Social media may be part of your lawsuit.
On January 7, 2015, a three judge panel sitting on Florida’s Fourth District Court of Appeals ruled that a plaintiff had to produce photos she had posted on Facebook. The court granted Defendant Target Corporation’s request to compel Plaintiff Maria Nucci to produce the photos.
Prior to this decision, Florida trial courts were split as to whether information posted on social media sites is discoverable in a lawsuit.
When Target moved to compel Nucci to produce photos from her Facebook page, Nucci argued that, as a Facebook user, she had a reasonable expectation of privacy. Nucci cited the fact that Facebook generally prevents the public from accessing her page without her permission.
Rejecting Nucci’s argument, the Florida Court held that Facebook users have only very limited privacy rights. The court noted that Facebook requires users to acknowledge their limited rights when they sign up for the site. The court then held that photos depicting Nucci’s quality of life before and after an accident at a Target store were highly relevant to the lawsuit—and discoverable.
It remains to be seen how other Florida courts will follow and apply the decision by the Florida Fourth District Court of Appeals.
On January 16, 2015, the U.S. Court of Appeals for the District of Columbia Circuit held in Williams v. Johnson that the District of Columbia Whistleblower Protection Act (DCWPA) protects employees who cooperate in good faith in an investigation. In April 2005, Christina Williams was tasked by her employer, the D.C. Department of Health, Addiction Prevention and Recovery Administration (APRA), with overseeing the implementation of ACIS, a new client information system. Williams was later required to testify before the D.C. Council regarding the implementation. Williams testified that the program was not useful and that its rollout was behind schedule. Williams’s testimony contradicted more optimistic testimony given by her supervisors.
The supervisors harassed Williams after her testimony. Williams sued under the DCWPA and eventually resigned her position with APRA. At trial, a jury determined that Williams’s testimony warranted protection under the DCWPA and awarded her $300,000.
On appeal by APRA, the D.C. Court of Appeals affirmed the jury’s verdict. The Court of Appeals held that a reasonable jury could view the statements Williams made in her testimony as disclosing an abuse of authority or a violation of law and thus warranting protection under the DCWPA. The Court noted that Williams testified truthfully, knowing that her statements conflicted with what her supervisors wanted her to say.
In its recent FY 2016 Budget Request, the Securities and Exchange Commission touted the success of its Whistleblower Program and proposed increased funding for the program to help with an increased workload caused by a surge in whistleblower tips. The SEC’s Enforcement Division, in the 2016 Budget Request, revealed that it had received approximately 3,600 tips in FY 2014 through the Whistleblower Program, the largest number of tips ever received by the SEC. The SEC also reported in its request that it had granted the largest number of rewards in its history to whistleblowers in 2014.
Under the SEC’s Whistleblower Program, a whistleblower may receive a reward of between 10 and 30 percent of penalties collected by the SEC if the whistleblower provides information leading to a penalty of $1,000,000 or more. In fact, in September 2014, the SEC announced a reward of more than $30 million to a whistleblower.
The Budget Request praises the effectiveness of the program, stating, “Whistleblowers can often provide high-quality information that allows the Division to more quickly and efficiently detect and investigate alleged violations of the law.” The Request predicts that the surge in rewards, including the September 2014 reward of more than $30 million, will spur more tips and ultimately allow the Enforcement Division to “bring enforcement actions against violators where it would otherwise have not had sufficient information to do so.” The SEC proposes increased funding to hire more staff to handle the increased workload.
The Request demonstrates the success of the Program in protecting investors by ensuring a fair marketplace. It also shows the tangible impact that encouraging whistleblower activity has had in advancing the SEC’s mission. Finally, the Request’s proposal for additional funding, if approved, will allow the SEC’s Whistleblower Program to investigate more tips and prosecute wrongdoing more quickly and efficiently, and to reward more whistleblowers for providing important information to the government.
Fourth Circuit Holds that Disclosure to the Government is Not a “Public Disclosure” and Reinstates Long-Running Qui Tam Case
The United States Court of Appeals for the Fourth Circuit recently held that a disclosure outside of the government is required to trigger the False Claims Act’s public disclosure bar. The FCA’s public disclosure bar requires courts to dismiss a qui tam action if the action is based on information already made public, unless the relator bringing the action was the original source of the information.
