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The Employment Law Group, P.C. produces this blog to provide general news and information about the field of employment law; the blog does not contain any legal advice upon which you should rely or act. If you need advice on a particular issue or problem, please contact an attorney. Use of this Web site does not create an attorney-client relationship between you and The Employment Law Group.

New Jersey Supreme Court Extends Whistleblower Protections to “Watchdog” Employees

On July 15, 2015, in Lippman v. Ethicon, Inc., the New Jersey Supreme Court held that whistleblower protections under New Jersey’s Conscientious Employee Protection Act (CEPA) extend to actions taken by employees as part of their normal job duties.

Dr. Joel S. Lippman was employed by Ortho-McNeil Pharmaceuticals, Inc. (OMP) and Ethicon, Inc. as the World-Wide Vice President of Medical Affairs and Chief Medical Officer. Lippman, in his role as Medical Officer, was asked to provide his opinion about the safety of OMP and Ethicon’s products.

Lippman, after he was terminated from his high-level position, filed a retaliation claim under New Jersey’s Conscientious Employee Protection Act. The New Jersey trial court granted OMP and Ethicon’s motion for summary judgment, determining that disclosures Lippman made as part of his normal job duties were not CEPA-protected conduct.
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Third Circuit District Courts Split on Kick-Out Actions Brought After Final Agency Decisions

The U.S. District Court for the Western District of Pennsylvania ruled that plaintiffs claiming retaliation under Federal Railroad Safety Act (FRSA) lose their right to sue in federal court when the Department of Labor (DOL) reaches a final decision in their action, even if that decision is reached more than 210 days after the DOL administrative complaint was filed.

This ruling creates a split among the Third Circuit’s district courts. Just last year, the U.S. District Court for the Eastern District of Pennsylvania found that the right to file a so-called “kick-out” action in federal court is triggered when a final administrative decision isn’t reached within 210 days, and that FRSA contains nothing that extinguishes that right if the DOL subsequently issues a final decision.

In Mullen v. Norfolk Southern, Harry Mullen alleged that the railroad wrongfully terminated his employment because he protested to his supervisors about violations of safety regulations. Mullen’s termination occurred on February 14, 2011. Mullen filed a whistleblower claim with the DOL’s Occupational Safety and Health Administration (OSHA) on April 28, 2011 under the FRSA, 49 U.S.C. § 20109.
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Favorable Jury Verdict for DuPont Tossed Because DuPont Withheld Evidence

The Louisiana-based federal judge in Simoneaux et al. v. E.I. du Pont De Nemours & Co., an environmental qui tam action concerning safety problems at a chemical plant, set aside a jury verdict in favor of DuPont, holding that DuPont withheld crucial evidence that could have changed the outcome of the case. While DuPont failed to produce the evidence at issue in Simoneaux, it had produced the same evidence in an unrelated qui tam action. The court rejected DuPont’s argument that the evidence was available to the relator in Simoneaux because DuPont had produced in the other case. The court held that DuPont had engaged in “misconduct” because the relator in Simoneaux requested the evidence in discovery and DuPont failed to produce it.
The court’s June 25, 2015 ruling states, “[T]he Court finds that Relator has established by clear and convincing evidence that the newly discovered leak calculations and the November 2014 OSHA Citation were called for in discovery. DuPont’s failure to produce them is misconduct for the purposes of Rule 60(b)(3).” The court held that DuPont’s failure to produce the evidence affected the integrity of the trial process and prevented the relator from fully presenting his case. The court emphasized that its decision to set aside the judgement in favor of DuPont does not imply that the outcome of the trial would have been different had DuPont not withheld the evidence.
Based on the unavailability of the evidence, the court granted the relator’s post-verdict motion for relief from judgment, but denied the relator’s motion for a new trial.

Fourth Circuit Holds that Single Discriminatory Incident Can Give Rise to a Hostile Work Environment

In overturning the U.S. District Court for the District of Maryland, the Fourth Circuit Court of Appeals affirmed that a hostile work environment – which typically results from a series of separate incidents – can also exist when an employee is subjected to a single sufficiently severe hostile action.

The Fourth Circuit found that Reya Boyer-Liberto, a former cocktail waitress at the Clarion Resort Fountainbleu in Ocean City, Maryland, was subjected to a severe hostile action when her supervisor called her a “porch monkey” twice in one night. The Court also found that Boyer-Liberto’s engaged in protected activity when she reported the incident.

