A whistleblower and a wiretap

The largest opioid settlement in United States history involves a courageous whistleblower, a strategic wiretap, a well-executed federal raid, and the work of two Richmond Law alumni — Virginia-based attorneys Jamie Shoemaker, L’91, and Kenneth Yoffy, L’81. Though they filed the suit, they represented neither the victim nor the perpetrator. Instead, the pair represented a witness — and the result was a record-setting $1.4 billion settlement for the federal government.

This was no ordinary lawsuit. When a whistleblower — someone who has witnessed a fraud against the federal government — sues the defrauder on behalf of the government, it’s known as a qui tam action.

These suits can be traced back to the Civil War, when weapons manufacturers cheated the Union government. In an effort to combat this fraud, the government enacted the False Claims Act — also known as the “Lincoln Law” — which empowered those with knowledge of the fraud to sue on the federal government’s behalf.

The statute sat dormant for a long time, and “it wasn’t until 1986 when … amendments put real teeth in the whistleblower provisions that it really started to take off,” Shoemaker said. Under today’s law, the whistleblower, also known as a relator, can receive a portion of the funds recovered as part of a settlement.

Before entering into the qui tam field, Shoemaker specialized in employment law in Newport News, while Yoffy ran a general practice out of Hampton Roads and later Williamsburg. “I had never heard about qui tam law,” Yoffy said. And he had never met Shoemaker, who graduated 10 years after him.

The two Richmond Law alumni started working together through a mutual friend and colleague — another Spider, the late Bill Hoyle, L’82, an expert in fraud who formed the team in 2002 based on the different strengths each brought to the table.

“Jamie is the stalwart on the complaints,” said Yoffy, whom Shoemaker describes as “a master of relationships with people and negotiating.”

At the time, Yoffy continued, “Bill and I started talking about it. He was telling me about Jamie and what a good guy he was. I said, ‘Why don’t we have a loose agreement amongst us all, see if we can develop a practice in qui tam law?”

Qui tam law is a niche market and not one that many lawyers fall into. But that’s what made the opportunity more enticing.

Qui tam law is “developing as we speak,” Yoffy said. “Every [federal] circuit has a different take on any given particular issue, and you’ve got to stay up on it.”

That only adds to the excitement. “Out of all the law I’ve done in my life, it’s the most interesting law, the most rewarding law,” Shoemaker said.

“You’re doing right; you’re doing good,” Yoffy said. Plus, “it’s exciting because you get to see the depths of fraud.”
Their first case working together came about in 2003, when a whistleblower named Dana Spencer brought a claim against pharmaceutical giant Pfizer, resulting in a $2.3 billion settlement. “Our client had a much smaller whistleblower contribution in this case, but it got our feet wet,” Yoffy said.

The drug in question

Headquartered in Richmond, Reckitt Benckiser Pharmaceutical Inc.’s big moneymaker is a drug known as Suboxone. An alternative to methadone, Suboxone treats opioid dependence by helping addicts wean themselves off of the opioid. It works by combining two components: a “maintenance dose” of buprenorphine (the opioid) and naloxone, which counters the withdrawal symptoms of the buprenorphine. Together, the two drugs provide a form of “medication-assisted therapy” that can support heroin, morphine, and oxycodone addicts in their withdrawal.

In its original form, Suboxone was administered as a tablet, which Reckitt Benckiser had exclusive rights to produce thanks to the Orphan Drug Act. That act gives a special designation, tax benefits, and exclusive rights to produce to the drug manufacturer. But that lucrative exclusivity was scheduled to come to an end in 2009. In an effort to extend its monopoly, the drug company developed a plan: It would design a different delivery method, known in medical terms as “sublingual,” for Suboxone. Instead of swallowing a tablet, users would dissolve a small, rectangular strip of film under their tongues. Reckitt Benckiser obtained a patent on this new delivery format — but its monopoly over Suboxone would only last if users perceived the film as superior to the tablet.

The strategy to promote the film and phase out the tablet was complex. This film was better than the tablet, Reckitt Benckiser asserted, because it was less likely to be abused, was safer for homes with children, and was even less likely to be diverted to an illegal market. Users and doctors learned of these benefits through a “Treatment Advocate” speaker program and a “Here to Help” website aimed at connecting patients with physicians who prescribed drugs containing buprenorphine.

There was just one problem: “These representations were just horribly exaggerated and, in some cases, outright false,” Shoemaker said. “To make the patent have the full potential value they thought it could have, they began misrepresenting the difference between the film and the tablet,” and making claims that had not been approved by the U.S. Food and Drug Administration.

‘A Machiavellian scheme’

Ann Marie Williams approached Yoffy and Shoemaker in 2012. Williams, a state government manager at Reckitt Benckiser Pharmaceutical, recognized the problems with her employer’s claims about the drug. A 63-year-old mother of one living in the Richmond suburb of Midlothian, Williams managed legislative aspects of Medicaid in several states, educating legislators and others about the alleged benefits of Suboxone film over tablets.

In her role, Williams witnessed conversations and marketing practices related to Suboxone that, for her, raised some red flags. Her concerns dated back to August 2010 when, in a conversation with the medical director of Kentucky Medicaid, Williams learned about fears that Medicaid patients in Kentucky were being prescribed Suboxone tablets in large quantities — and were not coming off the drug.

“She became concerned about the number of doctors who seemed to be in some kind of trouble with their state medical boards, writing these large scripts and having patient loads exceeding the regulations allowed,” Yoffy said. “As a result, she gradually began listening and questioning more about the information she was receiving from within the company.” And as she did so, her concerns for patient safety grew.

“In early 2012,” Shoemaker said, “she decided that she needed to take action.”