In United States ex rel. Wilson v. Graham County Soil & Water Conservation Dist., Relator Karen Wilson alleged fraud in a federally-funded storm cleanup program in North Carolina. After discovering the fraud, Wilson wrote a letter to a government official disclosing her concerns. A few months later, a government agency prepared an audit report that included the information disclosed by Wilson. The report was distributed to other state and federal law agencies. Wilson’s case survived two trips to the Supreme Court and was most recently dismissed in district court for lack of jurisdiction based on the public disclosure bar.
The district court relied on a Seventh Circuit case to dismiss Wilson’s complaint, holding that disclosure to a public official is sufficient to trigger the bar, absent a disclosure to the public at large. In its February 3, 2015 decision, the Fourth Circuit rejected the Seven Circuit’s approach and, falling in line with five other circuits, reasoned that Congress did not intend public disclosure to extend to disclosure to the government.
On February 5, 2015, Maryland proposed a new, expanded state False Claims Act that would better allow Maryland to deter and recover damages for fraud against the state. Maryland Attorney General Brian Frosh urged adoption of the Act, which would expand Maryland’s current limited version that only applies to Medicaid and health-care related fraud.
Under the proposed False Claims Act, Maryland may receive triple the damages for its losses, while the whistleblower who initiates the claim is allowed to receive a portion of the state’s recovery and is also protected against retaliation in the work place. The state’s current version of the Act has allowed it to recover $28 million a year in each of the past two years from Medicaid-related cases alone. Adopting the proposed expansion will allow Maryland to achieve greater success in deterring fraud and recovering funds, much like the federal government.
Under the federal False Claims Act, the federal government recouped nearly $5 billion in 2012. To incentivize states to adopt laws more closely mirroring the federal False Claims Act, the federal government, under the Deficit Reduction Act of 2005, allows states to collect an additional 10% of federal Medicaid funds recovered through a state action.
CareAll Management, a home healthcare provider based in Nashville, Tennessee, recently agreed to pay $25 million to settle charges that it violated the False Claims Act by submitting false and “upcoded” billings to Medicare and Medicaid. The settlement resolves a suit filed in the U.S. District Court for the Middle District of Tennessee. The suit alleged that CareAll overstated the severity of patients’ conditions to increase billings (upcoding) and billed for services that were not medically necessary and were rendered to patients who were not homebound. CareAll is one of the largest home healthcare providers in Tennessee.
As part of the settlement, the relator, Toney Gonzales, will receive more than $3.9 million as his share of the total recovery. Gonzales brought the lawsuit against CareAll under the qui tam provisions of the False Claims Act, which allows private citizens to sue on behalf of the United States for fraudulent uses of federal funds (including Medicare and Medicaid) and to share in any recovery.
The CareAll settlement illustrates efforts by the Department of Justice (DOJ) to make home healthcare fraud a bigger enforcement priority. In many cases, the government is criminally prosecuting the individuals responsible for the fraud in addition to the corporate entity. In the same week that it announced the CareAll settlement, DOJ reached multi-million dollar settlements involving three other home healthcare fraud schemes. These settlements mark the success of the Health Care Fraud Prevention and Enforcement Action Team (HEAT) initiative, a partnership between the Attorney General and the Secretary of Health and Human Services to increase efforts to prevent Medicare and Medicaid fraud.
The U.S. Court of Appeals for the Sixth Circuit recently ruled that federal statutes do not protect a job applicant from retaliation by a prospective employer based on whistleblowing at a previous employer. The decision puts the Court at odds with long-standing agency interpretation of the Energy Reorganization Act (ERA) by the Department of Labor (DOL), as well as assumptions underlying decisions in several other federal circuit Courts of Appeals. Gary Vander Boegh worked for the Department of Energy (DOE) for many years as landfill manager at the Paducha Gaseous Diffusion Plant (PDGP) under WESKEM, LLC, a subcontractor to Bechtel Jacobs Company (BJC). While working for WESKEM, Vander Boegh engaged in a range of protected whistleblowing, including reporting environmental violations. In 2005, DOE awarded the PGDP contract to Paducah Remediation Services, LLC (PRS). EnergySolutions subcontracted with PRS to provide waste management services. Vander Boegh applied to EnergySolutions to remain the landfill manager, but EnergySolutions hired another candidate. Vander Boegh filed a complaint against BJC, PRS, and EnergySolutions with DOL, alleging retaliation for prior protected conduct in violation of six federal statutes.