The Fourth Circuit’s decision overturned the District Court ruling, which was based on the presumption that a claim of hostile work environment must allege a series of discrete events in order to be actionable. The Fourth Circuit found that the actions of Boyer-Liberto’s supervisor were sufficiently severe to give rise to a hostile work environment claim, even though the discriminatory behavior happened in the course of just one night.

The ruling by the Fourth Circuit Court of Appeals that a single instance of discrimination can constitute a hostile work environment enhances workers’ rights. When a single incident is sufficiently severe, employers cannot avoid liability for a hostile work environment claim simply because the alleged underlying discriminatory behavior did not occur in a series of separate incidents.

US Senator Opens Email Address For Government Whistleblowers

A change in duties, suspended security clearance, or isolation from other employees—these are just some of the types of reprisals federal whistleblowers have suffered for exposing fraud to Congress.

On June 11, 2015, U.S. Senator Ron Johnson (R-WI), Chairman of the Senate Homeland Security & Government Affairs Committee, held a hearing on retaliation experienced by federal employees for reporting government waste, fraud, and abuse.

Senator Johnson, emphasizing the importance of protecting whistleblowers who report fraud to Congress, has created an email address, whistleblower@ronjohnson.senate.gov, to ensure that whistleblowing government employees have a clear line of communication to Congress.

“These men and women take great risk to stand up and expose wrongdoing,” said Johnson. “They sacrifice their careers, their reputations and often their financial security. Congress—and this committee in particular—must support federal whistleblowers and ensure that they are adequately protected from retaliation.”

Whistleblowers play a valuable role in fighting waste, fraud, and abuse, and ensuring the financial health of our nation. According to a 2013 report prepared by the Taxpayers Against Fraud Education Fund, the federal government recovers more than $20 for every dollar it spends to pursue whistleblower cases.

According to Johnson, more than 130 whistleblowers have reported waste, fraud, and abuse in 2015 through his Senate-sponsored email address.

Contract to Share Qui Tam Awards is Enforceable

In Fair Lab. Practices Assocs., et al., v. Riedel, et al., the United States District Court for the District of New Jersey ruled that a contract providing that two parties share potential qui tam awards is enforceable.

Plaintiffs Fair Laboratory Practices Associates (FLPA) and NPT Associates are both Delaware partnerships formed for the purpose of prosecuting qui tam actions. Defendant Hunter Laboratories, LLC is a California limited liability company in the commercial reference laboratory business; and Defendant Chris Riedel is Hunter’s sole managing member.

In 2005, Plaintiffs FLPA and NPT filed a qui tam action against Quest Diagnostics, Inc. and Unilab Corporation in the Southern District of New York (New York action). Shortly thereafter, Defendants Hunter and Riedel filed a qui tam (false claims) action against Quest, Unilab, and others in California state court (the California action).
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ARB Reverses ALJ and Finds Pilot Engaged In Protected Activity Under AIR-21

The Department of Labor’s Administrative Review Board (ARB) found that Dawn Sewade, a helicopter pilot for Halo-Flight, Inc., engaged in protected activity under AIR-21 when she reported what she reasonably believed to be unsafe aircraft conditions to Halo-Flight. The ARB also held that Sewade’s allegations of constructive discharge following a retaliatory warning for her report were actionable under AIR-21. The ARB decision reversed a prior decision by the DOL’s Office of Administrative Law Judge s (ALJ) that Sewade’s complaint was not protected activity under AIR-21.

The ARB found that Sewade engaged in protected conduct when she reported a safety concern about her aircraft and refused to fly, claiming that her aircraft was violently pitching and that fuel sampling techniques used by Halo-Flight were not proper. Sewade also reported a mechanic who threatened Sewade’s job security after Sewade made her complaints.
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Supreme Court to Hear Key Employment Law Cases in October 2015 Term

While Supreme Court analysts are still considering the impacts of a number of rulings from the Supreme Court’s October 2014 term, including an important ruling for religious accommodation of employees under Title VII in E.E.O.C. v. Abercrombie & Fitch Stores, the Court has already granted certiorari in a number of cases that could have sweeping impacts on employment law.

