The Giant Killers: The Whistleblower Lawyers of Phillips & Cohen

Washington, D.C.-based partners Timothy McCormack, Colette Matzzie, Erika Kelton and Peter Chatfield (Photo by Eli Meir Kaplan).

Magazine Feature: Facing possible job loss, isolation and unimaginable stress, whistleblowers need courage. They also need the right help: Lawyers with skills, resources and tenacity who possess the ability to become good friends and listeners while keeping their eyes on the higher purpose of corporate reform. Enter Phillips & Cohen. 

(VIEW THE FULL ARTICLE “THE GIANT KILLERS” IN PDF FORMAT.)

For anyone who has toiled in Corporate America, or read horror stories about it, the story is a familiar one. Employee A lands a job at, say, a large pharmaceutical company, and becomes established with access to proprietary information. He feels good about the job he is doing, but one day he stumbles across some questionable business activity that gives him pause.

He takes his concerns to his boss, and the response seems mean, but it is the kindest thing he will hear from that day forward: “Shut up and do your job.”

The employee, his pride and righteousness bruised, then takes his concerns about, say, false drug labeling, to a corporate compliance officer, who praises him and leads him into a senior executive’s suite.

The executive, too, praises the employee, and says that it’s people like him upon whom success is built.

That’s on a Monday.

On Tuesday, Wednesday and Thursday, there are a flurry of meetings, but Employee A is not invited to any of them. Meanwhile, behind the scenes, the company opens up a personnel file on him and begins to poke around in his personal life, looking for signs of vulnerability: a messy divorce, a drinking problem, a slew of bad debt.

By Friday, the company is pretty sure that, one way or another, they are going to fire him.

Sensing over the next several days or weeks that he has fallen out of favor, the employee starts to copy documents related to the activity he has stumbled across, and maybe even loads up a thumb drive and takes it home with him.

When one day he finally is told to turn in his key fob and is walked out of the building by an HR director – perhaps accompanied by a security guard – it dawns on him that his world is collapsing. He is humiliated and about to become jobless. Somewhere deep inside he is angry. He vows to seek revenge.

He decides to become a whistleblower.

At that juncture, the smartest thing former Employee A can do, according to Patrick Burns, co-director of Taxpayers Against Fraud, a nonprofit organization founded in 1986 to promote and protect the False Claims Act, is to call him. He will then assess the scenario – and the mettle of Employee A – and help the whistleblower locate some heavy hitters in the legal world who will file a lawsuit in federal court.

Burns narrates this typically dark tale with zeal on a steamy summer day in Washington, D.C., at a coffee shop around the corner from an ornate federalist-style building that houses a boutique law firm responsible for some of the largest False Claims Act settlements in U.S. history.

He looks like a smaller version of Curly from the Three Stooges, but he is deadly serious about the realities of taking on a behemoth.

“Corporate defendants rely on two things: fear, and the complexity of the fraud,” says Burns. The going can get rough, he cautions. “It’s like oats going through a horse: You’ll never be better, but you might be richer,” he says, reeling off anecdotes about whistleblowers who went up against aerospace and pharmaceutical companies, ordinary employees “who went in whole, and came out whole, but for 10 years in between were crying.”

Burns is not suggesting that whistleblowers are or should be motivated solely by money. “Money and change,” he clarifies. “It’s what we want to leave our kids. It’s the world we want to live in. It’s the question we ask ourselves. Are we doing any good?”

Before any good is to come from an act of conscience or good, old-fashioned vengeance, however, Employee A needs a seasoned professional who can lead him through a minefield of legal challenges, mental doubts and tests of will. He needs a high quality lawyer – and expert mechanic, in Burns’ parlance – who can diagnose a case, plot a course for dealing with it, and not only prevail but force the culprit to pay for the costs of those who exposed its sins.

That’s where Phillips & Cohen comes in.

Kelton is a national leader in whistleblower, or qui tam, cases filed under the False Claims Act and state false-claims laws, as well as whistleblower cases under federal provisions relating to the Internal Revenue Service, Securities & Exchange Commission and Commodities and Futures Trading Commission. A graduate of the University of California at Berkeley, Boalt Hall School of Law, where she wrote for the Law Review, she regularly writes op-eds and letters to the editors of various publications,
contributes to SEC, IRS & CFTC rule-making processes that reward whistleblowers and speaks at conferences in the U.S. and abroad.

She also serves on the board of the Taxpayers Against Fraud Education Fund, which was founded in 2005 to further educate the public about the False Claims Act. (Phillips & Cohen is a donor.)

She is as heavy a hitter as there is. Both Kelton and fellow partner Colette Matzzie are members of the Lawdragon 500 Leading Lawyers in America.

