Big money whistle-blower suits on the rise

When Marc Raspanti left the Philadelphia District Attorney's Office in the late 1980s to strike out on his own, he wasn't sure where to focus his practice.

He started out with a fairly standard white-collar defense practice with a private firm, drawing on his experience with the district attorney. But he soon set up his own firm and moved into whistle-blower lawsuits - a fateful decision, it turns out.

Whistle-blower lawsuits have boomed in recent years, and Raspanti's practice, along with those of the small clutch of other lawyers who handle these cases nationally, has grown accordingly.

Since Congress bolstered the federal False Claims Act in 1986 by expanding the circumstances under which contractors can be sued for cheating the government, financial penalties assessed against crooked companies have reached $27 billion, according to the latest Department of Justice compilation.

Under the act, whistle-blowers are entitled to at least 15 percent of the proceeds, a powerful incentive for people with information about corporate misdeeds.

That would mean that in the last generation, whistle-blowers have pulled down more than $4 billion; attorneys' fees likely have exceeded $1 billion. In one case last year, drug manufacturer Pfizer Inc. paid the government $2.3 billion to settle whistle-blower allegations that it had illegally marketed the painkiller Bextra and other medications.

Raspanti says that the whistle-blower cases handled by his Center City firm have resulted in payments of $1.8 billion to the government since he began the practice in 1989.

Not a bad payday all around.

"When I first started doing this work I would get low-level billing people coming in with information," said Raspanti, whose firm - Pietragallo, Gordon, Alfano, Bosick & Raspanti L.L.P. - has 90 lawyers and is based in Pittsburgh and Philadelphia. "Now I am getting people coming in from the boardrooms."

And there are signs that growth in this practice is accelerating.

Lawyers who focus on whistle-blower cases say the publicity surrounding huge pharmaceutical-industry settlements is raising awareness and causing people with information of corporate wrongdoing to come forward.

Moreover, the new law signed by President Obama governing oversight of the financial industry establishes procedures for similar whistle-blower actions against financial-services companies.