Whistleblower Law Blog

Hospital Chain HCA Inc. Pays $16.5 Million False Claims Act Settlement for Providing Physician Group with Financial Incentive to Refer Patients to HCA Facilities

October 03, 2012

HCA Inc., one of the United States’ largest for-profit hospital chains, has agreed to pay the federal government $16.5 million to settle a qui tam lawsuit filed under the False Claims Act and the Stark Law, which restricts financial relationships between hospitals and physicians.

According to the lawsuit, in 2007 HCA subsidiaries Parkridge Medical Center, located in Chattanooga, Tennessee and HCA Physician Services, headquartered in Nashville, Tennessee, violated federal law by providing financial benefits intended to induce physician members of Diagnostic to refer patients to HCA facilities.

Stuart F. Delery, Acting Assistant Attorney General for the Department of Justice’s Civil Division, said:

“The Department of Justice continues to pursue cases involving improper financial relations between health care providers and their referral sources, because such relationships can corrupt a physician’s judgment about the patient’s true healthcare needs.”

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.

Recent Kramer Decision in Favor of a Dodd-Frank Whistleblower Likely to Strengthen Anti-Retaliation Lawsuits Brought by Financial Whistleblowers, Law360 Reports

September 28, 2012

Law360 recently indicated in its lead story the broad implications of the recent ruling in Kramer v. Trans-Lux for financial whistleblowers.  The Kramer decision marked the first time a Dodd-Frank whistleblower’s retaliation claim has survived a motion to dismiss when, earlier this week, a federal judge embraced an expansive definition of whistleblower under Dodd-Frank.

The Kramer decision joins three other court decisions that have focused on the anti-retaliation provisions of Dodd-Frank as the latest in a series of decisions that broadly interpret who qualifies as a whistleblower.  According to Law360’s report, many whistleblower advocates believe that the Kramer decision will result in an uptick in the filing of whistleblower claims against employers.

These developments are favorable for financial whistleblowers who face retaliation from their employers for reporting fraud or illegal conduct because by filing a retaliation claim under Dodd-Frank rather than the Sarbanes-Oxley Act, plaintiffs have a longer statute of limitations and may bring their claims directly in federal court without having first to proceed through an administrative process at the Department of Labor.

In sum, the Kramer decision will serve as additional authority for employees who seek to bring Dodd-Frank complaints after having suffered retaliation when reporting violations to their employers internally, as well as to the Securities and Exchange Commission (SEC).

The article, “Dodd-Frank Whistleblower Ruling May Spark Retaliation Suits” appeared in the September 27, 2012 edition of Law360.

The whistleblower who brought the suit, Richard Kramer, is represented by The Employment Law Group® law firm’s Nicholas Woodfield and R. Scott Oswald.

Law360 Quotes Nicholas Woodfield on First-of-Its-Kind Ruling in Whistleblower Protection Case under Dodd-Frank

September 28, 2012

Law360 recently reported in its lead article on Kramer v. Trans-Lux Corp. , the first court decision allowing a Dodd-Frank Act retaliation suit to survive a motion to dismiss.  In the article, Law360 quoted Nicholas Woodfield, principal at The Employment Law Group® law firm and attorney for Richard Kramer, the whistleblower who brought the lawsuit.

Mr. Kramer, a former executive for Trans-Lux, was fired after reporting to the company’s board of directors and the Securities and Exchange Commission that his supervisors has run afoul of the company’s pension plan.

Trans-lux had argued that Kramer was not a whistleblower as defined in the Dodd-Frank law.  The court, however found that Kramer was protected by against retaliation as a whistleblower and that “Trans-lux’s interpretation would dramatically narrow the available protections to potential whistleblowers.”

Kramer’s attorney, Mr. Woodfield told Law360 that he is “pleased” with the decision and that he regards it as “a fair decision that accurately reflects the goals of the legislators in implementing Dodd-Frank.”  Woodfield also noted that “whether Mr. Kramer will prevail at trial is another issue, but [the decision] fairly recognizes that it was the intent of Congress to protect [whistleblowers] like him.”

