Whistleblower Law Blog

Settlement Talks Underway in First Case Interpreting the ACA’s 60-Day Repayment Provision

November 09, 2015

The first known case interpreting the Affordable Care Act’s repayment provision, United States. ex rel. Robert Kane v. Healthfirst, was recently approved for settlement talks after the United Stated District Court for the Southern District of New York denied Healthfirst’s motion to dismiss.

Effective March 23, 2010, the Affordable Care Act requires health care providers to report and return an overpayment to Medicare or Medicaid within sixty days of identification.  The ACA also requires health care providers to submit a statement identifying the reasons for overpayment. The ACA authorizes civil monetary penalties of $10,000 per item or claim, as well as treble damages, for a provider who fails to report and return known overpayments.

In 2011, Healthfirst fired Kane four days after he circulated an email with a spreadsheet documenting over 900 improperly billed claims worth more than $1 million in potential overpayments. » Read more

Connecticut Supreme Court Grants Constitutional Protection to Whistleblowers in the Public and Private Sectors

November 05, 2015

In a recent opinion from the Supreme Court of the State of Connecticut, Trusz v. UBS Realty Investors, LLC, __ A.3d __, 319 Conn. 175 (Conn. 2015), the Court held that First Amendment protection “applies to speech in a public workplace under the state constitution and that [the state’s whistleblower protection law] extends the same protection to employee speech in a private workplace for claims involving the state constitution.” This ruling from Connecticut’s highest court comes a little more than a year after the U.S. Supreme Court’s ruling in Lane v. Franks, 134 S. Ct. 2369 (2014), which narrowed the strict holding of Garcetti v. Ceballos, 547 U.S. 410 (2006), and allows for First Amendment protection for government employees who testify truthfully under oath about matters related to their employment. This expansion of constitutional protection to public employees by the Connecticut Supreme Court is a hopeful sign for enhancing the protection of whistleblowers nationwide.

In Garcetti v. Ceballos, the U.S. Supreme Court held that First Amendment protection applied to the speech of government employees only when those employees spoke about non-job related duties. But last year, in Lane v. Franks, the Supreme Court opened the door to First Amendment protection for public employees’ speech related to job duties by considering both the employee’s “obligation to the court and society at large [to tell the truth in testimony]” and whether an absence of such protection “would place public employees who witness corruption in an impossible position, torn between the obligation to testify truthfully and the desire to avoid retaliation and keep their jobs.” Ultimately, in Lane, the Supreme Court held that the First Amendment affords protection to public employees who testify truthfully about job-related duties.

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Fourth Circuit Will Rule on Use of Sampling to Establish FCA Liability

November 04, 2015

In United States ex rel. Michaels et al. v. Agape Senior Community Inc. et al., the United States District Court for the District of South Carolina certified its ruling rejecting the Plaintiff-Relators’ use of statistical sampling to prove liability and damages, setting the ruling for interlocutory appeal by the U.S. Court of Appeals for the Fourth Circuit.  On September 29, 2015, the Fourth Circuit agreed to review whether statistical sampling can be used to prove liability in a fraud case.

In Agape, the Plaintiff-Relators claimed that Defendants, a network of twenty-four nursing homes, committed fraud by submitting false Medicare, Medicaid, and Tricare claims and seeking reimbursement for nursing home-related services.  The government declined to intervene.  The case involves claims for at least 10,166 patients.  The district court found that “each claim asserted here presents the question of whether certain services furnished to nursing home patients were medically necessary,” meaning that each claim for each patient is distinct and unique from the other claims.» Read more

Federal Court Approves IRS’s Widened Use of “John Doe” Summonses to Identify Tax Evaders

November 04, 2015

In In the Matter of the Tax Liabilities Of: John Does, the United States District Court for the Southern District of Florida authorized the Internal Revenue Service to use “John Doe” summonses to identify U.S. taxpayers with undisclosed bank accounts in Belize.  The IRS uses “John Doe” summonses to assist in investigations where the identities of individuals are unknown. This marks at least the third time the IRS has used this investigatory tool, which makes it easier for the IRS to pursue tax fraud cases.

The IRS sought records from Bank of America, N.A. and Citibank, N.A. identifying U.S. taxpayers with accounts at Belize Bank International Limited, Belize Bank Limited, or Belize Corporate Services.  According to a Justice Department statement, these entities are subsidiaries of BCB Holdings Limited.» Read more

Washington Whistleblower Uses State Supreme Court Ruling to Restore Retaliation Claims

October 30, 2015

On September 29, 2015, a federal judge in Washington revived a state retaliation claim against a contractor accused of False Claims Act (FCA) violations, citing a recent Washington State Supreme Court ruling that overturned a previous decision that would have made the FCA retaliation provision the plaintiff’s sole avenue for relief.

Maxmillian Salazar III had sued federal fire-safety contractor Monaco Enterprises, Inc. under the federal False Claims Act based on allegations that the company overbilled the U.S. Government.  Salazar also alleged that Monaco fired him, in violation of Washington state common law, for reporting the overbilling.  In October 2011, the company had fired Salazar, its former Director of Application Engineering, after he reported overbilling he witnessed while performing work related to Monaco’s procurement process.

Under Washington state precedent in place since the decision in Cudney v. Alsco, Inc., 259 P.3d 244 (Wash. 2011), Salazar was barred from bringing the state retaliation claim because the FCA includes its own anti-retaliation provision (31 U.S.C. § 3730(h)).  Cudney held that a plaintiff could not bring a claim of wrongful discharge in violation of public policy under Washington state common law if an alternate remedy for the retaliatory filing existed under any state or federal statute.

