Whistleblower Law Blog

Senate Testimony and IG Report Reveal that the VA Inflated Success Rate of Meeting Veterans’ Mental Health Care Needs

May 08, 2012

On April 23, 2012, representatives from the Veterans Administration (VA) Office of Inspector General (OIG) and former employee from the VA hospital in Manchester testified before the Senate Veterans Affairs Committee about a recent report that showed that the VA inflated its success rate in treating veterans with mental health needs. The report included testimony from Nicholas Tolentino, a former mental health administrator, who said that the VA culture encourages administrators to game performance metrics and tamper with results of VA-wide surveys.

Tolentino and a panel of VA officials discussed the findings of the IG report, which showed that the VA overstated how quickly it serves veterans in need of mental healthcare. The report revealed that in 2011, only forty-nine percent of all new patients received a full mental health evaluation within the department’s required time period of fourteen days, but the VA’s 2011 Performance and Accountability Report stated that ninety-five percent had received the evaluation within the required time period. In addition, the investigation found that only sixty-four percent of patients began treatment within 14 days of their desired start date, while the VA reported that 95 percent had done so.

Chair of the Senate Veterans Affairs Committee Senator Patty Murray had originally requested the IG investigation, and she called the report “substantial and troubling.” In response, William Schoenhard, VA Deputy Undersecretary for Health for Operations and Management, said the VA concurs with the IG’s findings and has instituted a number of changes to address the issues.  “The explanations for the [IG’s] findings are varied, none are satisfactory — we must do more to deliver the mental health services that veterans need,” Schoenhard said.

The VA announced that it will hire 1,900 mental health care staff members, including 1,600 practitioners. In addition, the Agency will also hire family therapists and mental health counselors. The VA is also conducting an extensive internal review of its mental health operations has promised to take proper action to address the concerns raised in the IG’s report.

The Employment Law Group® law firm has an extensive nationwide whistleblower practice representing employees who have been victims of retaliation for reporting fraud or improper practices.

Defense Contractor ATK Launch Systems Inc. Agrees to Pay Nearly $37 Million to Settle False Claims Act Lawsuit for Selling Dangerous and Defective Illumination Flares to the Army and Air Force

May 07, 2012

The Department of Justice has announced that defense contractor ATK Launch Systems Inc., based in Arlington, VA, has agreed to pay $36,967,160 to settle a False Claims Act qui tam lawsuit filed in the U.S. District Court for the District of Utah by a whistleblower employee, ATK flare program manager Kendall Dye.

According the lawsuit, ATK knowingly delivered defective illuminating para-flares from 2000 to 2006 to the Defense Department. These flares were used extensively by the Air Force and Army in Iraq and Afghanistan for nighttime combat, and covert search and rescue operations.  Because flares burn at temperatures in excess of 3,000 degrees Fahrenheit for over five minutes, the government requires that they withstand a 10-foot drop test without exploding or igniting; ATK’s flares failed to meet this requirement.  In 2005, Dye learned that ATK had been aware since 2000 that its flares did not meet government standards, but the company continued submitting claims for payment.

David B. Barlow, U.S. Attorney for the District of Utah, states:

“This settlement demonstrates our commitment to aggressively go after contractors who recklessly disregard and deliberately ignore critical safety defects in munitions used by America’s uniformed fighting men and women on the front lines of the war on terror.”

As part of the settlement, ATK will pay the U.S. government $21 million in cash, and provide necessary services worth $15,967,160 in order to fix the remaining 76,000 unsafe para-flares.

The Employment Law Group® law firm is a leader in the field of whistleblower law and has an extensive nationwide whistleblower practice representing employees who have exposed illegal activity by their employer.

