Canadian Court Holds Employee Has No Duty to Accept Lower Position If Constructively Dismissed Via Demotion

In Farwell v. Citair, Inc., the Canadian Superior Court of Justice affirmed a trial court ruling that Citair had wrongfully dismissed Kenneth Farwell. The Court held that Farwell did not have an obligation to accept an alternative position offered to him by Citair. The alternative job was below Farwell’s most recent position; and though it had the same salary and working conditions as Farwell’s most recent position, it involved a likely reduction in bonus.

The Court found that an employee cannot be obligated to mitigate by working in an atmosphere of hostility, embarrassment, or humiliation. And since accepting a position lower than his previous position would humiliate Farwell, he did not have a duty to accept it.

Supreme Court of Hawaii Refuses to Enforce Arbitration Clause Giving Defendant “Sole Discretion” to Pick Arbitrator, Citing Lack of “Fundamental Fairness”

On October 31, 2014, the Supreme Court of Hawaii held that arbitration clauses that give a defendant “sole discretion” to select an arbitrator violate the “fundamental fairness standard” and are thus unenforceable.

In Nishimura v. Gentry Homes, Thomas and Colette Nishimura filed a class action suit against Gentry Homes. Gentry Homes filed a motion to compel arbitration, and the determination of that motion ultimately made its way to Hawaii’s highest Court.

The Hawaii Supreme Court’s refusal to enforce the arbitration provision is noteworthy for its use of the fundamental fairness standard developed by the Sixth Circuit Court of Appeals to ensure an employee’s right to a fair judicial forum. Specifically, the Hawaii Court cited the Sixth Circuit’s ruling in McMullen v. Meijer, Inc., which held that an arbitration agreement granting an employer exclusive control over a pool of arbitrators is unenforceable because the forum lacks neutrality. The Court also relied on the Sixth Circuit’s decision in Walker v. Ryan’s Family Steak Houses, Inc., which held that the symbiotic relationship between defendant and arbitration service can render an arbitration clause unenforceable.

Federal Court in Pennsylvania Holds that Claims which Violate the Stark Act Necessarily Qualify as False Claims under the False Claims Act

On August 21, 2014, Judge Kim Gibson of the Western District of Pennsylvania held that physicians had engaged in unlawful conduct under the Stark Act when they made referrals to a hospital that used a radiation imaging company in which the doctors had financial interests. United States ex rel. Bartlett v. Ashcroft, __ F.Supp.2d___ , 2014 WL 4179862 at *15 (W.D. Pa., Aug. 21, 2014). The alleged pay scheme worked as follows: 1) physicians invested in Tri-County Imaging Associates, Inc., which performed radiation services, including CT scans, for Tyrone Hospital; 2) the same physicians referred patients to Tyrone Hospital, which almost exclusively used Tri-County for CT scans; and 3) Tyrone Hospital paid Tri-County, which, in turn, paid the same physicians their share of profits. Id. at *9.

The whistleblowers (Relators) in Bartlett, both former employees of Tyrone Hospital, filed a qui tam (false claims) action against Tri-County, Tyrone Hospital, and the physicians, alleging violations of the Stark Act, the Anti-Kickback Statute, and the False Claims Act. Id. at *1. The Court found that the Defendants could not show an applicable exception to the Stark Act and that the physicians had made “self-referrals” to Tyrone Hospital, which were prohibited under the Stark Act. Id. at *11-14.


Supreme Court Weighs Scope of Whistleblower Protection Act

The U.S. Supreme Court next week will hear arguments in Department of Homeland Security v. MacLean, a case that could determine whether government officials are free to punish whistleblowers who disclose information that’s been labeled as “sensitive” — even if the information was never listed for protection by any law.


Cardiology Group Will Pay $1.3 Million to Settle Claims of Improper Referrals

The U.S. Department of Justice (DOJ) said it obtained a $1.3 million settlement of allegations that a cardiology practice violated the False Claims Act and the Stark Act by knowingly compensating its physicians based on the number of tests that the physicians referred.

The Stark Act prohibits a physician from referring Medicare patients for designated health services to an entity with which the physician has a financial relationship (unless an exception applies). The Stark Act does not permit a practice to compensate a physician based directly on the volume or value of the physician’s referrals for services not personally performed by the ordering physician.

The DOJ received a tip that Cardiovascular Specialists, P.C., d/b/a New York Heart Center (NYHC),compensated its physicians in a manner that violated the Stark Act. From September 2007 through August 2008, NYHC allegedly determined the compensation for its physicians by taking into account the value of the physicians’ referrals for nuclear scans and CT scans. The government’s investigation revealed that NYHC knew that this compensation formula could have violated the Stark Act.

“Medical decisions should always be made on the basis on what’s best for the patient’s health, not the physician’s finances. The compensation system in place in this case had the potential to influence medical judgment, which would be unacceptable,” said Thomas O’ Donnell, Special Agent in Charge of the U.S. Department of Health and Human Services Office of Inspector General (HHS-OIG), New York region.

Panel Finds Whistleblower Retaliation Against WMATA Employee Who Reported Technology Project

Public records obtained by a nonprofit website- Government Attic, reveal that the Washington, D.C. Metropolitan Area Transit Authority (WMATA) Whistleblower Retaliation Hearing Panel found that a former employee who blew the whistle on a troubled technology project was the victim of retaliation. This case is the first case since the panel was formed in 2010 in which the agency agrees that WMATA violated laws prohibiting whistleblower retaliation.

The panel believes that the former employee’s February 2010 termination was in part due to his cooperation with the agency’s Office of Inspector General (OIG) audit of a $6.9 million information technology project aimed at fixing problems with People Soft software, which is used by Metro.

Although the panel did not reinstate the employee, it ruled that the former employee is a “capable person” and should be given “preferred consideration” for future openings for which he qualifies.

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