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SEC Whistleblower Program Receives Over 3,000 Whistleblower Tips in FY2012


The Securities and Exchange Commission (SEC) this month released its “Annual Report on the Dodd-Frank Whistleblower Program,” which announced that in fiscal year 2012 the agency received a total of 3,001 tips from all fifty states, Washington, D.C., Puerto Rico and from forty-nine foreign countries. Under the new program, the first reward was issued on August 21 to a whistleblower who reported a multimillion-dollar fraud. The report also found that out of the 3,001 tips received, the SEC issued 143 enforcement judgments and orders. These enforcement judgments and orders were posted by the Office of the Whistleblower as “Notices of Covered Action” because their monetary sanctions exceeded $1 million. Under the Dodd-Frank Whistleblower Program, individuals are given 90 days from the time in which these notices are posted to apply for a whistleblower incentive award.

“In just its first year, the whistleblower program already has proven to be a valuable tool in helping us ferret out financial fraud,” said SEC Chairman Mary L. Schapiro. “When insiders provide us with high-quality road maps of fraudulent wrongdoing, it reduces the length of time we spend investigating and saves the agency substantial resources.”
By R. Scott Oswald
The Employment Law Group® law firm is a leader in the field of whistleblower law and has published a guide on the SEC’s new rules for the Dodd-Frank whistleblower program.

OSHA Announces Appointment of New Whistleblower Protection Program Director

On November 20, 2012, the Department of Labor’s Occupational Safety and Health Administration’s (OSHA) Assistant Secretary Dr. David Michaels announced that Beth Slavet has been appointed as the new direct or OSHA’s Whistleblower Protection Program.

Slavet has over thirty years of whistleblower enforcement experience. Prior to her appointment as director of OSHA’s whistleblower program, Slavet served as a member, vice chairman and former chairman of the U.S. Merit Systems Protection Board (MSPB) from 1995-2003. Slavet spent the last decade working in the private sector where she focused on representing whistleblowers.

The Employment Law Group® law firm has an extensive nationwide whistleblower practice representing employees who have been victims of retaliation.

Senate Approves Stronger Whistleblower Protection for Federal Employees Who Expose Government Wrongdoing

On November 13, 2012, the Senate voted in favor of the Whistleblower Protection Enhancement Act (WPEA), S. 743/H.R. 3289, a piece of legislation that would provide federal whistleblowers with stronger protection from retaliation. Overall, this bill will close many gaps in the existing law, providing additional protection to those who expose fraud, waste, abuse, and illegal activity in the federal government.

Specifically, WPEA will close loopholes which currently allow agencies to protect only the first employee who reports government misconduct and allow agencies to retaliate against reporting employees if the misconduct falls within their job duties. This bill also modifies the standards an employee must meet in order to make a disclosure to only require “reasonable belief” of misconduct.  Additionally, government scientists and Transportation Security Administrative employees will be provided with whistleblower protection, and compensatory damages will be provided to whistleblowers that prevail after an administrative hearing.

The Office of Special Counsel (OSC), which would enforce WPEA, praised the Senate’s vote and has stated that this bill will “provide OSC with all the tools it needs to effectively fulfill its mission to protect employees from unlawful retaliation.”

After over a decade of being pushed through Congress, this bill was presented to President Obama on November 16, 2012 to be signed into law.

The Employment Law Group® law firm has an extensive nationwide whistleblower practice representing employees who have been victims of retaliation.

Nuclear Whistleblower Files ERA Lawsuit against Energy Northwest

Dave Sanders, former assistant maintenance manager for the Energy Northwest Columbia Generating Station, filed suit on October 25, 2012 in the U.S. District Court for the Eastern District of Washington under the whistleblower provision of the Energy Reorganization Act of 1978 (ERA).  Sanders alleges that Energy Northwest retaliated against him for questioning the nuclear power plant’s security clearance procedures and handling of security violations.

In early 2011, Sanders asked Security Force Supervisor Bruce Pease to increase security clearance standards for temporary employees being hired for maintenance outages. When Pease refused, Sanders worked through his own chain of command in order to obtain permission.  Pease allegedly retaliated against Sanders by accusing him of wrongfully authorizing a per diem for his daughter’s boyfriend Ricky Hayes, who Sanders had recommended for a temporary position.  Hayes received a per diem because he claimed to be a South Carolina resident, but he then moved to a local residence.   Energy Northwest revoked Sanders’s credentials and terminated his employment two weeks later.

Missouri Hospital Pays $9.3 Million to Settle False Claims Act and Stark Law (Healthcare Fraud) Violations for Compensating Physicians for Referrals

The Department of Justice has announced that Freeman Health System, a healthcare provider and hospital system located in Joplin, Missouri, will pay $9,316,139 to settle allegations that it violated the False Claims Act and Stark Law for improperly compensating physicians for referrals.

The lawsuit alleged that Freeman provided seventy physicians employed at clinics operated by Freeman with incentive pay based on revenue generated by their referrals for diagnostic testing and other services provided by the hospital. Disclosures made to the U.S. Attorney for the Western District of Missouri showed that several physicians were made eligible for incentive compensation based on the value and volume of referrals they made to the hospital. The United States conducted an investigation and found that Freeman knowingly violated Stark Law by compensating these physicians. Stark Law prohibits hospitals from billing Medicare for certain services based on referrals from physicians that have a financial relationship with the hospital because this arrangement could potential create an incentive to refer patients for those procedures.

David M. Ketchmark, Acting U.S. Attorney for the Western District of Missouri, stated:

“Our priority is protecting the patients… These laws are intended to ensure that physicians make referrals for health care services based solely on the medical needs of their patients rather than any financial incentives. These laws also protect the integrity of the government-funded health care benefit programs.”

The Employment Law Group® law firm’s whistleblower attorneys have helped many clients file suit against employers that fraudulently bill the U.S. government, and have established favorable precedents under the retaliation provision of the False Claims Act.