After the Sixth Circuit remanded a previous appeal by Vander Boegh, the district court again granted summary judgment to the one remaining defendant, EnergySolutions, holding that Vander Boegh lacked standing because he was an applicant and not an employee of EnergySolutions. On appeal, the Sixth Circuit affirmed, finding that Vander Boegh lacked standing under the ERA and the False Claims Act (FCA), and that the court thus did not have subject matter jurisdiction over Vander Boegh’s claims under four other federal environmental statutes: The Safe Drinking Water Act (SDWA), 42 U.S.C. § 300j-9(i); the Clean Water Act (CWA), 33 U.S.C. § 1367; the Toxic Substances Control Act (TSCA), 15 U.S.C. § 2622; and the Solid Waste Disposal Act (SWDA), 42 U.S.C. § 6971.
In its opinion filed on November 18, 2014, the Sixth Circuit noted that the Third Circuit had “assumed, without deciding, that applicants are employees under the ERA,” but declined to follow the Third Circuit’s reasoning. Vander Boegh argued that the term “employee” is ambiguous and the Court should thus apply Chevron deference to DOL’s interpretation of the term in the ERA and adopt the agency’s long-standing interpretation. But the Court reasoned that since the term “employer,” but not “employee,” was defined in the statute, it should be guided by the dictionary definition of “employee.” With that reasoning, the Court endorsed the following definitions of “employee” under the ERA: “[s]omeone who works in the service of another person (the employer) under an express or implied contract of hire, under which the employer has the right to control the details of work performance,” and “[a] person working for another person or a business firm for pay.”
The Court concluded that, by these definitions, Vander Boegh was not an employee because he never worked for EnergySolutions. It added that Congress had included, in its ERA definition of employer, “applicants” for Nuclear Regulatory Commission licenses, indicating that had it intended to include applicants within the definition of “employee,” it would have. The Court added that courts should “presume Congress intended a term to have its settled, common-law definition” absent a contrary indication in the statute.
But the Court did not address two other viable theories of statutory interpretation. The first is that Congress simply failed to define the term “employee” in the ERA, thus creating a statute with ambiguous language. The accepted doctrine of Chevron deference to agency interpretation in such instances would carry no weight if Congress intended Courts to defer to dictionary or common law definitions when faced with unintended ambiguity. The second possibility – that Congress knowingly left the term undefined, expecting the agency to use its discretion in defining it – even more strongly supports Chevron deference.
The Court also failed to engage DOL’s reasoning for including applicants within the definition of “employees.” In Samodurov v. General Physics Corporation, the DOL Office of Administrative Appeals stated, “It is well established that the ERA covers applicants for employment.” The DOL reasoned that “[a] broad interpretation of ‘employee’ is necessary to give full effect to the purpose of the employee protection provision, which is to encourage reporting of safety deficiencies in the nuclear industry.” In Vander Boegh, the Sixth Circuit did not address either the DOL’s long-standing and settled interpretation of employee under the ERA, or DOL’s reasoning based on the congressional intent underlying the statue.
Finally, in addition to the Third Circuit opinion cited but not followed by the Court, other circuits have assumed that applicants are protected under the anti-retaliation provision of the ERA. The Fifth Circuit applied a three-part test to decide whether job applicants were protected under the ERA in Williams v. Administrative Review Board. In Hasan v. Department of Labor, the Tenth Circuit upheld the dismissal of an applicant’s claim under the whistleblower provision of the ERA, but not because the plaintiff was an applicant. Like the Fifth Circuit in Williams, the Tenth Circuit laid out the elements the applicant needed to show to sustain a claim under the act. At least three other circuits have thus deferred to DOL’s determination that applicants are within the definition of employee under the ERA.
For these reasons, the Sixth Circuit’s limited reading of “employee” under the ERA (and, by extension, other federal whistleblowing statutes) to exclude applicants is unlikely to be followed by other circuits.