The article, “Judge Backs Broad Whistleblower Definition Under Dodd-Frank” appeared in the September 26, 2012 edition of Law360.

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

Whistleblower Protection Enhancement Act (WPEA) Passes House, Bill Set to Strengthen Protections for Federal Employees

September 28, 2012

Today the U.S. House of Representative enacted the Whistleblower Protection Enhancement Act (WPEA). The U.S. Senate will likely enact it through unanimous consent in the near future.  Below is a summary of the legislation.

The Employment Law Group® (TELG) supports the passage of the Whistleblower Protection Enhancement Act (WPEA), S. 743 / H.R. 3289. This legislation will help employee-side counsel protect federal employees from unlawful retaliation. The WPEA strengthens protections for employees who disclose waste, fraud, and abuse in 10 critical areas.

1. Protecting all lawful disclosures of waste, fraud, and abuse. The WPEA addresses court decisions that have narrowed the scope of protections Congress intended. For example, employees now are not protected for blowing the whistle in the course of their job duties. Final passage of the law would eliminate protections for some of the most important positions in government. Federal auditors, safety inspectors, and other employees with health and safety roles should be encouraged to perform their jobs diligently and with the public interest in mind. An efficient whistleblower law encourages employees to work within the chain of command to resolve problems early and effectively.
2. Deterring retaliation through disciplinary actions. The WPEA also furthers congressional intent by restoring the government’s ability to seek disciplinary actions against employees who engage in unlawful retaliation. The WPEA establishes a “significance motivating factor” test, which will allow government agencies to effectively enforce the whistleblower law and protect employees by deterring wrongdoing.
3. Providing full and fair relief for victims of unlawful retaliation. The WPEA strengthens the remedies for whistleblowers who prevail in their retaliation claims. The legislation provides for compensatory damages, which will allow employee’s counsel to seek full and fair relief for employees who suffer from sustained harassment in addition to adverse personnel actions. The need for this reform is highlighted by recent whistleblower cases at the Bureau of Alcohol, Tobacco, Firearms, and Explosives. Law enforcement officers and other employees may believe their careers have been stifled because of their protected whistleblowing. In such cases, correcting a personnel record may be insufficient to make an employee whole, and the availability of compensatory damages is a better remedy for combating the stigma that too often is associated with conscientious whistleblowing.
4. Holding agencies accountable for retaliatory investigations. The WPEA further strengthens the remedies available for whistleblowers and provides a strong deterrent to retaliatory investigations by allowing employees to recover damages or costs associated with an agency “witch hunt.”
5. Extending whistleblower protections to all TSA employees. The WPEA covers a loophole in existing law that exempts Transportation Security Officers from the whistleblower protections afforded to other employees. The 50,000+ employees at the nation’s airports should feel confident that they will be protected from retaliation for speaking out against threats to aviation security.
6. Promoting scientific integrity in government operations. The WPEA explicitly protects government scientists and other professionals for disclosures related to the integrity of the scientific process.
7. Allowing the prosecutor to shape the law. The WPEA would give the Office of Special Counsel greater authority to shape the whistleblower law by allowing the OSC to file friend of the court briefs in important cases.
8. Ensuring that whistleblower protections supersede agency non-disclosure agreements. The WPEA makes it a prohibited personnel practice for an agency to impose a non-disclosure agreement on an employee if the agreement does not explicitly state that the employee’s rights under the whistleblower law supersede the terms of the agreement. This provision is necessary to inform employees of their statutory rights and encourage lawful disclosures of misconduct and waste.
9. Enhancing diversity in appellate review of whistleblower claims. The WPEA established a two-year period in which whistleblower protection claims may be heard by the regional appellate courts in addition to the U.S. Court of Appeals for the Federal Circuit. This will improve the development of the law.
10. Informing employees of their rights and protections. The WPEA requires each agency Inspector General to designate a Whistleblower Protection Ombudsman.

Collectively, these reforms will make the Whistleblower Protection Enhancement Act stronger than at any point in its history, and provide employee-side attorneys with all the tools they needs to effectively fulfill their mission to protect employees from unlawful retaliation.

