The federal government and the New Jersey government eventually intervened in Dr. DePace`s lawsuit to settle the claims before the lawsuit. As part of the settlement agreement, Cooper agreed to pay a total of $12,600,000 to the United States and New Jersey, of which the United States and New Jersey agreed to pay a total of $2,394,000 to Dr. DePace. Cooper also agreed to pay „as full payment“ for attorneys` fees in the amount of $430,000 „pursuant to subsection 3730(d)(1)“. The retainer agreement between DePace and its lead counsel provided that in the event of recovery prior to litigation, Lead Counsel would receive 40% of Relator`s share paid to DePace and would also have the right to recover and withhold the defendant`s attorneys` fees. After a deal of more than $11 million, the relater`s personal lawyer challenged the Lead Counsel`s retainer agreement, arguing that these compensation rules were unenforceable. During the course of the dispute, the parties agreed to mediation with a U.S. judge. Finally, the parties reached an oral settlement agreement in a public court whose terms were discussed and accepted „on the record“ by the federal government, the State of California, the whistleblowers and the defendant supplier. The transaction included payment of an amount not mentioned by the defendant, dismissal of tam`s claim and a related case filed by the supplier against the State of California, a review of the provider by the state`s Medicaid program, and the use of the Department of Justice`s „standard“ written settlement agreement for the Qui Tam cases. The oral settlement agreement did not terminate the whistleblowers` claims, for which the federal government and the state of California did not intervene, and the oral settlement did not resolve the whistleblowers` request for attorneys` fees.
Referring to the Supreme Court`s decision in the civil law appeal Venegas v. Mitchell, 495 U.S. 82 (1990), the Borough Court rejected the first and second arguments on the basis that „[a royalty transfer law] controls what the losing defendant must pay, not what the dominant plaintiff must pay to his attorney“ and „deprive applicants of the opportunity to pay more than the legal tax if necessary to obtain the attorney of their choice, the purpose of the Federal False Claims Act, to allow these plaintiffs not to move forward „to provide competent legal assistance.“ Id. at *6-*7. The court catalogued the many district courts that had allowed contingency fee plans in FCA cases in situations where the attorney also recovered the defendant`s legal costs….