The whistleblower case the government tried to nix keeps coming back
Academy Mortgage Corporation's $38.5 million whistleblower settlement produced two Ninth Circuit rulings on April 6, 2026, both tied to the ongoing fight over attorneys' fees.
If you thought this case was done, it is not. The Thrower whistleblower case just generated a pair of appellate decisions on the same day, and the full story behind them is one every mortgage professional should know.
Here is what happened. In 2016, Gwen Thrower, a former mortgage underwriter at Academy Mortgage Corporation, filed a lawsuit against the company. She alleged that Academy had been falsely certifying its compliance with the Federal Housing Administration's Direct Endorsement Program – the program that lets approved lenders underwrite and endorse residential mortgages for government insurance without government review. When borrowers default on those loans, the Department of Housing and Urban Development picks up the tab. So when a lender games the certification process, the government is the one left holding the bag.
Thrower's case got off to a rough start. The government reviewed the allegations and decided not to step in, telling her legal team there was not enough evidence of systemic fraud at Academy. Most plaintiffs would have walked away at that point. Thrower did not. Her attorneys at Thomas & Solomon, a seven-person firm out of Rochester, New York, launched their own investigation. They spent weeks building a call sheet of former Academy employees across the country, cold-calling them and conducting interviews about the company's underwriting practices. That investigation turned up new evidence, and the firm filed an amended complaint.
Then things got worse before they got better. Academy moved to have the case thrown out. And in an unusual move, the government joined in – not on Thrower's side, but on Academy's. The government filed its own motion to dismiss, arguing the case was not worth the cost. At the time, no court had ever allowed a whistleblower lawsuit to continue over the government's objection. Thrower's attorneys fought both motions and won. The district court denied both.
By late 2022, Academy settled for $38.5 million. Nearly $27 million went back to the government. Thrower received about $11.5 million.
That should have been the end of it. But the settlement left the question of attorneys' fees unresolved. In mid-January 2023, the parties agreed to dismiss the fraud claims, but Thrower's fee claims were expressly carved out and left pending. On January 27, 2023, the district court approved the settlement and entered an order reflecting that arrangement. Thrower then sought over $13 million in fees and expenses.
Sixteen months later, on May 31, 2024, the district court decided the fee dispute. It calculated a base fee of roughly $4.37 million for Thomas & Solomon's work and then applied a 1.75 multiplier, pointing to the exceptional outcome and the firm's investigative efforts. The total attorneys' fee award came to approximately $8.59 million, plus $89,437.77 in expenses.
Academy appealed the multiplier. And Thrower filed her own appeal, arguing that interest on the fee award should have been running since January 2023, when the settlement was approved, rather than from May 2024, when the fees were actually calculated. Both appeals were argued on the same day before the same Ninth Circuit panel, which issued two separate rulings on April 6, 2026.
On the multiplier, the court reversed. It found that the two reasons the district court gave for the enhancement – the unusual result and the extensive investigation – were already accounted for in the base fee calculation. The hours billed covered the investigative work. The hourly rates reflected the quality of the attorneys. Stacking a multiplier on top of that, the court concluded, was not supported. The panel also noted that the district court never explained why it picked 1.75 as the multiplier rather than some other number. One judge partially disagreed. Judge M. Smith agreed the 1.75 figure was not adequately explained but argued the district court was within its rights to award some enhancement. He endorsed the lower court's characterization of the firm's work as substantial, successful, and heroic, and pointed out that the result – surviving both a defendant's and the government's attempts to kill the case, then securing a $38.5 million settlement – was genuinely unprecedented. The multiplier question now goes back to the district court.
On the interest question, the court ruled against Thrower. The issue turned on what counts as a money judgment for purposes of accruing interest. The Ninth Circuit held that a court order must identify the parties and specify a definite dollar amount before interest starts running. The January 2023 order approving the settlement did not do that – it expressly left the fee amount to be determined later. Only the May 2024 order, which set the fee at $8.59 million, met that standard. The court acknowledged that several other federal appeals courts have taken a different approach, allowing interest to run from the moment a party becomes entitled to fees even if the amount has not been determined. The Ninth Circuit disagreed, siding with the plain text of the statute and joining the Third, Seventh, and Tenth Circuits in requiring a fixed dollar figure before the interest clock starts.
For mortgage professionals, the fees fight is a sideshow. The real takeaway sits in the underlying case. Academy's experience shows that FHA Direct Endorsement Program certifications carry serious financial risk. A single former mortgage underwriter with firsthand knowledge turned into a whistleblower who secured a $38.5 million recovery – even after the government tried to shut the case down. That is not a scenario any lender wants to find itself in. And it is a reminder that compliance shortcuts in the endorsement process can have consequences that outlast the loans themselves.
