The information provided by a whistleblower recently resulted in Olympus Corp. reaching a $646 million settlement with the United States Department of Justice. Forbes reports that this case set a new record for recovery in cases where companies paid illegal kickbacks. The case is also noteworthy because it "shows how important whistleblowers are to regulators' global anti-corruption enforcement agenda."
Whistleblowers are richly rewarded when they provide information which makes it possible for the government to recover money that was improperly paid out to companies or individuals, including healthcare providers and medical device manufactures who receive funds improperly. The financial incentives provided to whistleblowers are important to encourage people to take risks and bring allegations of fraud and wrongdoing to light.
Company Settles Illegal Kickback Case with DOJ Thanks to Whistleblower
In the recent case involving Olympus Corp, the whistleblower was a former compliance officer who worked for the company. He indicated the company was paying kickbacks in order to encourage the purchase of certain medical equipment, including endoscopes which are used to conduct examinations of the gastrointestinal tracts of patients. Paying kickbacks is illegal under the U.S. Anti-Kickback Statute. The actions of the company in this case were also illegal under the Foreign Corrupt Practices Act because the kickbacks were illegally paid out not just in the United States but also in Central America and South America.
The former compliance officer who blew the whistle on the illegal kickbacks brought the case under the False Claims Act, which allows whistleblowers to file qui tam lawsuits in an attempt to bring fraud to light. A plaintiff who files a qui tam lawsuit is entitled to receive a part of the money received from a settlement or from a jury verdict when the government is successfully able to recover funds it improperly paid out.
In this particular case, Olympus paid $311 million to settle the lawsuit initiated under the False Claims Act. The whistleblower who brought the case to light will receive $51 million for his part in raising the alert about the kickbacks and bribes that were being improperly paid out.
Olympus also paid out an additional $22.8 million in order to settle the charges related to foreign bribery. The bribery allegations stem from the fact the company's Latin American subsidiary provided cash, as well as paid for personal travel, for healthcare providers from between 2006 and 2011. The goal of providing these payments was to prompt more sales of medical equipment, which violates the Foreign Corrupt Practices' Act prohibition against making payments to foreign officials in order to obtain business.
The settlement which Olympus entered into mandates the company has to pay penalties of close to three times its gross profits from sales in the United States which were related to unlawful payments of kickbacks. This is more than $230 million. All of this money was recovered in these settlements thanks to the whistleblower's choice to come forward.