Updated 1:25 p.m.
The whistleblower who helped the government land a $93.5 million settlement with Verizon to resolve a false claims suit is demanding an increased cut of the funds, arguing he is entitled to additional payment for his substantial assistance.
Federal prosecutors in April announced the deal with Verizon to close an investigation over allegations the company overcharged the government on voice and data communication contracts. The whistleblower, Stephen Shea, filed suit in Washington federal district court in 2007. The case was under seal until earlier this year.
Shea's lawyers at Washington’s Phillips & Cohen, including Colette Matzzie, said in court papers (PDF) filed this week that the government initially refused to pay Shea the statutory minimum of 15%, or about $14 million, for exposing the alleged overbilling. After Shea’s attorneys filed a motion to compel, the government paid up, according to Matzzie.
The dispute over an additional 10%—$9.35 million—was pending in recent weeks before Magistrate Judge John Facciola of U.S. District Court for the District of Columbia. Last month, Shea’s attorneys and the government team participated in a mediation conference with Facciola. The lawyers did not reach an agreement.
With the dispute back in front of U.S. District Judge Gladys Kessler, Shea’s attorneys said this week the legal and factual question is “the extent to which the relator ‘substantially contributed’ to the $93.5 million settlement between Verizon and the United States.”
But whether Shea will even get to argue for more money remains in doubt. The U.S. Justice Department, according to Shea’s lawyers, argues Shea had until June 1 to file an opening brief in the action in front of Kessler.
Shea’s attorneys disagree and have asked Kessler to allow limited discovery.
“Litigation over the sum of $10 million should not occur without any discovery,” Matzzie said in court papers. “'Trial by ambush’ is no more appropriate here than in any other similarly significant litigation.”
A Justice Department spokesman, Charles Miller, declined to comment on the dispute. Assistant U.S. Attorney Doris Coles-Huff, who participated in Verizon settlement negotiations, was not immediately reached for comment this morning.
“The U.S. Attorney’s Office will look at this issue in a fair manner, and we expect the relator to get his fair share of the settlement in this case,” Bill Miller, a spokesman for the U.S. Attorney’s Office, said in an e-mail. “Beyond that, the U.S. Attorney’s Office has no comment at this time, as we prepare the government’s response for the Court.”
Prosecutors this afternoon filed a response (PDF) to Shea's demand for increased compensation. The government said discovery or an evidentiary hearing "should only be considered if and when it appears that there are discoverable and triable issues."