ERMI’s Claim Whistleblower Gave Flawed Legal Advice Can Continue

Orthopedic device maker ERMI LLC can advance allegations that its former chief compliance office—turned whistleblower—breached a fiduciary duty by not providing the quality of legal advice the company expected.

Elizabeth A. Cooley, who filed a False Claims Act suit against the company in 2020, argued that ERMI’s counterclaim would violate public policy by discouraging whistleblowers from coming forward with allegations of government fraud. Cooley’s suit says ERMI falsely told federal health-care programs that the company was operating in Florida with a valid state license.

But the counterclaim can proceed because the legal advice at issue concerning regulatory compliance and litigation ...