The whistleblower who exposed allegations that Verizon Communications bilked the federal government should not receive millions more in compensation for his assistance in the case, federal prosecutors said in court papers filed this week.
Verizon earlier this year settled a whistleblower suit in Washington federal district court for $93.5 million. The whistleblowers, Stephen Shea and his company 2Probe LLC earned about 15%, or $13,725,000.
Lawyers for the whistleblowers in July asked for an additional payment of nearly $7.5 million. Shea and his company provide billing work to private clients on telecommunications contracts with Verizon and other providers.
Responding to the request for more money, prosecutors in Washington said in a court filing (.pdf) Monday the whistleblowers “contributed to the government’s recovery by initiating this civil action. However, they made only modest contributions to the actual prosecution of the case.”
Still, prosecutors said Shea and his company should receive an additional $1.47 million. An assistant U.S. attorney, Doris Coles-Huff, said in court papers that the extra amount would mean a 16% cut from the overall recovery.
The False Claims Act guarantees in some cases that a whistleblower will receive a minimum 15% cut of any government recovery. Prosecutors said Monday that whether a person should get more is based on the extent to which the whistleblower “substantially contributed” to the prosecution of a case.
The law, however, doesn’t define substantial contribution. Prosecutors urged Judge Gladys Kessler to examine the helpfulness of the whistleblower’s information and the role the whistleblower played in the prosecution and recovery effort.
In Monday’s filing, prosecutors said Shea and 2Probe had no first-hand knowledge of Verizon’s billing under a specific contract. The complaint alleged Verizon unlawfully billed the government for certain taxes and surcharges.
Prosecutors said the government’s “substantial investigation and settlement” before litigation reduced the role that Shea played in the prosecution of the case. Awards at the high end of the range, up to 25% in cases in which the government intervenes, are “restricted to only those cases which proceed to litigation and trial,” prosecutors said in the court filing.
Lawyers for Shea, represented by Phillips & Cohen, argue he provided a critical “insider” document that “cracked open the fraud and showed the illegal surcharges submitted to the United States.”
Prosecutors said in response that the information Shea provided was already in the government’s possession. Shea’s “lack of information required an extensive investigation of the allegations,” prosecutors said.
The Justice Department said that if Shea had provided information beyond speculation about Verizon’s billing, “the government would have been able to complete the investigation and settlement efforts in much less time.”
An attorney for Shea, Colette Matzzie, said in a declaration (.pdf) that Phillips & Cohen dedicated about 1,200 hours of attorney and paralegal time in the case.
Matzzie, a partner at the firm, said Shea “took very seriously his duty to scrutinize the settlement agreement closely to determine whether fair, adequate and reasonable and to provide the court with his views on the settlement.”
Kessler gave the whistleblowers until early next month to reply to the Justice Department’s position.