In Tyson Foods v. Bouaphakeo, the Court will examine what effect, if any, differences in individual members of classes certified under a class action lawsuit or collective action suit under the Fair Labor Standards Act should have when damages are calculated by use of statistical sampling. In this case, a class of workers in a meat processing plant seek unpaid overtime for the time spent each day to put on (donning) and remove (doffing) protective equipment before and after shifts and before and after lunch breaks. To prove liability and damages at trial, the plaintiffs presented timesheets for the individual plaintiffs as well as average donning and doffing times derived from observations of more than 700 employees. The Eighth Circuit affirmed the use of statistical sampling in this case because the plaintiffs all worked in the same location, used similar equipment to perform their jobs, and the company used a common pay scheme regarding their “donning and doffing” times. The Eighth Circuit also pointed to the fact that since the company had failed to keep adequate records of specific times spent on “donning and doffing” for each specific plaintiff, reasonable inferences drawn from average times and individual timesheets were sufficient.

In Bouaphakeo, the Supreme Court will also examine whether class certification should survive when some members of the class suffered no actual damages from the employer’s activities. This case will be important for determining the outcomes of future cases involving unpaid overtime and employee misclassification, especially given the increase in these types of claims in recent years.
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Multi-Agency Guide Updates LGBT Discrimination Protections for Federal Workers

On June 3, 2015, four U.S. Government agencies released a guide on rights and protections afforded to federal employees and applicants who allege sexual orientation or gender identity discrimination. The guide reflects a growing body of case law that supports the proposition that Title VII of the Civil Rights Act of 1964 and other statutes offer substantial protections for lesbian, bisexual, gay, and transgender (LBGT) employees.

The U.S. Office of Personnel Management (OPM), the U.S. Equal Employment Opportunity Commission (EEOC), the U.S. Office of Special Counsel (OSC), and the U.S. Merit Systems Protection Board (MSPB) collaborated on the guide, titled “Addressing Sexual Orientation and Gender Identity Discrimination in Federal Civilian Employment: A Guide to Employment Rights, Protections, and Responsibilities.” The guide provides federal workers with a description of employee rights and agency responsibilities under Title VII, the Civil Service Reform Act of 1978, and other agency and union procedures.
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District Court Upholds Disability Claim for Employer’s Failure to Perform an Individualized Inquiry into Employee’s Medical Condition

In EEOC v. Kyklos Bearings Int’l, LLC, the United States District Court for the Northern District of Ohio denied summary judgment for Kyklos, an Ohio bearings manufacturer, in an Americans with Disability Act (ADA) case. The district court held that a company doctor’s “sparse” and “superficial” examination was insufficient to support the employer’s claim that it had fulfilled its legal responsibility to conduct an individualized inquiry into the medical condition of an employee it subsequently fired. The Court also held that even though the employee originally complained only of failure to accommodate, the EEOC could bring charges in the case on a different theory.

Dominque Price worked at Kyklos Bearings as a “tugger,” a position which required her to use a motorized scooter to move materials and productions, including “trains” of carts. Price’s job also involved lifting up to fifty pounds. In 2007, Price was diagnosed with breast cancer; she recovered and returned to her job. In August 2011, Kyklos laid off Price for business-related reasons but rehired her in April 2012. Upon her rehiring, Kyklos’s company doctor determined that Price was fit to return to work as a tugger.
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DaVita to Pay $450 Million to Settle Wasted Medication Allegations

On June 24, 2015, DaVita Kidney Care, a division of DaVita Healthcare Partners and one of the largest U.S. kidney dialysis providers, agreed to pay the U.S. government nearly half a billion dollars to settle allegations brought by two former employees that it violated the False Claims Act by intentionally wasting dialysis medications in order to receive higher Medicare payments.

In 2007, two whistleblowers – Dr. Alon Vainer and nurse Daniel Barbir – brought a qui tam action against DaVita after observing that DaVita was throwing out good medicine for which it then billed Medicare. In March 2011, the Justice Department decided not to intervene in the case, but the whistleblowers continued to litigate the case. This settlement is one of the largest recoveries in which the Justice Department did not intervene. The whistleblowers are entitled to 25% to 30% of the nearly half a billion dollar settlement. DaVita’s settlement comes on the heels of two other recent settlements by the company: one in 2014 for $350 million for alleged kickbacks, and one in 2012 for $55 million for the alleged overbilling of a drug.

