(LEGAFI) -- A whistleblower lawsuit filed against Family HealthCare Network four years ago may be reaching an out-of-court settlement.

The Family HealthCare whistleblower lawsuit alleges that the nonprofit organization and its CEO and former CFO intentionally defrauded the U.S. government by using false information and follow-up data to receive millions of dollars in competitive grants awarded by the Health Resources and Services Administration (HRSA).

Whistleblower Sharman Wood, a former grants management coordinator at Family HealthCare from November 2002 to March 2004, alleged in the whistleblower lawsuit that FHCN officials knowingly submitted “false and fraudulent” claims to the federal government in order to obtain approximately $4.3 million in two competitive HRSA grants.

“In each application, as required by the grants, Defendants submitted detailed budget and narrative information setting forth its plan to hire additional staff and extend the operating hours at two FHCN clinics. However, Defendants never intended that the grant funds would be used for their required purposes. Instead, from the outset, Defendants intended that the funds would be applied to FHCN's ongoing operating expenses, which Defendants knew was expressly prohibited by the grant award," the FHCN whistleblower lawsuit states.

 

"Defendants also wrongly harassed Wood for her role in exposing and complaining about the fraud."

Wood claims that after being rebuffed by her immediate supervisors, she reported her allegations to the government in February 2004. She resigned from FHCN in March 2004.

After investigating Wood’s claims for more than a year, the U.S. Attorney’s office declined to intervene in the case. A trial is set for June 2012 in civil court. Attorneys in the case confirmed to Valley Voice newspaper that settlement negotiations are ongoing and may be finalized before the trial.

Successful “qui tam” whistleblower lawsuits, which are filed by a whistleblower on behalf of the U.S. government, can net the whistleblower between 15 to 30 percent of the funds recovered if the government joins the case.