SEATTLE, NOV. 5, 2012 –Davis Wright Tremaine LLP today announced that its client, Richard J. Klein, former chief financial officer of the Seattle biopharmaceutical company Omeros Corporation, has received a $3.94 million payment to settle his wrongful termination and federal False Claims Act whistleblower lawsuit.
Mr. Klein’s lawsuit was filed three years ago, and the settlement was reached three days before a trial was scheduled to begin in federal court. Mr. Klein did not invite the settlement discussions, said Tom Lemly, at Davis Wright Tremaine, the lead attorney for Mr. Klein.
"The size and timing of the settlement tell you all you need to know about the strength of our client’s case," Lemly said.
In the lawsuit, Klein alleged that Omeros falsified timekeeping records on a National Institutes of Health (NIH) research grant. Omeros terminated Klein shortly after he alerted the company’s Audit Committee to the false timekeeping, Lemly said. Klein’s lawsuit alleged wrongful termination and a violation of the federal False Claims Act, which allows individuals to bring a claim that a company or individual defrauded the federal government.
The federal government was not a party to the lawsuit or the settlement, and it may still take additional action against Omeros, Lemly said.
Omeros has stated that it alerted the NIH to the company’s mistakes in timekeeping, and that an internal company investigation concluded that it had underbilled, rather than overbilled, the government. But in pretrial motions, Omeros sought to exclude the testimony of certain NIH managers regularly involved in the grant, who had testified in depositions that Omeros had not properly informed the NIH of either the timekeeping mistakes or the true nature of the work Omeros was doing under the grant. According to the NIH witnesses, it was not reasonable for anyone at Omeros to think that what the company was doing was appropriate under the grant and federal regulations, or that the NIH approved of what Omeros had done.
In a ruling shortly before the case was scheduled for trial, U.S. District Judge John C. Coughenour denied Omeros’ motion to exclude the NIH witness testimony. In the ruling, Judge Coughenour wrote: "The NIH testimony is evidence that the problems at Omeros involving false reports to the federal government were more widespread than Klein knew at the time. It is thus circumstantial evidence that [Omeros] fired Klein to prevent him from discovering the extent of the problems."
Although Davis Wright Tremaine normally represents employers in False Claims Act cases and other employment litigation, this was an exceptional case, Lemly said. "We felt that Mr. Klein had a strong legal and factual basis for his claims, and we were pleased to be able to represent him in this matter in order to obtain redress for the wrong done him."
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