Canada’s Securities Commission Adopts U.S. Whistleblower Reward Framework

The Ontario Securities Commission (OSC), Canada’s regulatory agency for securities, has backed proposed legislation that draws directly from the U.S. whistleblower reward program. On June 9, 2015, the CBC, Canada’s national public broadcaster, reported that the OSC, which is similar to the U.S. Securities and Exchange Commission, held a roundtable to discuss proposals to protect and reward corporate whistleblowers.

OSC commissioner Mary Condon specifically stated that the proposed legislation takes from the “apparent successes” of the U.S. whistleblower reward program. Since the U.S. whistleblower reward program was enacted, the number of investigations and findings of corporate wrongdoing increased significantly. As a result, the U.S. recovered hundreds of millions of dollars in taxpayer money, and whistleblowers received rewards as high as tens of millions of dollars.
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Fourth Circuit Holds that McDonnell-Douglas Survives Nassar for Prima Facie Retaliation Cases

In a recent case, Foster v. University of Maryland-Eastern Shore, the Fourth Circuit held that the familiar McDonnell Douglas burden-shifting framework survives the but-for causation standard articulated by the Supreme Court in University of Texas Southwestern Medical Center v. Nassar in 2013. The Fourth Circuit held that Nassar does not alter the burden for Title VII plaintiffs at summary judgment because McDonnell Douglas already incorporates a but-for standard. This case is important for plaintiffs, as it sheds light on questions raised by the Supreme Court in Nassar as to how plaintiffs carry their burdens in employment litigation.

Iris Foster worked for the University of Maryland-Eastern Shore as a campus police officer. The University placed her on a standard probationary period of six months upon hiring. The University did not contest that Foster faced significant sexual harassment from a colleague even before she began her employment. Foster complained of the harassment within the first month of her employment, and the University disciplined Foster’s co-worker, transferring him to a different role, requiring him to attend sexual harassment training, and putting him on a “Last Chance Agreement.”
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Sixth Circuit Finds Teleworking a Reasonable Accommodation Depending on the Situation

In EEOC v. Ford Motor Co., the Sixth Circuit ruled that Jane Harris, a resale buyer at Ford who suffers from irritable bowel syndrome (IBS), was not qualified for her position, and therefore Ford did not discriminate against Harris when it denied her request to telework as a reasonable accommodation.

The EEOC brought claims on Harris’s behalf under the Americans with Disabilities Act, alleging that Ford failed to reasonably accommodate Harris when it denied her request for a schedule with maximum flexibility to telework, and retaliated against her for reporting this denial to the EEOC. The District Court granted summary judgment to Ford on both claims.

The Sixth Circuit reversed the District Court and held that whether teleworking is a reasonable accommodation was a question for a jury. In an en banc review, the Sixth Circuit affirmed the District Court’s grant of summary judgment. In the en banc opinion, the Sixth Circuit determined that no reasonable jury could find that telecommuting was a reasonable accommodation under this particular set of facts, but also held that telecommuting could be a reasonable accommodation under a different fact pattern.

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SEC Awards Whistleblower Maximum Possible Share of Settlement in Dodd-Frank Retaliation Case

On April 28, 2015, the Securities and Exchange Commission announced that it was awarding a whistleblower 30 percent of funds recovered in settlement of the Commission’s first retaliation charges brought under the Dodd-Frank Wall Street Reform and Consumer Protection Act (Dodd-Frank).

The whistleblower’s share will be more than $600,000. In deciding to award the maximum 30 percent, the SEC’s Claims Review Staff weighed heavily the “substantial evidence that the whistleblower suffered unique hardships as a result of reporting.”

In the Matter of Paradigm Capital Management, Inc. and Candace King Weir, File No. 3-15930 (June 16, 2014), the SEC charged the hedge fund investment adviser with retaliating against the whistleblower for reporting what the whistleblower believed to be misconduct to the SEC. The SEC found that Paradigm removed the whistleblower from the whistleblower’s then-current position, changed the whistleblower’s job function, and removed the whistleblower’s supervisory responsibilities, among other retaliatory acts.
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Middle District of Florida Affirms Use of Statistical Sampling in Qui Tam Actions

Allegations of fraud against Medicare, a frequent impetus for qui tam actions under the False Claims Act, often involve an enormous number of false claims as part of a larger scheme of fraud committed by an entity. These large numbers of claims present a practical problem in determining liability and calculating damages. In a recent case, United States ex rel. Angela Ruckh v. Genoa Healthcare, et al., the United States District Court for Middle District of Florida affirmed the use of statistical sampling to demonstrate liability in a qui tam action.