St. James Stevedoring Partners LLC Agrees to Pay River Barge Captain $245,000 to Settle Retaliation Lawsuit After Terminating Him for Reporting Engine Problems to the Coast Guard

May 03, 2012

On April 23, 2012, the U.S. Department of Labor announced that St. James Stevedoring Partners LLC, a New Orleans-based riverboat company, has agreed to pay $245,000 to settle allegations that it violated the Seaman’s Protection Act when it terminated an employee for raising safety concerns.  The whistleblower provisions of the Seaman’s Protection Act protect employees who report violations of various consumer product, environmental, financial reform, food, health reform and maritime laws.

An investigator from the Occupational Safety and Health Administration (OSHA) determined that St. James Stevedoring terminated a riverboat barge captain after he notified the U.S. Coast Guard that the starboard vessel engine was inoperable.  After the incident, the company suspended the captain and told him that he was not permitted to report safety concerns to the Coast Guard, despite the fact that riverboat captains are required by law to report safety hazards to the Coast Guard.  The captain was put on probation,When he discovered another engine safety violation and reported it to the Coast Guard,  the company terminated the captain and claimed that it was because of his poor performance.

The terms of the settlement require St. James Stevedoring Partners to pay the captain a total of $245,000, which includes $23,451 in back pay, $70,352 in front pay, $133,106 in compensatory damages and $18,091 in attorney’s fees. In addition, the company will inform all employees of their right to raise maritime safety concerns without fear of being terminated.  The settlement is the most significant financial settlement under the Seaman’s Protection Act since OSHA assumed jurisdiction over the whistleblower provisions of the law in 2010.

“Employees must feel free to exercise their rights under the law without fear of termination or retaliation by their employers,” said John M. Hermanson, OSHA’s regional administrator in Dallas. “The Labor Department is committed to vigorously protecting the rights of all workers.”

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

Consumer Financial Protection Bureau (CFPB) Announces Clamp Down on Discriminatory Lending Practices

May 01, 2012

On April 18, 2012 the Consumer Financial Protection Bureau (CFPB) released a compliance bulletin announcing its intention to clamp down on discriminatory lending practices.  According to the bulletin, the CFPB plans to use a variety of available legal strategies – including disparate impact claims – to crack down on lenders and other financial institutions whose practices discriminate against consumers.

In the bulletin, the CFPB reiterated its authority to issue guidance about compliance with the fair lending requirements of the Equal Credit Opportunity Act (ECOA), and its corresponding implementation regulation, Regulation B.  The Dodd-Frank Wall Street Reform and Consumer Protection Act of 2012 (Dodd-Frank) granted the CFPB the authority to enforce and supervise compliance with the ECOA, as well as to issue regulations and interpret the ECOA.

The ECOA makes it unlawful for any creditor to discriminate against a credit applicant on account of race, religion, national origin, marital status, age, receipt of public assistance income, or due to the exercise of a right under the Consumer Credit Protection Act.  The ECOA protects consumers from such discriminatory lending practices which can occur when applying for credit cards, car loans, student loans, mortgages, and other lines of credit.

In the bulletin, the CFPB noted that it intends to monitor banks and other financial institutions for lending practices that violate the ECOA, including lending practices that result in a disparate impact or have a discriminatory effect on individuals protected by the ECOA.

Individuals who come forward and report potential violations of the ECOA, including employees of companies that engage in discriminatory lending practices, or employees of contractors, competitors, and vendors of such companies, are protected against retaliation by their employers under Section 1057 of the Dodd-Frank Act.

The Employment Law Group® law firm has an extensive nationwide whistleblower practice representing employees who have been victims of retaliation for reporting fraud or improper practices, such as discriminatory lending practices.

Sarbanes-Oxley Compliance Journal Publishes Article by The Employment Law Group® Managing Principal, R. Scott Oswald

April 30, 2012

According to The Employment Law Group® law firm’s managing principal, R. Scott Oswald, “2011 marked a sea change for whistleblowers at the Department of Labor’s Administrative Review Board (ARB).”  The Sarbanes-Oxley Compliance Journal recently published an article by Mr. Oswald which discusses the impact of recent ARB decisions on whistleblower protection and describes why “2011 was an important year for whistleblowers.”