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.

Kramer v. Trans-Lux Corp., First Dodd-Frank Claim to Survive Motion to Dismiss in Federal Court

September 26, 2012

On Tuesday, September 25, the U.S. District Court for the District of Connecticut ruled that the definition of “whistleblower” under the Dodd-Frank Act encompasses individuals who make disclosures required or protected under the Sarbanes-Oxley Act or the Securities Exchange Act of 1934.  Plaintiff’s Richard Kramer’s case against former employer Trans-Lux is the first Dodd-Frank claim to survive a motion to dismiss in federal court.  Kramer v. Trans-Lux Corp., 3:11cv1424 (D. Conn. Sept. 25, 2012).   Scott Oswald and Nick Woodfield, principals with The Employment Law Group, represent Mr. Kramer.

Background

Kramer served as Vice President of Human Resources and Administration for Trans-Lux for eighteen years.  He reported to Chief Financial Officer Angel Toppi.  Kramer and Toppi comprised Trans-Lux’s pension plan committee.  Trans-Lux’s pension plan requires at least three members on the committee, and Kramer repeatedly advised Toppi that the committee needed at least one additional member.  Toppi repeatedly rejected Kramer’s advice.  In addition to serving on the committee, Toppi served as the sole trustee of the pension plan.  Kramer was concerned that this created a conflict of interest.

On four occasions between 2008 and 2011, Trans-Lux amended its pension plan.  On two of those occasions the two-person committee approved the amendments, although the plan requires approval by a three-person committee.  In addition, Toppi failed to bring the 2009 amendments to the board of directors for approval and failed to file them with the SEC.

In March 2011, Toppi ordered Kramer not to notify the Pension Benefit Guaranty Corporation that the company had missed a contribution.  This notification would have resulted in an immediate penalty to Trans-Lux.  Later that month, Kramer notified Trans-Lux executives of all his concerns with Trans-Lux’s failure to adhere to its pension plan.  In May 2011, he brought his concerns to the board of directors’ audit committee.  Finally, he sent two letters to the SEC, notifying them of Trans-Lux’s violations.

As soon as Kramer expressed his concerns, Trans-Lux executives began to retaliate against him.  They reprimanded him, reassigned his subordinates to other executives, stripped him of his responsibilities, and finally terminated him.

“Whistleblower” Under Dodd-Frank

Trans-Lux argued in its motion to dismiss that Kramer did not report Trans-Lux’s violations in the manner that the SEC requires, and therefore did not meet the definition of a “whistleblower.”  Kramer argued that individuals who make disclosures  that are required or protected under the Sarbanes-Oxley Act or the Securities Exchange Act of 1934 meet this definition regardless of the manner in which they make their disclosure.

The court agreed with Kramer’s argument, citing to a final rule promulgated by the SEC on August 12, 2011.  The court explained:

Trans-Lux’s interpretation would dramatically narrow the available protections available to potential whistleblowers. In order to have provided information in the manner provided by the SEC, an individual would have either had to submit the information online, through the Commission’s website, or by mailing or faxing a Form TCR (Tip, Complaint or Referral). Mailing a regular letter is insufficient…. Such a reading seems inconsistent with the goal of the Dodd-Frank Act, which was to “improve the accountability and transparency of the financial system,” and create “new incentives and protections for whistleblowers.”

The court found that Kramer’s disclosures were required under Sarbanes-Oxley and relate to violations of securities laws and therefore are protected under Dodd-Frank regardless of the manner in which they were made.  The court further clarified that the Dodd-Frank Act expands the protections of Sarbanes-Oxley, and that this expansion is a permissible construction of the statute.

Related U.S. District Court Decisions

On April 3, 2012, the U.S. District Court for the Middle District of Tennessee confirmed that the term “whistleblower” includes individuals who make internal disclosures of security law violations, as long as the disclosures are made in accordance with the “certain laws within the SEC’s jurisdiction.”  Nollner v. S. Baptist Convention, Inc., 852 F. Supp. 2d 986, 993 (M.D. Tenn. 2012).  However, the court found that plaintiffs Ron and Beverly Noller were not whistleblowers under Dodd-Frank, because their employer does not issue stock and was not subject to the SEC’s jurisdiction.   Id. at 997.