In Ruckh, the Relator alleges that a number of health care facilities defrauded the U.S. government by “upcoding” (billing for higher level services than the facility actually performed). The Relator alleges that the Defendants submitted false claims from fifty-three different health care facilities. Given the impracticality of analyzing each and every claim from the various facilities, the Relator sought to use statistical sampling, as well as expert testimony, to extrapolate the amount of overpayment and assess liability. The Defendants in Ruckh relied on a footnote in a 1993 district court case from Massachusetts, United States v. Friedman, No. 86-0610-MA, 1993 U.S. Dist. LEXIS 21496 (D. Ma. Jul 23, 1993), for the proposition that statistical sampling cannot be used to demonstrate liability and calculate damages.
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Whistleblower Not Obligated to Produce Evidence of Retaliatory Termination

On March 20, 2015, the Department of Labor Administrative Review Board (ARB) reversed and remanded a decision by the DOL’s Office of Administrative Law Judges (OALJ) that held a railroad employee had not proved that his report of a workplace injury was a contributing factor to management’s decision to terminate his employment.

Robert Powers reported to his employer, Union Pacific Railroad Company, that he injured his hand while operating a rail saw at work in May 2007. Over slightly more than a year, Powers saw several doctors who prescribed various treatments. His doctors also imposed a series of work restrictions, including limits on lifting and repetitive motions.

Union Pacific became suspicious about Powers’ reported injuries and resultant work restrictions. The company hired a private investigator who filmed Powers performing tasks around his property, including using a sledgehammer and carrying boxes of ammunition. After an internal administrative procedure that determined that Powers had violated the company’s dishonesty policy and had failed to stay within his medical restrictions, the company terminated Powers’ employment.
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SEC Awards $1.5 Million to Compliance Officer

On April 22, 2015, the U.S. Securities and Exchange Commission announced its second-ever whistleblower award to a compliance professional. The SEC’s award demonstrates that compliance professionals and other fiduciaries can be whistleblowers when the employer fails to take action to address misconduct reported by a fiduciary.

The complainant, in his role as a fiduciary, was statutorily required to disclose the suspected misconduct internally and then wait 120 days for the employer to investigate and take corrective measures before initiating an action under the SEC’s whistleblower award program. Here, the complainant did as required, and the SEC found that the employer did not take meaningful corrective action. The SEC held the financial award to the whistleblower was appropriate given the employer’s failure to remediate.

The SEC’s first ever award to a whistleblower was in 2014. The SEC releases limited information about whistleblower case as it is bound by the law to protect the confidentiality of whistleblowers.

ARB Rules Airline Workers Exempt From Arbitration

In Willbanks v. Atlas Air Worldwide Holdings, Inc. et al., the Administrative Review Board for the U.S. Department of Labor ruled that airline workers are transportation workers and thus exempt from the arbitration requirements of the Federal Arbitration Act. The ARB ruling reversed an Administrative Law Judge’s grant of a motion to stay proceedings pending arbitration,.

The FAA provides that arbitration agreements are valid unless grounds exist for revoking the agreement. But the FAA specifically exempts contracts for the employment of “seamen, railroad employees, or any other class of workers engaged in foreign or interstate commerce.” In its ruling, the ARB acknowledged that the FAA should be interpreted liberally to favor arbitration, and that any exceptions should be viewed narrowly.
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Fourth Circuit Interprets ADAAA Broadly in Overturning Summary Judgment

The U.S. Court of Appeals for the Fourth Circuit, in a recent case on appeal from the Eastern District of North Carolina, interpreted the 2008 Amendments to the Americans with Disabilities Act (ADAAA) broadly and reversed the district court’s grant of summary judgment in favor of the defendant. The opinion contains a number of holdings favorable to ADA plaintiffs, including: 1) that the EEOC’s interpretation of what constitutes a “major life activity” under the ADA deserves Chevron deference from the courts; 2) that reasonable accommodations may include the restructuring of a plaintiff’s job, including the trading of some duties; and 3) that an employer’s retrospective addition of reasons for termination may bolster evidence of pretext on a retaliation claim.