In the article, Oswald highlighted 2011’s significant developments in whistleblower law, noting that “the ARB changed the standard of proving protected activity, embraced the concept of corporate knowledge, established the most generous standard for an adverse action in employment law, and established the fact that most Sarbanes-Oxley cases should proceed to an evidentiary hearing.”

Specifically, Oswald discussed the significance of the following 2011 ARB decisions:

• In Sylvester v. Parexel International LLC, ARB No. 07-123, ALJ Nos. 2007-SOX-039, 042 (May 25, 2011), the ARB affirmed that whistleblowers are protected under SOX even when mistaken and held that an employer’s disclosure of the whistleblower’s identity constitutes an adverse employment action, and, finally, found that whistleblowers can establish causation by showing that their whistleblowing activity was merely a contributing factor in the employer’s decision to take the adverse employment action.
• In Funke v. Federal Express Corporation, ARB No. 09-004, ALJ No. 2007-SOX 043 (ARB July 8, 2011), the ARB expanded whistleblower protections by confirming that an employee’s disclosure that a FedEx customer was using FedEx services to engage in mail fraud was protected activity under SOX, as was the whistleblower’s reporting of the customer’s conduct to local law enforcement.
• In Vannoy v. Celanese, ARB No. 09-118, ALJ No. 2008-SOX-064 (ARB September 28, 2011) the ARB “relieved whistleblowers from the heavy burden of proving their claims without using any of the employer’s confidential information,” whereas previously, Oswald noted, “whistleblowers could be subject to serious penalties for doing so.”
• In Menendez v. Halliburton, ARB Nos. 09-002, 09-003, ALJ No. 2007-SOX-005 (ARB September 13, 2011) the “ARB affirmed that whistleblowers are protected under SOX even when they are mistaken about the nature of their complaints” and held that an employer’s disclosure of the whistleblower’s identity constitutes an adverse employment action.
• In Johnson v. Siemens Bldg. Techs, Inc., ARB No. 08-032, ALJ No. 2005-SOX-015 (ARB March 31, 2011) the ARB “declared that whistleblowers may seek SOX’s protections from non-publically traded subsidiaries of publically traded companies.”
• Finally, in Villanueva v. Core Laboratories, ARB No. 09-108, ALJ No. 2009-SOX-006 (ARB December 22, 2011) the ARB “found that SOX can protect disclosures of violations of United States law by foreign whistleblowers who work for foreign branches or subsidiaries of United States companies”.  In the article, Mr. Oswald noted that, “as a result” of this decision, “even complaints to foreign compliance offices should be taken seriously and investigated when the violation claimed refers to U.S. law” because “foreign offices or subsidiaries can still violate U.S.s securities laws and resolutions.”

In addition to ARB decisions expanding whistleblower protections, 2011 also saw “the Consumer Financial Protection Bureau extend whistleblower protections to new industries pursuant to the Dodd Frank Act of 2010 – most recently payday lenders, student loan companies and mortgage finance companies”.

With this expansion of whistleblower protection, according to Oswald, “the ARB’s influence over the scope and contours of whistleblower protection, articulated in its precedents in 2011, will be felt for years to come by employers in areas of the US economy that may have had few, if any, whistleblower protections before.”

The article, entitled “More Protection for Whistleblowers”, was published in the April 25, 2012 edition of the Sarbanes-Oxley Compliance Journal and was also syndicated in Compliance Daily, as well as Governance, Risk Management & Compliance Daily.

The Employment Law Group® law firm is a leader in the field of whistleblower law and has an extensive nationwide whistleblower practice representing employees who have exposed illegal activity by their employer.

