Judge grants whistle-blower 15% in Cell Therapeutics case
Company paid $10.5 million
By JOSEPH TARTAKOFF
P-I REPORTER
A federal judge ruled late Friday that an informer who alerted the government to possible fraud at Cell Therapeutics Inc of Seattle should be awarded $1.575 million for his "significant" role in the case, despite his involvement in the wrongdoing.
Cell Therapeutics paid $10.5 million in April to settle charges that it defrauded the Medicare system by illegally promoting unapproved uses of its cancer drug, Trisenox. The government used information to make its case provided by James Marchese, who had worked as a sales representative at Cell Therapeutics.
By law, whistle-blowers such as Marchese are entitled to 15 percent to 25 percent of a settlement, although a court may reduce the share if it finds that the whistle-blower planned and initiated the scheme.
Over the course of a two-day hearing last month, government lawyers argued that Marchese did just that and therefore did not deserve any of the settlement money.
They said Marchese had found a way to list unapproved uses of Trisenox in a bulletin used by oncologists to select medicines to prescribe and had written letters to Medicare directors alerting them that because the unapproved uses were included in the bulletin, they should be reimbursable.
Government lawyers also argued that Marchese had not been forthright about his role.
During Marchese's testimony, in which he at one point broke into tears, he countered that he had been a low-level employee who had taken a risk by alerting the government to the alleged fraud once he learned that it may have caused patient harm. His lawyers argued that he should receive 25 percent -- the maximum allowed -- of the settlement.
But in her ruling, Judge Marsha Pechman said that Marchese should receive 15 percent, or $1.575 million, because while his contributions to the government's case were "significant," he had also played a role in the alleged fraud and did not immediately report the wrongdoing.
Pechman said that it was Marchese's idea to publish the unapproved uses in the bulletin, although she wrote that Marchese "held a reasonable belief that his actions were legal" and therefore could not be pinned down as the planner and initiator of the scheme. She also said he had relied on the advice of consultants and superiors.
In an interview, Peter Winn, the assistant U.S. attorney who handled the case, said, "We're pleased the judge reduced the award from 25 to 15 percent."
Marchese did not respond to an e-mail late Friday evening, and his lead lawyer did not respond to a message left at his office.
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