On December 17, 2014, the Court of Appeals for the Eighth Circuit affirmed a lower court ruling ordering Bayer Corporation to reinstate a former pharmaceuticals sales representative, Mike Townsend, wrongfully terminated by Bayer in violation of the anti-retaliation provisions of the False Claims Act (FCA), 31 U.S.C. § 3730(h). Bayer had opposed the court-ordered relief, arguing that reinstating Townsend constituted an abuse of discretion by the lower court because Bayer had planned to eliminate Townsend’s position in a reorganization and the FCA did not permit reinstatement in those circumstances.
In April 2009, Townsend disclosed to his manager that a Bayer customer, Dr. Kelly Shrum, was committing Medicare fraud by buying a cheaper Canadian version of a contraceptive device and submitting reimbursement claims for the more expensive FDA-approved contraceptive. Townsend eventually reported Shrum to the Arkansas attorney general.
On May 5, 2010, Bayer fired Townsend, claiming he couldn’t do his job because his credit card had been deactivated. At trial, Bayer argued that the deactivated card prevented Townsend from entertaining physicians. The jury rejected Bayer’s stated reason for terminating Townsend as pretextual and found Bayer fired Townsend in retaliation for reporting Shrum’s Medicare fraud.
Judge James M. Moody of the District Court for the Eastern District of Arkansas ordered Bayer to reinstate Townsend. The Eighth Circuit affirmed reinstatement as an appropriate remedy for the retaliatory firing, given that Townsend had no performance issues, enjoyed working at Bayer, and there was no evidence that Townsend’s coworkers would harass him upon his return. The Court rejected Bayer’s planned reduction in force as an affirmative defense to bar Townsend’s reinstatement. The Court held that Bayer did not have to reinstate Townsend to the exact same position, but, at a minimum, had to put him in a position with “the same seniority status” he would have had but for Bayer’s unlawful conduct.
Arbon Equipment Corporation and its holding company, Rite-Hite Holding Company, agreed to pay $4 million to settle a suit alleging they violated the federal and California False Claims Act by failing to pay employees prevailing wages on certain government-funded projects. A former employee, Mark Brooks, filed the qui tam suit in the U.S. District Court for the Southern District of California. Brooks and other employees installed and serviced loading dock equipment at facilities owned by the federal or California state government. Arbon and Rite-Hite, as part of the settlement, also agreed to change their compensation practices and policies.
The Service Contract Act and the Davis-Bacon Act require contractors and subcontractors working on certain government-funded projects to pay employees specified hourly wages that are higher than minimum wage and often higher than wages paid for similar work on private projects. Courts recognize that false certifications regarding the mandated payments can form the basis for qui tam actions.
Because of Brooks’ decision to blow the whistle, he will receive an award of $1,164,000. Additionally, Arbon and Rite-Hite Holding have agreed to pay approximately $1,500 to each current and former employee who was not paid the required wages.
Department of Labor Administrative Review Board Upholds Compensatory Damages Award Based on Unrebutted Psychiatrist Testimony
On November 3, 2014, the U.S. Department of Labor Administrative Review Board ruled that a pilot was entitled to compensatory damages for retaliation by Continental Airlines for his protected refusal to fly a plane without an inspection.
The 2014 ARB decision upheld the determination made by an administrative law judge on remand from a previous ARB decision. On January 31, 2012, the ARB had affirmed the earlier ALJ decision, which found that Continental Airlines retaliated against Roger Luder. However, in its 2012 decision, the ARB held that the ALJ had improperly granted both back and front pay to Luder and remanded the case to determine the proper amount of damages.
Luder’s claims date back to 2007, when he and a co-pilot were scheduled to fly a Continental flight from Miami to Houston. Before departure, Luder’s co-pilot informed him that the plane had experienced turbulence during the previous flight that had gone unreported. Federal regulations require that planes be inspected after experiencing turbulence. Accordingly, Luder insisted that the plane be inspected prior to taking off and wrote a log entry regarding the turbulence.
As a result, Continental temporarily suspended Luder and issued him a “termination warning” letter citing “unprofessional behavior.” Luder eventually claimed to suffer from an array of ailments arising from the retaliation, and claimed those ailments caused him to fail a flight simulator test and be disqualified from flying.