On May 4, 2011, the U.S. District Court for the Southern District of New York reached the same decision as the Noller court regarding internal disclosures and therefore granted plaintiff Patrick Egan leave to amend his complaint to include a claim for retaliation under Dodd-Frank.  Egan v. TradingScreen, Inc., 10 CIV. 8202 LBS, 2011 WL 1672066 (S.D.N.Y. May 4, 2011).

On June 28, 2012, the U.S. District Court for the Southern District of Texas declined to decide whether plaintiff Khaled Asadi met the definition of a “whistleblower” under Dodd-Frank for making protected disclosures under Sarbanes-Oxley.  Asadi v. G.E. Energy (USA), LLC, CIV.A. 4:12-345, 2012 WL 2522599 (S.D. Tex. June 28, 2012).  Instead, the court decided that the statute did not protect plaintiff Asadi’s disclosures because they occurred outside of the United States.  Id.

Richard Kramer is represented by The Employment Law Group law firm’s Nicholas Woodfield and R. Scott Oswald.

Department of Labor Orders Ohio Company to Reinstate and Pay Whistleblower $270,000

September 21, 2012

Dana Holdings Corp., an Ohio based company that supplies driveline, sealing and thermal management technologies for passenger, commercial and off-highway vehicles, has been ordered by the U.S. Department of Labor to reinstate a financial analyst and pay him $274,922.47 in compensatory damages in order to settle a whistleblower lawsuit filed under the Sarbanes-Oxley Act of 2002.

The employee alleges that he was terminated in February 2009 in retaliation for raising concerns regarding inaccuracies in the company’s customer information assessment system database, which could in turn lead to inaccuracies in the company’s annual financial reports.

Nick Walters, the Department of Labor’s Occupational Safety and Health Administration’s (OSHA) regional administrator in Chicago, stated:

“The Sarbanes-Oxley Act provides protection to workers who report alleged violations of federal laws relating to fraud against shareholders… This case clearly shows the department’s commitment to ensuring that individuals are provided the protections and relief afforded by the law, and sends a message that retaliatory actions will not be tolerated.”

In addition to reinstating the former financial analyst and paying him compensatory damages, Dana Holdings must expunge all adverse references related to the discharge from the employee’s personnel record and must train all employees and post a notice regarding the Sarbanes-Oxley Act’s whistleblower provision.

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

Justice Department Joins False Claims Act Medicare Fraud Lawsuit

September 14, 2012

The Justice Department announced last week that it will join the False Claims Act qui tam lawsuit filed against Hospice of the Comforter Inc. (HOTCI) by Douglas Stone, HOTCI’s former vice-president of finance. Stone’s suit alleges that HOTCI engaged in fraudulent Medicare billing.

According to the lawsuit, HOTCI’s chief executive officer verbally instructed HOTCI employees to admit for hospice care patients with Medicare coverage, without determining whether those patients were in fact eligible for hospice benefits. Medicare hospice benefits are reserved for terminally ill patients with a life expectancy of six months or less. Under hospice care, because the patient has elected to end curative care and allow the disease to run its normal course, medical treatment is focused on providing patients with relief from pain and stress. Once informed by its Medicare contractor that a formal audit would be conducted, HOTCI formed an internal committee to review hospice eligibility of its Medicare patients.  Between 2009 and 2010, the company had to discharge at least 150 patients after determining that they were ineligible for Medicare hospice benefits.

Robert O’Neill, U.S. Attorney for the Middle District of Florida, stated:

“Some of the most vulnerable people in our district rely on hospice services… It is critically important that Medicare remains solvent in order to provide hospice benefits, and that we confront those whose practices in this area put economic gain before patient care.”

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.

