A NYC boutique law firm expands to Philly, betting on growth in whistleblower cases

After graduating from Temple Law School in the early 1990s, friends Jim Walden and Dan Miller followed separate career paths — while keeping up joint family vacations at the Shore.

Walden made a name for himself prosecuting mob cases out of New York, and in 2015 co-founded a boutique law firm, Walden Macht & Haran, in Manhattan.

Miller worked for the Delaware Attorney General’s office, then took his expertise handling whistleblower cases into private practice at Berger Montague.

Now, the Temple alumni have notched a legal victory together, as Walden’s firm expands to Philadelphia, with Miller on board as a partner: The firm represented a whistleblower in a $75 million settlement with a major pharmaceutical company, announced April 1 by the U.S. Attorney’s Office for the Eastern District of Pennsylvania.

The case was more than seven years in the making, and alleged that Bristol Myers Squibb underpaid rebates it owed to Medicaid programs, which are supposed to help lower the government’s costs of prescription drugs. A company spokesperson said it denies that any wrongdoing occurred, and “acted responsibly” in interpreting complex regulations.

“Were it not for whistleblowers, there’s a lot of fraud and corruption that would never get exposed, and they take very serious risks,” said Walden, who served as special counsel on a New Jersey investigation of corporate tax breaks, and whose client Grigory Rodchenkov blew the whistle on state-sponsored doping in Russian sports. “From our perspective, it’s all about making government function as fairly and as effectively as possible.”

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Whistleblower complaints — also known as “qui tam” cases — are the government’s biggest source of financial settlements and judgments under the False Claims Act. In its fiscal year 2020, the U.S. Department of Justice recovered $2.2 billion under that law, and nearly $1.7 billion stemmed from whistleblower suits, most of it related to the health-care industry. A whistleblower usually stands to collect 15% to 30% of the amount recovered.

The 672 qui tam suits filed last year marked a three-year high, though it’s still below the peak of 757 whistleblower complaints filed in 2013, according to Justice Department statistics.

Bringing on Miller “supersized” the firm’s whistleblower practice, Walden said. In one case potentially worth $1.5 billion, their suit alleges that a pharmaceutical company misled the U.S. Food and Drug Administration about defects in cardiac implantable devices. The firm also has more than two dozen qui tam suits filed under seal.

Government spending on health care is an evergreen target for fraud. “The budget each year, no matter what administration is in charge, is over $1 trillion for Medicaid and Medicare alone,” said Miller, a past president of the National Association of Medicaid Fraud Control Units. “So whenever you have that kind of money floating around, there are going to be people who try and take it.”

Walden, who grew up in Levittown, had long envisioned Philly as the first site for the firm’s expansion. “All of my formative legal experiences started in Philadelphia,” he said. Miller was a year behind him at Temple law, and they played on the law school’s rugby club together.

In October 2019, Miller left Berger Montague and briefly struck out on his own. He was talking to Walden one day, and recalls his friend saying, “I want to build a Philadelphia office. Let’s start with you.”

In January 2020 the firm leased office space in Center City at 20th and Market. Then came the pandemic, leaving Miller working from home, as members of the New York office worked remotely, as well.

The firm currently numbers 39 lawyers and 18 staffers. Walden didn’t specify how many people they plan to hire in Philadelphia, though he and Miller anticipate leasing a larger space in Philly later this spring. “We’re looking for talented people, with a very clear eye on diversity, and we’ll grow to the size that makes sense,” Walden said.

In the qui tam practice area, it helps to work in the Eastern District of Pennsylvania because prosecutors here have a reputation for handling sophisticated cases, Miller said, and “working cooperatively with whistleblowers,” who are also referred to as “relators” in legal-speak.

The U.S. Attorney’s Office in Philadelphia has recovered more than $6 billion from False Claims Act cases since the 1990s — a figure that encompasses blockbuster settlements in the pharmaceutical industry.

“There’s absolutely no substitute for a whistleblower who has first-hand knowledge of how a scheme was carried out,” said Gregory David, the office’s civil division chief. Particularly in the last three years, “we’ve made a real effort to get the relator’s attorneys’ perspective, and to think about ways we can work together collaboratively.”

In addition to its 29 civil assistant U.S. Attorneys, the office also devotes staffing to false claims cases that includes three full-time auditors, two investigators, and a paralegal who is a certified fraud examiner, along with other litigation consultants and support.

“We’re one of the few districts that has those resources,” said Charlene Fullmer, the civil division deputy chief. The office welcomes initial meetings with whistleblowers, she said, and once a qui tam is filed in the Eastern District, “it’s a no-stone-unturned approach.”

In False Claims Act (FCA) cases, a whistleblower typically begins working with a private lawyer first, and government prosecutors then decide whether to pursue the case themselves.

If the government declines, the whistleblower has a choice: Walk away, or stick with the case.

Miller has often chosen to stick with it in those instances — even though a much smaller portion of FCA whistleblower awards result from cases prosecutors declined. Last year, such cases made up 11.4% of the Justice Department’s qui tam recoveries.

“One of the things he does best is to take those cases and keep pursuing them even when the government doesn’t want to be the plaintiff,” Walden said. “And he’s had some extraordinary results.”

Take the Bristol Myers settlement. The suit was first filed in 2013, and prosecutors declined to intervene in 2017. Miller’s client, Ronald Streck, forged ahead anyway, and the federal government and states will reap the funds. It was Miller’s 10th FCA settlement in a case the government had previously declined.

The cardiac medical device case “is a perfect example where we’re picking up where the government left off,” Miller said. That suit is pending in federal court in Minnesota. The plaintiff is a physician who alleges that Boston Scientific knew its cardiac defibrillator devices had serious defects before winning FDA approval in 2008, blamed problems on doctors’ techniques, and sold the devices until regulators issued a recall in 2009.

Boston Scientific has denied those allegations in court papers. The company did not respond to a request for comment.

Miller has been working on the case for 10 years. A verdict in the case could be worth $1.5 billion, the firm said. But if their side loses, they could end up with zero for a decade’s worth of work.

“You try and make good judgements on the facts and the law,” Miller said, and pursue enough cases so “that the ones that succeed are large enough to allow you to keep doing the good work.”