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Circuits Split on Dodd-Frank’s Whistleblower Protections

October 14, 2015

In Berman v. Neo@ogilvy LLC, the Second Circuit held that there was enough ambiguity between the Dodd-Frank Act’s definition of “whistleblower” and its anti-retaliation provisions to trigger Chevron deference to the SEC’s interpretation of the statute.  The Second Circuit thus accepted the SEC’s interpretation that Dodd-Frank does not require whistleblowers to report wrongdoing to the SEC to invoke the Act’s employee protection provisions.  This is the opposite conclusion reached by the Fifth Circuit in Asadi v. G.E. Energy (USA), L.L.C., setting the stage for the Supreme Court to resolve the conflict among the Circuits.

The Dodd-Frank Wall Street Reform and Consumer Protection Act, 15 U.S.C. § 78u–6, was passed in 2010 in response to the 2008 economic crash.  Section 922 of Dodd-Frank contains two courses of relief for whistleblowers: a whistleblower can provide information to the SEC and the SEC may provide that whistleblower with a monetary award; or a whistleblower may file a private cause of action against an employer who retaliates because of the whistleblower’s protected disclosures (this latter section is often referred to as the “anti-retaliation provision”).

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Despite Recent Scrutiny, Whistleblower Retaliation at the VA Remains a Critical Problem

October 14, 2015

In recent testimony before the Senate Committee on Homeland Security and Governmental Affairs, Carolyn Lerner, head of the U.S. Office of Special Counsel, said that her office expects that 35 percent of the prohibited personnel practices complaints it receives in 2015 will come from aggrieved employees at the Department of Veterans Affairs. Lerner also told the Committee that, in 2014, “the VA surpassed the Department of Defense in the total number of cases filed with OSC, even though the Defense Department has twice the number of civilian employees as the VA.” Lerner’s testimony came on the heels of a September 17, 2015 letter to President Obama from her office that detailed numerous OSC findings of the VA’s failures to hold accountable employees responsible for wrongdoing, including unlawful retaliation. It also came shortly after the OSC announced that it found that the VA unlawfully retaliated against a former employee of its Baltimore Regional Office. These developments demonstrate the ongoing challenges in protecting the valuable role played by whistleblowers in exposing wrongdoing.

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MSPB Holds that Hostile Work Environment is an Adverse Action under the Whistleblower Protection Act

October 13, 2015

On September 3, 2015, in Savage v. Dep’t of the Army, the Merit Systems Protection Board held that the creation of a hostile work environment is a prohibited personnel action under the Whistleblower Protection Act.  The Board, in Savage, remanded an initial decision in part because the administrative judge did not consider creation of a hostile work environment a prohibited action under the WPA.

The Whistleblower Protection Act provides relief to federal whistleblowers who 1) disclose activity they reasonably believe is a violation of law, rule, or regulation, and 2) experience a prohibited personnel action as a result.  The WPA defines twelve prohibited personnel actions, including termination, demotion, and transfer.  The twelfth is a catchall for “any other significant change in duties, responsibilities, or working conditions.”  The Savage decision placed hostile work environment claims within this category of prohibited personnel actions.

Tommie Savage was a supervisory Contract Specialist with the U.S. Army Engineer and Support Center in Huntsville, Alabama who received excellent performance ratings throughout her time in the job.  Savage reported activities she believed to be illegal, and her disclosures led to a May 24, 2007 internal audit that the MSPB found validated her concerns.

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OSHA Encourages Nationwide Adoption of “Early Resolution” ADR in Whistleblower Cases

October 07, 2015

On August 18, 2015, the Occupational Safety and Health Administration released a directive to its regional offices to adopt “early resolution” alternative dispute resolution in whistleblower cases.  The directive follows a successful pilot program by OSHA in its Chicago and San Francisco regions.

From October 1, 2012, to September 30, 2013, OSHA ran a pilot ADR program in regions V (Chicago) and IX (San Francisco).  The program provided two options for settling disputes: (1) an “early resolution” process offering parties the assistance of a “neutral, non-decision-making OSHA whistleblower expert;” and (2) a one-day, in-person mediation with a “professional third-party mediator.”

OSHA found the early resolution process a “very effective and viable alternative” to the normal OSHA investigative process.  As a result, OSHA is expanding the pilot program to all of its regional offices, though OSHA did leave regional offices the choice to offer parties additional ADR options.
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Recent Decisions Bring Focus to The Seaman’s Protection Act

September 25, 2015

Currently, 25 federal laws protect whistleblowers in the workplace.  The Seaman’s Protection Act (SPA), enacted by Congress in 2010, ensures that seamen (and women) on vessels are protected from retaliation for disclosing safety violations in the work place.

While a lesser known that other whistleblower statues, the SPA prohibits retaliation against mariners for engaging in protected activities.  These protected activities include disclosures related to failure to comply with maritime safety laws and regulations, reporting maritime safety issues to the U.S. Coast Guard, and disclosing violations to any other federal agency.

Recent decisions highlight the protections and the limitations of the SPA.  In Joseph Dady v. Harley Marine Services, Dady, a marine pilot, reported to the U.S. Coast Guard Harley Marine Service’s practice of dumping raw sewage into the ocean.  He also reported repeated rudder failure and improper manning.  The illegal sewage spills sickened crew members.  Harley terminated Dady shortly after his internal disclosures and reports to the U.S. Coast Guard. While the Administrative Judge held that Dady had engaged in protected activity, he also held that Dady was unable to prove that his disclosures caused his termination.

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