8(k)(6)), and were not covered by Medicare, Medicaid and other Federal health care programs; and (b) knowingly promoted the sale and use of Rapamune in treatment regimens that had not been approved by the FDA including the use of Rapamune with transplant patients who used another immunosuppressant drug before using Rapamune and the use of Rapamune in combination with certain types of products other than cyclosporine and corticosteroids.

Ms. Sandler and Mr. Paris were represented by Reuben Guttman and Traci Buschner. Mr. Guttman is one of the country’s preeminent whistleblower lawyers, having representing individuals in some of the largest pharmaceutical and financial services cases on record.

“Pfizer subsidiary Wyeth joins a parade of other pharma giants to plead guilty and pay significant penalties for unlawfully marketing their drugs,” said Mr. Guttman. “The abuses related to illicit marketing of Rapamune paint a disturbing portrait. Wyeth leadership placed a highly vulnerable patient population at serious health risk. Exposing those whom drug makers have pledged to heal to increased risk merits immediate congressional oversight. Hopefully, the settlement will prompt Congress to take action.”

Mr. Guttman continued: “Over the past five years, at least half a dozen pharma giants have paid fines for conduct that places patients in harm’s way, yet not a single individual has been held accountable. Our nation can no longer afford the expenditure for drugs that don’t work, cause additional harm and saddle the country with the long-term of obligation of paying for the medical care of victims. These cases are reported in terms of dollars but they are more about conduct that impacts patients and taxpayer.”

In the last three years, Guttman and Buschner have had unprecedented success representing lead whistleblowers in the government’s $1.6 billion settlement with Abbott (2012); its $1.04 billion settlement with GlaxoSmithKline (2012); and its $24.9 million dollar settlement with Amgen (2013). The firm also represented whistleblower Lynn Szymoniak, who first reported claims of robo-signing to 60 Minutes and whose allegations led to a $95 million settlement as part of the government’s historic $25 billion settlement with the country’s four largest banks (2012).

Mr. Guttman and Ms. Buschner currently represent several relators in an ongoing case, in which the government has intervened, against defense contractor LockheedMartin regarding alleged environmental noncompliance and mishandling of hazardous waste at the Paducah Kentucky Gaseous Diffusion Plant.

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