GE-Hitachi Nuclear Plant Employee Files Whistleblower Lawsuit in Federal Court after Being Threatened and Demoted for Raising Safety Concerns

September 14, 2012

Harry Knight, an employee of Global Nuclear Fuel-Americas, LLC (GNF-A) a subsidiary of GE-Hitachi Nuclear Energy Americas, LLC, last month filed a federal whistleblower lawsuit under the Energy Reorganization Act of 1974 (ERA) against GE-Hitachi in the U.S. District Court for the Eastern District of North Carolina.

Knight, who has worked for GE for twelve years, alleges that the company retaliated against him in 2009 when it removed him from his position as Primary Emergency Director and Environmental Health and Safety Manager. Knight alleges that the facility manager and Senior Executive of GM Nuclear Fuel Cycle, Lisa Price, asked him to handle fire alarm activations at GNF-A’s Nuclear Power Plant in Wilmington, North Carolina in a way that did not follow the outlined federal licensing emergency plan guidelines. Knight refused to follow orders from Price, who instructed him to resolve alarm activation in a manner inconsistent with federal regulations. Knight claims that GE then placed him on a Performance Improvement Plan (PIP) because he disagreed with Price and raised safety concerns regarding protocol issues at the plant. Furthermore, Knight alleges that GE had a pattern of terminating and reassigning employees placed on PIPs, and that the company intended to terminate his employment after placing him on a PIP.

Knight is seeking punitive damages for wages, bonuses, and raises that he did not receive as a result of his demotion. He is also asking the court to order GE to reinstate his employment and terminate the individuals “directly involved in creating a chilled work environment.”

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

Arizona Trucking Company Ordered to Reinstate Former Employee and Pay $315,000 Settlement for Violating the Whistleblower Provision of STAA

September 11, 2012

M3 Transport LLC/SLT Expressway Inc. and its successors-in-interest, Lyons Capital LLC and the Roadmaster Group in Glendale, Arizona, were ordered last week by the Occupational Safety and Health Administration (OSHA) to reinstate a former truck driver and pay him $315,000 in damages after being found to have violated the Surface Transportation Assistance Act (STAA).

On February 8, 2010, the employee was assigned a new co-driver to transport explosives to Canada. When the employee found the vehicle’s ashtray overflowing with cigarette butts, he notified his supervisors because his co-driver’s smoking while hauling explosives violates federal regulations. The employee was then ordered to go home until he was assigned a new co-driver.  Two days later, however, the company terminated him. OSHA determined that the termination was a retaliatory action taken because the employee reported his co-worker’s violations of federal law, and that the company therefore violated STAA.

In addition to ordering reinstatement and paying the former employee, M3 Transportation must also remove any adverse references related to the discharge from the employee’s personnel records and post a notice to inform all employees of their rights under STAA.

The Employment Law Group® law firm is a leader in the field of whistleblower protection law and has an extensive nationwide whistleblower practice representing employees – including commercial motor carrier whistleblowers – who have exposed illegal activity by their employer and suffered retaliation.

New Jersey State Trooper Awarded Over $1 Million Whistleblower Settlement

August 31, 2012

Brian Royster, a former New Jersey State Police trooper, has been awarded $1.06 million by an Essex County Superior Court jury; however, because of a cap on damages for emotional distress under the Americans with Disabilities Act (ADA) his award will be limited to $860,000.

Royster filed his lawsuit against the New Jersey State Police, Superintendent Rick Fuentes, and others, in 2005 under the New Jersey Conscientious Employees Protection Act, and the state’s Law against Discrimination, as well as Title VII of the federal Civil Rights Act of 1964. His lawsuit was dismissed in 2006 but revived upon appeal in 2007.

Royster alleged that that the police department not only failed to act on his race discrimination complaints, but also failed to provide him reasonable accommodations for his inflammatory bowel disease. According to Royster, he was subjected to a pattern of disparate and racially-motivated treatment by his supervisor, and the police department’s Equal Employment Opportunity/Affirmative Action unit did not properly investigate his complaints. When he began complaining about the department’s alleged practices, he was denied a promotion and given a poor performance evaluation.

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