Luder brought the suit under the whistleblower protection provision of the Wendell H. Ford Aviation Investment and Reform Act for the 21st Century, also known as AIR 21, and its implementing regulations, 29 C.F.R. Part 1979 (2013). The ARB has authority to issue final agency decisions under AIR 21. The November 3, 2014 decision on damages was ARB Case No. 13-009.
The 2012 ARB decision had determined that Luder’s actions constituted protected activity under AIR 21 and that Continental’s suspension of Luder constituted an adverse action. The ALJ had awarded Luder compensatory damages for posttraumatic stress disorder, anxiety, and depression resulting from Continental’s retaliation for his refusal to fly an uninspected and potentially damaged plane. The ALJ relied on testimony by Luder and a psychiatrist, Dr. Shaulov. The ARB remanded to the ALJ for determination, under a preponderance of the evidence standard, that the retaliation caused the harm.
The ALJ entered a Recommended Decision and Order on Remand, determining that Luder proved that the retaliation caused his psychiatric condition that prevented him from returning to work. The ALJ found “ample support for causation . . . when the entire record, including the credible testimony of Dr. Shaulov, Dr. Jorgenson, and Luder, is considered.”
A dissenting opinion in the ARB’s recent 2014 decision argued that a judge should still examine undisputed expert testimony under Federal Rule of Evidence 702 for “sufficient facts or data that properly applied reliable principles and methods,” but stopped short of advocating a Daubert hearing.
The U.S. Department of Justice announced that taxpayers recovered nearly $6 billion from False Claims Act (FCA) cases in fiscal year 2014.
More than half the total came via lawsuits filed by individuals. Under the FCA’s qui tam provision, whistleblowers who uncover fraud may sue on behalf of the government — and get up to 30% of recovered funds as a reward.
In FY 2014, the Government paid out $435 million in such awards. It was the second consecutive year in which more than 700 qui tam suits were filed, and the first time FCA recoveries exceeded $5 billion.
Federal District Court Refuses To Dismiss Case Based on the Public Disclosure Bar When the Government Has Opposed Dismissal On that Basis
In United States ex rel. Karin Berntsen v. Prime Healthcare Services, Inc. et al., the U.S. District Court for the Central District of California denied Prime Healthcare’s motion to dismiss, ruling that a False Claims Act qui tam action cannot be dismissed under the “public disclosure bar” if the Government has opposed dismissal on that basis.
The False Claims Act prevents a private party from bring a qui tam action where the alleged fraud is already publicly known (this is often referred to as the public disclosure bar). In this case, Karin Berntsen, the relator, alleged that she was the original source of the information underlying her qui tam complaint and that she made these disclosures to the government before filing her lawsuit. But Prime Healthcare and the other defendants moved to dismiss, in part, because they claimed that Berntsen was not the original source. In support of their motion, they identified a number of publicly-available reports and articles regarding their allegedly fraudulent practices.
The relator argued that because the Government opposed the dismissal of the complaint on the basis of the public disclosure bar, the district court was barred from dismissing the complaint on that basis. The court agreed with the relator. The court also acknowledged a lack of legal authority on the issue and reviewed Congress’s intent in creating the public disclosure bar: to strike a balance between encouraging private persons to root out fraud and stifling parasitic lawsuits. Since the Government, through its opposition to the dismissal, had indicated that it supported the relator’s qui tam action, the court found that it would be “illogical” for it to conclude that the relator’s action was parasitic, and thus allowed the relator’s qui tam action to proceed.
The Department of Justice recently released recommendations from a report by the Attorney General that reviewed protections for FBI whistleblowers. The DOJ has already begun implementing the recommendations and will implement additional changes over time. Specifically, the report proposes the following changes:
– Provide voluntary alternative dispute resolution in FBI whistleblower cases
– Award compensatory damages for retaliation
– Expand the list of persons to whom a protected disclosure may be made
– Report findings of wrongdoing to the appropriate authority
– Provide authority to sanction violators of protective orders
– Expedite the OARM process through the use of acknowledgement and show cause orders
– Equalize access to witnesses
– Expand resources for OARM to reduce the time needed to adjudicate FBI whistleblower cases
– Publish decisions with appropriate redactions
– Publish annual reports to be submitted to the President
Senators Grassley and Wyden, who initially inquired about the Attorney General’s report in August 2014, have generally endorsed the new FBI whistleblower protection recommendations and are optimistic that the recommendations will provide better protection for whistleblowers. The recommendations and changes reflect a need to pay special attention to whistleblowers who have access to classified information and to ensure that they are protected under the law.
