Whistleblower Stephen Shea and the federal government settled a suit against Verizon last year for more than $93 million. But that didn't mark the end of the company's dealings with Shea.
Shea had a pending whistleblower suit against Verizon, one that the company's lawyers at Wilmer Cutler Pickering Hale and Dorr described as a copy of the first case. Verizon's lawyers urged a federal judge in Washington to toss the second case.
And that's just what happened yesterday. U.S. District Judge Gladys Kessler dismissed Shea's second suit, saying it closely resembled the first case.
Shea's first suit against Verizon, filed in January 2007, alleged the company bilked the government for reimbursement of certain prohibited surcharges. DOJ joined the suit in 2007, and the case later settled for $93.5 million. Verizon didn't admit wrongdoing. The case involved telecommunications contracts with the General Services Administration.
Shea filed the second complaint in 2009, adding other federal agencies as victims of alleged fraud by Verizon. The complaint alleged fraudulent billing on contracts that were not identified in the first case. The government didn't intervene to back Shea.
Verizon's attorneys, including Wilmer partners Randolph Moss and Jennifer O'Connor, argued that certain False Claim Act provisions should void Shea's second suit.
The law, for instance, contains a rule that blocks follow-up suits that are related to or based in large part on an earlier-filed action. That requirement benefits the first person to allege fraud, blocking out any second suit that mirrors the first.
Shea's lawyers argued the so-called "first to file" rule doesn't apply in this case because Shea brought both cases. The attorneys also said the first Verizon case wasn't pending when he lodged the second against the company.
Kessler ruled that the statute in question "states without ambiguity or qualification" that no person other than the government can bring a successive suit. Shea, of course, isn't the government. (DOJ hasn't sued Verizon for any of the allegations Shea made in his second complaint.)
Kessler also said the allegations in the second complaint against Verizon are based on the material facts alleged in the first suit. Shea's "argument that his two lawsuits are not related because they involve different contracts with different agencies has no merit," the judge said.
Verizon isn't entirely clear yet. The government said Kessler shouldn't dismiss the case with prejudice to the United States. Just in case the government decides, later on, to challenge Verizon.