U.S. Department of Labor Files OSH Act Lawsuit Against Florida Canvas Manufacturer for Terminating Whistleblower Who Complained About Rodent Infestation

April 30, 2012

The U.S. Department of Labor Occupational Safety and Health Administration (OSHA) filed a whistleblower retaliation lawsuit against Aquatech Canvas & Consignment, a division of LOTO Services, LLC, and its owner, Allan R. Lochhead, for terminating an employee who raised health concerns about Aquatech’s facility in Stuart, Florida.  According to OSHA, Aquatech Canvas & Consignment “specializes in the preparation, sale and installation of canvas, including covers for boats and upholstery.”

OSHA filed suit in the U.S. District Court for the Southern District of Florida after its investigation found that Aquatech and Lochhead violated the whistleblower provisions of Section 11(c) of the Occupational Safety and Health Act when they terminated the employee for raising health concerns.  The employee reported to management that the offices were infested with rodents and that rodent droppings could be seen in various places.   Although Lochhead personally placed rodent traps in the office, the problem persisted and the employee complained again.  When Lochhead insisted that there was no rodent problem, the employee filed a health complaint with OSHA.  One day after OSHA notified Aquatech and Lochhead about the complaint the company fired the employee.

In addition to requesting back wages, interest, and compensatory and punitive damages, OSHA is asking the employee be reinstated and that Aquatech expunge from the employee’s personnel records any negative information relating to this matter.

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

Whistleblower Awarded $462,500 for Alerting U.S. Coast Guard of Major Pollution Violation

April 30, 2012

Baltimore, Maryland U.S. District Judge Marvin Garbis has awarded Salvador Lopes, the ship’s third engineer, $462,500 for blowing the whistle on Greek ship manager Efploia Shipping Co. and Denmark-based Aquarosa Shipping. In January, both shipping companies pled guilty to violating the Act to Prevent Pollution from Ships (APPS) by intentionally releasing oil and plastic waste in the port of Baltimore. Lopes could receive an additional $462,500 if the judge dismisses Efploia’s argument that Lopes should have notified company officials before complaining to the U.S. Coast Guard.

Officials state that Lopes provided the Coast Guard valuable information leading to this verdict, which include a handwritten note detailing illegal dumping of oil waste and garbage from the vessel Aquarosa, copies of the ship’s log, and over 300 cell phone photos documenting the violations.  Lopes also showed the Coast Guard where to find the “magic pipe” that allowed the ship to discharge pollutants undetected by illegally bypassing pollution prevention equipment.

Judge Garbis has also ordered that Efploia and Aquarosa each pay $952,000 in fines and donate $275,000, as part of their community service, to the National Fish and Wildlife Foundation, which has a mission of restoring the Chesapeake Bay and other Maryland waterways.

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

Networking Equipment Company Pays $2 Million to Partially Settle a Qui Tam Whistleblower Lawsuit

April 27, 2012

On April 16 2012, the U.S. Department of Justice (DOJ) announced that Cablexpress Corp, which operates under the name CXtec, agreed to pay $2 million to settle allegations that it violated the Trade Agreements Act (TAA). The lawsuit claims that CXtec unlawfully sold to the federal government counterfeit gigabit interface converters (GBICs) as well as networking and voice communication equipment  that were manufactured in countries prohibited by the TAA .

Timothy Kuney, a former high-ranking employee at CXtec, brought the law suit under qui tam provisions of the False Claims Act (FCA). The FCA allows a private citizen with knowledge of an organization committing fraud against the government to file a lawsuit against the organization on behalf of the government in order to recover fraudulently obtained federal funds.

Kuney filed the complaint in 2008 with the U.S. District Court for the Northern District of New York, claiming that CXtec  knowingly violated the TAA by selling products that were manufactured in China, Taiwan, Indonesia, Malaysia and Thailand, to federal agencies. The contract between CXtrec and the government required that all products be compliant with TAA. According to the complaint, CXtrec also established a specialized operation to sort, test and repackage counterfeit GBICs in order to deceive the government that they were authentic products.