In Jacobs v. N.C. Admin. Office of the Courts, a former deputy clerk at the courthouse in New Hanover County, North Carolina asked that her employer accommodate her social anxiety disorder by reassigning her from providing customer service at the front counter of the courthouse to a job which would require less personal interaction. The employer waited three weeks before acting on the request and then terminated the deputy clerk.
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Two Senators Launch Bipartisan Whistleblower Protection Caucus

In February 2015, Senators Chuck Grassley (R-Iowa) and Ron Wyden (D-Oregon) announced the Whistleblower Protection Caucus, signaling that whistleblower protection is a topic on which politicians on both sides of the aisle can agree. Grassley, a long-time advocate for whistleblower rights, initially announced plans to form the Caucus in April 2014.

The purpose of the Caucus is to bring together like-minded Senators who can shed light on the need for ongoing whistleblower protections. The Caucus will focus on enforcement of whistleblower protections and creating a culture that understands and respects the right to blow the whistle on wrongdoing.
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Home Health Care Fraud on the Rise

In February 2015, two Florida doctors and their spouses paid $1.13 million to settle allegations that they received kickbacks in exchange for home health care referrals. Drs. Alan Buhler and Craig Prokos hired their wives as “marketers,” and referred patients for home care services. The settlement will resolve the allegations brought by a relator under the qui tam provisions of the federal False Claims Act, which allows private parties to bring suit on behalf of the United States government to recover funds paid by the government based on false claims. The relator is entitled to a share of the settlement amount.

Home health care is an area of continuing and rising fraud. Fraudulent conduct has become part of a number of companies’ business plans. Some businesses view making a settlement payment a cost of doing business, knowing that the settlement will be only a fraction of the money they have fraudulently received. Often, though, criminal charges are also brought against the fraudster.
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ARB Affirms Dismissal of Standard-Setting Case

Although the Department of Labor’s Administrative Review Board affirmed the dismissal of James Speegle’s whistleblower retaliation complaint, his case cemented a new standard for employees to meet when they invoke the “same decision” defense. In previous posts on May 15, 2014, September 3, 2014, and January 13, 2015, we discussed the Speegle standard and the burden it places on employers. Under Speegle, when an employer uses the “same decision” defense (arguing that it would have taken the same adverse action against an employee in the absence of his protected activity), the administrative judge must examine the defense by excising both the protected activity and the entangled facts from consideration.

In Speegle, the complainant and other supervisors had expressed concerns about Stone & Webster’s use of apprentices to apply paint coatings in a nuclear plant. Stone & Webster fired Speegle, ostensibly for insubordination after his obscene outburst at a meeting. The case then moved back and forth between DOL’s Office of Administrative Law Judges (the ALJ), the ARB, and the Eleventh Circuit, eventually establishing the present standard.
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South Carolina Holds FCA’s First-to-File Rule Overcome by Previous Voluntary Dismissal

The United States District Court for the District of South Carolina held that the False Claims Act’s (FCA) first-to-file rule requires that another complaint must be pending. Thus, the voluntary dismissal of an earlier-filed complaint clears the way for subsequent complaints, and no comparison of content of the complaints is necessary to allow the later-filed case to proceed.

The FCA’s first-to-file bar provides that when a private person brings an FCA action, “no person other than the Government may intervene or bring a related action based on the facts underlying the pending action.”
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Federal Court in South Carolina Holds That A Complaint Is Not Barred by The FCA’s First-to-File Rule If the Earlier-Filed Complaint was Voluntary Dismissed

The United States District Court for the District of South Carolina held that the False Claims Act’s (FCA) first-to-file rule requires that another complaint must be pending. Thus, the voluntary dismissal of an earlier-filed complaint clears the way for subsequent complaints, and no comparison of content of the complaints is necessary to allow the later-filed case to proceed.

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The Employment Law Group, P.C. produces this blog to provide general news and information about the field of employment law.

R. Scott Oswald
Managing Principal
The Employment Law Group

J. Thomas Harrington
The Employment Law Group

Contributing Editor
Laurence Hooper

Max Bernas
James Crosland
Lauren Farruggia
Lauren Galloway
Drew Howell
Misty Howell
Matthew Purushotham