CORPORATE CRIME REPORTER
Neil
Getnick Takes Down Glaxo
24 Corporate Crime Reporter 43(11), November 4, 2010
It was late October.
The trial date was November 1, 2010.
And GlaxoSmithKline (GSK) was facing charges brought by a GSK quality assurance manager.
Her name: Cheryl Eckard.
Eckard charged that the British drug giant for years knowingly operated a major facility in Puerto Rico with extensive manufacturing violations and the almost total breakdown of quality.
Eckard’s lawyer – Neil Getnick of Getnick & Getnick – along with co-lead counsel Lesley Skillen and their law firm’s entire team – was ready to go to trial.
But GSK chose not to.
Last week, GSK settled for $750 million – including a $600 million civil settlement.
The whistleblower’s share of the federal recovery?
$96 million.
The state recovery is still to come.
The defense team for GSK – Geoffrey Hobart and Matthew O’Connor at Covington & Burling.
How close did the case come to going to trial?
“There are differing views on that subject,” said Getnick in an interview with Corporate Crime Reporter last week. “There were active settlement negotiations. And within the last six months, it appeared that this case was going to be resolved through settlement.”
“But having said that, the final signatures went on the settlement papers on October 26, 2010, the date the settlement was announced.”
“So, it’s one thing to say that we have reached a settlement in principle and another to say that the case in fact has been settled.”
“And you can’t let up until the case is settled. You must be ready to try the case. That is the ultimate leverage that forces a settlement for real value.”
“That’s why it was important when earlier this year, in the spring, the court specifically asked – are you ready to try this case?”
“Answer: Yes.”
“How long will you need?”
“Answer: Six weeks.”
“Okay, I’m giving you a trial date: November 1, 2010.”
“And it’s no coincidence that this case was settled on October 26, in the face of a trial date of November 1.”
And GSK settled for good reason.
In 2003, Eckard went to GSK management with a long list of violations at the company’s giant Cidra facility.
Getnick says that Eckard approached the company with a list of “mixed up products, super and sub potent diabetes drugs, an area of the factory used to make injectable drugs that was not sterile, air handling systems that misdirected the flow of product powders, a water system contaminated with microorganisms, and a host of other manufacturing and quality testing problems that led her to conclude that GSK could not assure that its product from that plant was free from contamination and made according to the drug formulas registered with the FDA.”
“As a result of those findings, Ms. Eckard, in her capacity as a global quality assurance manager, urged GSK to take swift and decisive action at Cidra, including at least temporarily shutting the plant until those problems could successfully be addressed.”
GSK did not respond well to Eckard’s complaints.
GSK did not take her advice.
Instead, they declared her “redundant” – which resulted in her termination and firing.
“And it’s important to note that even after she was fired, she came back to the company and spoke with a high level compliance and legal team to point out why it was essential, whether or not she stayed, that the company take decisive and immediate action,” Getnick said.
“But again, they chose to ignore her and to ignore the problem.”
One of the things you hear repeatedly from False Claims Act defense counsel is that this law forces employees outside of the corporate chain of command and gives them the incentive to cash in by reporting problems directly to the government.
Instead, they argue, the employees should be bringing the problems up the chain of command within the corporation.
“That has never been our experience,” Getnick said. “To the extent that such a phenomenon exists – we believe it is the rare exception, not the rule.”
“In 2003, we brought what was then the largest Medicaid fraud recovery in U.S. history.”
“That case was brought by a relator – George Couto – who described a venal system of cheating by that company on the best price due Medicaid.”
“He did everything in his power to get the company to address the problem.”
“Ironically, because of an earlier False Claims Act case, the company was under a governmental requirement to provide compliance training for their executives.”
“One day, George Couto found himself in a room together with other colleagues, watching and listening to a video tape in which the President of Bayer said that people should follow the spirit as well as the letter of the law.”
“If there was a problem, he said, employees should come to him directly.”
“I remember very well when George testified about that during his deposition. The attorney who cross-examined him asked in effect – well, isn’t that exactly what a company should do?”
“And George explained that yes it was, but the reality at the company was such that, after the attendees heard the President make that statement, there was such raucous laughter in the room that the tape had to be turned off, people had to settle down, and only then could they continue to the end.”
“The very next day, George Couto went to his supervisor and reported the fraud that was taking place. But nothing was done – the point being that the compliance presentation was over and now it was back to business as usual.”
“Once again, despite following the chain of command, he was ignored and ultimately he went to the government and came to us.”
“That’s the scenario that we see. It is important that companies have robust compliance programs. It’s preferable if these problems are addressed internally and corrected. But often these programs prove to be nothing more than a facade.”
So, Eckard first goes up the corporate chain of command.
And she’s terminated, allegedly for being redundant. But undaunted, she goes back to the company and talks with a high level legal and compliance team.
This was after she was fired?
“Yes, after she was fired,” Getnick says. “She was fired in May 2003. In July 2003 she called GSK’s CEO as well as GSK’s general counsel. Neither took her call.”
“She then called the legal department in the U.S.”
“A secretary helpfully referred her to the GSK compliance department and in mid-July she made extensive reports to GSK’s compliance officer and an investigation was opened.”
“She didn’t hear back from GSK until late August 2003 when she was asked to take part in a call with the compliance department investigation team.”
“On August 27th, she made a full report to the team, but came away with no confidence that GSK would take any action in response to her complaint.”
“But the veracity of what she said and the compelling nature of the evidence she presented were made entirely clear by what happened next.”
“She then tells the FDA the same story. The FDA is so impressed and so appalled that they immediately go into overdrive, draft search warrants, and soon thereafter send in a team of FBI agents to execute those search warrants, to begin to gather the evidence that led to a number of governmental actions, culminating in the resolution that was announced last Tuesday, October 26, 2010.”
Getnick says that going to the government first before filing one’s False Claims Act case actually may have some legal advantages.
“Still, there is a risk that by going to the government first, the government may proceed on its own, and then you may never get to file a case,” Getnick says. “First she went to the company. Then she went to the government. And only then did she file her lawsuit.”
“To the people who criticize whistleblowers for being in it for the money, look at the facts – not only the facts of this case, but in so many other cases – and you will see that is a charge that simply does not stand up.”
[For a complete transcript of the Interview with Neil Getnick, see 24 Corporate Crime Reporter 43(11), November 8, 2010, print edition only.]
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