Whistleblower Receives $1.2 Million in $6 Million Settlement of Qui Tam Action Against Caremark For Failing to Reimburse Medicaid for Drug Costs Covered by Both Medicaid and a Private Health Plan
The Department of Justice announced that Caremark, a pharmacy benefit management (PMB) company, will pay $6 million to settle allegations that it violated the False Claims Act; and the former Caremark employee who blew the whistle on the violations will receive $1.2 million from the settlement. Caremark allegedly knowingly failed to reimburse Medicaid for the cost of drugs for beneficiaries who were covered by both Medicaid and a private health plan. These patients are referred to as “dual eligible” and their private insurer or PMB must assume the cost of the prescription drugs rather than submit claims to Medicaid.
If Medicaid pays for the drugs when a private insurer or PMB should have assumed the cost, the private insurer or PMB must reimburse Medicaid. Caremark caused Medicaid to pay the drug costs when Caremark should have paid.
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.
Federal District Court in New York Holds that Retaliation under FRSA is Governed by AIR 21’s Burden-shifting Framework
The U.S. District Court for the Northern District of New York recently denied summary judgment in a suit filed by Robin Young against his former employer, CSX Transportation. Young alleged that CSX violated the Federal Rail Safety Act’s anti-retaliation provisions when it fired him after it was informed that he had filed a complaint with the Occupational Safety and Health Administration (OSHA). Young’s complaint to OSHA alleged that CSX told him to “refrain from providing extensive testimony about related safety issues” during a formal hearing with the Federal Railroad Administration; and then fired him because he refused to comply with this order.
Pennsylvania Pharmaceutical Company Agrees to Pay $56.5 Million to Settle Allegations It Engaged in Deceptive Marketing Practices
Pennsylvania-based pharmaceutical company, Shire Pharmaceuticals LLC, recently agreed to pay $56.5 million to resolve civil allegations that it violated the False Claims Act (FCA). Shire allegedly made false and misleading statements when marketing several drugs, including Adderall XR, the well-known drug used to treat attention deficit hyperactivity disorder (ADHD) in children and adults.
OSHA Finds BNSF, Rail Company Owned by Berkshire Hathaway, Liable in Three Retaliation Cases and Awards Damages to Employees
The Department of Labor’s Occupational Safety and Health Administration found a railway company owned by Warren Buffett’s Berkshire Hathaway liable in three retaliation complaints brought by employees. OSHA ordered Berkshire Hathaway’s Burlington Northern Santa Fe Railway Co. (BNSF) to pay more than $272,000 to these employees, plus various non-monetary relief.
OSHA found that BNSF violated the Federal Railroad Safety Act (FRSA) when it reprimanded a conductor who missed work in accordance with a physician’s treatment plan. In addition to ordering BNSF to pay $12,000 in monetary damages ($2,000 in compensatory damages and $10,000 in punitive damages, plus attorneys’ fees), OSHA ordered BNSF to purge the employee’s personnel record of all disciplinary information, and to distribute whistleblower rights information to all employees.
The ARB Reaffirms the Speegle Standard, which Requires an Employer to Show It would have Punished a Whistleblower Absent Any Protected Activity
In previous posts on May 15 and September 3, we discussed the Department of Labor Administrative Review Board’s new Speegle test—which places a tougher burden on employers to justify any adverse actions against whistleblowers. The ARB recently reaffirmed the Speegle standard in Cain v. BNSF Railway Co.
Cain involved the following facts: Shortly after an on-the-job traffic accident in January 2010, Christopher Cain filed a report to his employer, BNSF Railway, about minor injuries he sustained. A few weeks later, Cain’s symptoms had not disappeared, and he sought medical treatment. His doctors said his injuries were much worse than originally thought, including broken ribs and fluid around his lungs. Cain filed a second report about the more severe injuries, although his supervisors discouraged him from doing so. A short time after Cain filed his second report, BNSF opened an investigation into potential wrongdoing by Cain related to the accident. BNSF ultimately found that Cain violated its reporting rule by failing to report the full extent of his injuries in his first report. Cain then filed a complaint for whistleblower retaliation under the Federal Rail Safety Act of 1982 (FRSA).