Kelton sits down and describes an endless amount of fraud in the healthcare, defense and telecommunication industries that has already netted billions of dollars in settlements for whistleblowers and the U.S. government that “never ceases to amaze me.”

Yet, “the deterrent effect is profound,” she says, noting significant changes in the marketing of pharmaceuticals, to name just one area of change that has resulted from her firm’s successful litigation.

The list of Phillips & Cohen’s takedowns is long, punctuated by a leading role in the record-setting $3 billion settlement with GlaxoSmithKline in 2012 for improper marketing practices and financial inducements to doctors to prescribe and promote drugs such as Advair, Wellbutrin and Lamictal for off-label, unapproved uses, and a $1.8 billion settlement with Pfizer Inc. in 2009 for illegally marketing painkillers.

But as impressive as the corporate scalps on her wall is Kelton’s mastery of the art of relating to, protecting and guiding the whistleblower. “They are all sorts of different human beings,” she says. “Their personalities are all different. Most have tried other means and have been frustrated. I might be the first person who has taken them seriously. They may have lost their jobs. They want to correct wrongdoing. They are incredibly admirable and courageous. Many will be friends for life.”

Not surprisingly, Kelton is fiercely loyal to her clients and defends their motivations and honor. “Opportunism is not rewarded,” she says, deflecting any suggestion of a jackpot mentality. “This is very risky business. There are no sure bets. Most awards are not necessarily life-changing.”

One whistleblower’s life who has changed as a result of his association with Kelton is former GSK employee Matthew Burke.

“I have so much admiration for her,” Burke says of Kelton. “What I find so impressive about her is that it’s about justice, and doing the right thing. It’s about fair play.”

San Francisco-based partners Mary Inman, Eric Havian, Stephen Hasegawa and Claire Sylvia (Photo by Gregory Cowley).

Mary Louise Cohen, one of the firm’s founding name partners, says that Kelton embodies the firm’s brand in that she “sees the forest,” pointing to her “entrepreneurial instinct” and “foresight” as her key leadership qualities. “Plus she’s a fabulous writer,” Cohen adds.

Burke and Kelton got to know each other well: The Glaxo case went on for approximately 10 years. And not only did Burke emerge victorious, he appears  relatively unscathed.

Burke describes himself as a competitive guy from a large family who grew up playing high school and college baseball. He worked at Procter & Gamble until moving over to Glaxo, where he started in sales and marketing, eventually becoming a regional vice president of sales.

Eventually he became aware of what he describes as “immoral and illegal things” that reminded him of the lurid tales at the center of “a John Grisham novel.”

According to Burke, one of his sales reps had observed a physician speak on a number of occasions about off-label uses for the drug Wellbutrin, which accounted for $2 billion in sales at the time. She conveyed this  in an email to her manager, who shared the information with Burke, who also shared the information with Glaxo employees.

Burke soon found himself in a crossfire: “There were 20 off-label claims that were replete with concerns, and at the same time the [Food and Drug Administration] was investigating both Wellbutrin and the speaker at the program.”

Burke was fired, he says, simply for forwarding the email.

“I began looking into the marketing of the product,” says Burke. “I was motivated by the fact that I had been bullied, and the fact that GSK was marketing products that were improper and dangerous.”

He reached out to Phillips & Cohen after a friend informed him of the firm’s success in bringing whistleblower cases. “I knew that most of the time it doesn’t work out well for whistleblowers even when they effect change,” he says, “but my engagement with them was so positive.”

Burke attributes his experience to Kelton’s deft handling of the matter, which included the help of another whistleblower from Glaxo, he says. “I consider her a friend. We took on Goliath together. She managed our expectations, respected our intelligence, and treated us as partners in the process.”

He also sees the way his employer handled the matter as a key to his decision. “They offered me a separation agreement and $140,000,” he says. “They said, ‘Matt, just take the money, you’ll get another job.’ It was arrogant and dumb on their part.”

Once committed to a whistleblower lawsuit, finding the lawyer with the raw skills was only part of the equation for Burke. “You have to have someone who cares for people, because they often have to manage difficulty in their lives. Erika was always there to remind me of the higher purpose of what we were doing.”

He says he had doubts that his case would be successful, and that he never considered the thought that it would play a lead role in the historic $3 billion settlement. (Phillips & Cohen’s case along with a separate case in Colorado accounted for more than $1 billion of the civil settlement and $767 million of the criminal settlement paid by Glaxo.)

“I knew I could be blackballed, and I knew that just because you are right doesn’t mean that you’ll win,” he says. “But I got punched in the face, and I wanted to punch back.”

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