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Whistleblowers: Incentives, Disincentives, and Protection Strategies by Frederick D. Lipman

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Chapter Two

The Remarkable Story of Cheryl Eckard and the $96 Million Bounty under the False Claims Act

ON OCTOBER 26, 2010, GlaxoSmithKline (Glaxo) issued a press release disclosing a settlement with the U.S. Department of Justice with respect to the investigation of the company's former manufacturing facility in Cidra, Puerto Rico. Glaxo had issued a press release on July 15, 2010, disclosing a $750 million charge to its second-quarter 2010 earnings in connection with an agreement in principle with the U.S. Department of Justice.

Neither press release revealed a $96 million bounty payment to Cheryl Eckard that was paid in connection with the settlement, equal to 22 percent of the federal settlement. Eckard was also entitled to an additional bounty payment from the settlement with the Medicaid participating states as well as a percentage of the interest paid by Glaxo on both the federal and state settlements.

WHO IS CHERYL ECKARD?

Cheryl Eckard worked for SmithKlineBeecham Corporation d/b/a GlaxoSmithKline from 1992 through May 2003, when her employment was terminated after she had repeatedly expressed to her superiors serious concerns about quality assurance and compliance problems at the Cidra plant in Puerto Rico.

The complaint, filed by Eckard in February 2004 and (as amended) more than 130 pages long, stated that Eckard was the manager of global quality assurance for Glaxo. Much of the information in this chapter is based on allegations contained in the complaint against ...

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