Virginia Attorney General’s Office Intervenes in $1.15 Billion Suit Against 15 of the World’s Largest Banks in an Action Under the Virginia False Claims Act
Like most states, Virginia has its own state statute that mirrors the federal False Claims Act and allows whistleblowers to collect rewards for bringing to light fraud against the state government. Virginia’s Fraud Against Taxpayers Act, like its federal counterpart, permits the state to intervene in cases brought by qui tam (false claims) relators. On September 16, 2014, Virginia’s Attorney General Mark Herring did just that, filing a 317 page complaint alleging that fifteen of the world’s largest banks knowingly misrepresented the financial stability of mortgage securities to the state’s retirement system in the years leading up to the financial crisis in 2007 and 2008.
The complaint alleges that as a direct result of the banks’ misrepresentations, the state’s retirement system purchased doomed mortgage securities and ultimately lost $383.91 million. The Commonwealth seeks $1.15 billion in damages from the banks (three times the amount of actual damages, as permitted by the statute), plus civil penalties for each violation. The relator was Integra REC, LLC, a financial modeling firm. This historic lawsuit demonstrates the price that can be paid for fraud against taxpayers and the government. And because the relator may receive between 15 to 25 percent of the ultimate settlement ($172.5 million to $287.5 million if the full $1.15 billion sought is awarded), it also demonstrates the incentives for whistleblowers to expose fraud.
DOJ Aggressively Pursues and Settles False Claims Actions Against Doctors and Clinical Labs for Kickbacks and Medically Unnecessary Testing
Over the past two years, the Department of Justice has announced several large settlements involving alleged violations by doctors and clinical laboratories of the False Claims Act and The Anti-Kickback Statute. Many clinical laboratories rely on referrals from physicians, hospitals, and other healthcare entities to obtain samples to examine –which is the crux of their business. However, as shown below, the relationships between clinical labs and physicians and other entities sometimes lead to unnecessary services, billing for more expensive services, and illegal kickback arrangements:
• In February 2013, Florida dermatologist Dr. Steven J. Wasserman, agreed to pay $26.1 million to resolve allegations that he violated the False Claims Act. The government alleged that Wasserman entered into an illegal kickback arrangement with a clinical laboratory and its owner, Dr. Jose Suarez Hoyos. Wasserman allegedly sent biopsy specimens for Medicare beneficiaries to the lab for testing and diagnosis; the lab then made it appear that Wasserman had performed diagnostic work. As part of the alleged kickback agreement, Wasserman substantially increased the number of skin biopsies he performed on Medicare patients, thus increasing referrals to the pathology lab.
• In August 2013, Bostwick Laboratories agreed to pay about $500,000 to resolve allegations it illegally paid physicians to induce them to enroll in a study sponsored by Bostwick. In October 2014, in a separate suit filed by a whistleblower against Bostwick, Bostwick agreed to pay $6.05 million to settle allegations that it made illegal payments to persuade physicians to use Bostwick’s services.
On October 31, 2014, the Supreme Court of Hawaii held that arbitration clauses that give employers “sole discretion” to select an arbitrator violate the “fundamental fairness standard” and are thus unenforceable.
What does a fisherman’s criminal destruction of undersized fish have to do with the scope of federal whistleblower laws? The U.S. Supreme Court will soon tell us, after hearing oral arguments last week in Yates v. United States.
In deciding whether a fish is a “tangible object” as that term is used in the Sarbanes-Oxley Act (SOX), the justices will again signal how broadly they’re willing to apply SOX — a topic they last visited in March in Lawson v. FMR LLC, a sweeping decision that turned one section of SOX into something like a general-purpose whistleblower protection law.
Here’s the problem with telling the justices of the U.S. Supreme Court that they’re wrong: They always get the last word.
And the last word in Department of Homeland Security v. MacLean — based on today’s oral arguments in the case, at least — now seems likely to be a rejection of the Obama Administration’s contention that federal agencies may strip employees of their rights under the Whistleblower Protection Act of 1989 (WPA) simply by issuing regulations that forbid certain types of disclosure.
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.