Working with Yoffy, Shoemaker, and their team of lawyers, Williams described what Yoffy calls “a multifaceted, Machiavellian type of scheme” to market and sell the new sublingual film. Make no mistake — the film did what it said: It was an effective tool for transitioning addicts off opioids. But that’s only if all parties played by the rules.
“If you have a responsible doctor who monitored his patient, counseled his patient, and didn’t have a pill mill practice or a film mill practice, it did work,” Shoemaker said.

But that model is not what Williams witnessed. She described sales representatives who routinely marketed dosages of the film in excess of the FDA’s recommendation of 16 to 24 milligrams per day, for example, and physicians who prescribed Suboxone for pregnant patients who were addicted to opioids — an unauthorized use.

Other claims, detailed in the legal team’s 259-page complaint, dove even deeper. Reckitt Benckiser made an argument that the new form of Suboxone was safer for children due to its individual sleeve packaging — when in truth, Shoemaker and Yoffy explained in their complaint, once the packaging is breached, “the film presents substantially increased danger to children because it dissolves rapidly, and children who accidentally place Suboxone film in their mouths tend to absorb the buprenorphine it contains dangerously fast.”

Reckitt Benckiser’s sales representatives also marketed the film as “less divertible” to illegal purposes. But Williams’ legal team explained that the film was in fact more divertible because of how easy it was to conceal. According to a June 2017 Richmond Times-Dispatch article, for example, incidents in Virginia included a visitor concealing eight Suboxone strips under a ring at the Pocahontas State Correctional Center and 44 strips found concealed in an inmate package at the Red Onion State Prison in Wise County, Virginia.

“Suboxone strips are a significant issue for us, as they are easier to conceal than many other drugs,” Lisa Kinney, spokeswoman for the Virginia Department of Corrections, said in the article.

In total, Shoemaker and Yoffy’s complaint detailed 204 counts under both state and federal versions of the False Claims Act.

The next steps

Williams, it turns out, was one of six whistleblowers to bring claims against the pharmaceutical giant. And in qui tam cases, the order in which those cases are brought before the federal government for consideration makes a big difference: Generally, the first to file wins.

“You want to disclose the fraudulent conduct to the state and feds as soon as possible,” Shoemaker said.

But even though they were the third of six parties to file a lawsuit, the Hampton Roads team had one thing working in its favor: “We named the parent Reckitt Benckiser Group, and we were the first to do that,” Shoemaker said.

Reckitt Benckiser Pharmaceutical is a subsidiary of the larger, London-based Reckitt Benckiser Group. And as Shoemaker explained, there’s no case law that says you can go “upstream” and file against the parent. However, it’s completely permissible to go “downstream” and file against subsidiaries. Naming that parent company made their particular complaint more attractive to the federal government and helped facilitate the settlement against Reckitt Benckiser Group.

The relator share — or what each whistleblower brings to the table — also plays an important role. And Williams brought more than her fair share.

“It was one of those rare cases, in probably both of our careers, when our client was asked by the feds to wear a wire,” Shoemaker said.

In recordings with Reckitt Benckiser Pharmaceutical executives, district managers, and compliance officers, Williams uncovered valuable admissions — such as when a fellow employee noted on tape that a Reckitt Benckiser Pharmaceutical officer acknowledged that the company’s use of “therapeutic assistants” in its marketing plan was not in compliance but chose not to correct it for almost a year.

The almost cinematic elements of the investigation only increased for Williams when she partnered with the federal agents to help them plan a raid of the company headquarters. From a Richmond hotel suite where she and her legal team met with 20 to 30 federal agents, Williams “gave a layout of what records were where, what computers were where,” Shoemaker said. “They wanted to know where they could get the information [they needed] before it was destroyed,” Yoffy added.

“Our client is incredibly brave and courageous,” Yoffy said. “She put her job in jeopardy. She put her personal life in jeopardy. … She did it for the right reasons.”

The Department of Justice agreed. “In the end, the DOJ pretty much conceded that Ann Marie Williams brought the most to the table” of the six relators, Shoemaker said. As such, “we were deemed first-to-file against the parent company for the purpose of relator share.”

In April 2019, a federal grand jury issued an indictment against the subsidiary in Abingdon, Virginia. “Our indictment alleges a wide-ranging and truly shameful scheme to put profits over the health and well-being of patients trying to manage substance use disorder and opioid dependence,” Virginia Attorney General Mark Herring, L’90, said in a Department of Justice statement.

That same statement put other drug manufacturers on notice. “The Department of Justice intends to hold accountable those who are in position to know the harm opioid abuse inflicts but instead choose to profit illegally from the pain of others,” said Jesse Panuccio, DOJ principal deputy associate attorney general.

The $1.4 billion settlement against the parent company was announced in July 2019. The civil case against Reckitt Benckiser Pharmaceutical has been stayed pending the outcome of the criminal case against it, which is scheduled to go to trial in May.

When it comes to the settlement pots, the False Claims Act dictates that a relator can receive between 15 and 25% of the total. Guidelines dictate circumstances that justify exceeding 15%.

“When the client has added a lot to the investigation and to the prosecution, they will depart upwards from the 15% in ever greater amounts depending on the contribution made by the relator,” said Shoemaker.

In other words, the $1.4 billion settlement and the federal grand jury’s indictment — which is likely to push another civil settlement forward — was a good day for Shoemaker and Yoffy.

“Practicing law is hard,” Shoemaker said. “It is a tough way to make a living. Every lawyer has plenty of bad days. But when you have a couple of days like we’ve had recently, or you have a great jury verdict, there is nothing more satisfying than that.”