Kuney will receive an award of $380,000 as a result of the settlement. The $2 million settlement resolves some claims in the complaint, but not all. The lawsuit will continue to move forward on additional allegations that CXtec sold to the government other products that violated the TAA .

“We are gratified that the government’s attorneys and investigators aggressively pursued our client’s allegations with respect to the unlawful sale of cables and counterfeit GBICs in violation of the False Claims Act, and we intend to continue our investigation and litigation of the remaining qui tam claims in the case,” said Jonathan Tycko, one of Kuney’s attorneys.

The Employment Law Group® law firm is a leader in the field of whistleblower law and has an extensive nationwide whistleblower practice representing employees who have exposed illegal activity by their employer.

Former Infosys Principal Consultant Blows the Whistle on Company’s Illegal Visa Practice, Prompting Federal Investigation

April 20, 2012

Last week CBS News reported that Jay Palmer, a former principal consultant for Infosys Limited, filed a whistleblower retaliation lawsuit against the information technology firm, sparking a federal investigation by the Department of State and Homeland Security and Senator Charles Grassley (R-Iowa).

Palmer alleges that Infosys used the H-1B and B-1 visa programs to commit visa fraud. According to Palmer, the company used these visa programs to bring to the U.S. Indian workers who would be willing to work for less than American worker:

“[Infosys] could outbid everyone or underbid everybody on every contract (because they were paying less.) For example… if I’m gonna pay you $15,000 a year why would I pay an American or a legal worker $65,000 a year? It makes no – it’s just economics.”

In order to bring Indian workers to the U.S., Infosys first used H-1B visas, a program intended for foreign workers with specialized skills or technical abilities that cannot be found among American workers. However, Palmer states, many workers that Infosys brought to the U.S. under this program lacked the specialized skills necessary to qualify for the H-1B visa program.

Furthermore, Palmer alleges that once the U.S. State Department began to limit the number of H-1B visas issued, Infosys began bringing workers to the U.S. under B-1 visas, which are meant for foreign employees traveling to the U.S. to attend training seminars or conventions.  Because the B-1 program prohibits holders from using the visa to work in the U.S., Infosys maintained a list of “do’s and don’ts” on how to obtain B-1 visas for that prohibited purpose. Palmer says that once he blew the whistle on the company’s illegal practices, Infosys executives retaliated against him.

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

R. Scott Oswald, Managing Principal of The Employment Law Group®, Serves as Panelist in D.C. Bar Sponsored Whistleblower Law Seminar

April 18, 2012

R. Scott Oswald, managing principal of The Employment Law Group® law firm will serve as a panelist in an upcoming presentation to the District of Columbia Bar on April 18, 2012.

In the seminar – “Recent Developments in Whistleblower Rules: Opportunities and Risks” – Mr. Oswald will speak as part of a panel comprised of government whistleblower enforcement officials and private practitioners including:

• Carolyn Hahn, Consumer Financial Protection Bureau (CFPB)
• Vincent Martinez, U.S. Commodity Futures Trading Commission (CFTC)
• Larry Ellsworth, Jenner & Block
• Thomas Willcox, Law Offices of Thomas C. Willcox
• Michael G. McLellan, Finkelstein Thompson LLP (Moderator)

The seminar will focus on recent developments in federal whistleblower law and regulations in the areas of whistleblower protection, enforcement actions, and monetary awards for whistleblowers.  Additionally, the panelists will discuss the opportunities and risks provided by these developments and will provide guidance to practitioners in the field of whistleblower law.

The program is being held at Weil, Gotshal & Manges LLP in Washington, D.C. from 6:00 to 8:00pm.  The D.C. Bar’s Antitrust and Consumer Law Section is sponsoring the event, in conjunction with the Administrative Law and Agency Practice Section, the Corporation, Finance and Securities Law Section, the Litigation Section, the Taxation Section, and the Tort Law Section.

The Employment Law Group® law firm is a leader in the field of whistleblower law and has an extensive nationwide whistleblower practice representing employees who have been victims of retaliation.