Whistleblower Law Blog

Governor O’Malley Signs the Maryland False Health Care Claims Act of 2010

April 30, 2010

On April 13, 2010, the Maryland False Health Claims Act of 2010 (SB 279) was signed into law by Governor O’Malley.  The Act prohibits a person from knowingly presenting or causing to be presented a false or fraudulent claim for payment or approval to a State health plan or program and creates a right of action against those who submit a false claim.  The Act also creates robust protections for whistleblowers.  Below is a summary of the Act which is to be codified from section 2-601 to section 2-611 of the Annotated Code of Maryland.

• A person may not knowingly present or cause to be presented a false or fraudulent claim for payment or approval.  The concealment or improper reduction of a debt owed to the State (also known as a reverse false claim) is prohibited as well.  Violators are subject to a fine of up to $10,000 and may be liable for up to three times the damages sustained by the State, and in no event, less than the loss suffered by the State.

• An individual may file a civil action on behalf of the State seeking any damages permitted by law as well as costs and attorney’s fees.  An action filed by an individual shall remain under seal for at least 60 days, during which the State shall investigate the claim and may elect to intervene.  If the State declines to intervene, the court must dismiss the case.

• If the State intervenes in a civil action brought by an individual, the State will have the primary responsibility for proceeding with the action and may withdraw from the action at anytime.  If the State withdraws, the court must dismiss the case.

• If the State proceeds with an action and prevails, the person who initiated the action shall be awarded an amount between 15 and 25% of the proceeds of the action.  However, if the court finds that the action is based upon publicly available information, the award is limited to 10% unless the individual is an original source.  Courts do not have jurisdiction to hear claims brought by an individual who is not an original source, though the State may still pursue the action independently. 

• Retaliation against any employee, contractor, or grantee is prohibited.  Protected conduct includes: any lawful act taken in furtherance of the Act; objections to reasonably suspected violations; participation in any action brought under the Act; and any actual or threatened disclosure of information which the whistleblower reasonably believes evidences a violation of the Act.  Prohibited retaliation includes discharging, suspending, demoting, threatening, harassing, discriminating against, or taking any other adverse action relating to the conditions of employment, contract, or agency.  

• Whistleblowers suffering retaliation may file a civil action seeking injunctive relief including reinstatement and up to two times the amount of lost wages, benefits, and other remuneration, including interest.  Whistleblowers may also seek any other relief necessary to make them whole as well and punitive damages. 

For information about The Employment Law Group® law firm’s False Claims Act Practice, click here.

TELG Publishes Article on Whistleblower Provisions in Health Care Reform Act

April 13, 2010

TELG attorneys Scott Oswald and Jason Zuckerman published an article in the April 8, 2010 edition of Employment Law 360 about the whistleblower provisions in the Patient Protection and Affordable Care Act of 2009, signed by President Obama on March 23, 2009.  The Act includes several whistleblower provisions including a new private right of action for retaliation and amendments to the False Claims Act.  The full article is available here.

To learn more about The Employment Law Group® law firm’s Whistleblower Retaliation Practice, click here.

OSHA Orders New Jersey Transit to Reinstate Rail Worker, Pay Punitive Damages

April 07, 2010

On April 6, 2010, OSHA ordered the New Jersey Transit Corporation (NJT) to reinstate a rail worker and pay him over $500,000 for retaliation he suffered as a result of missing work due to a job related illness.  In February 2008, the Complainant witnessed a contractor being electrocuted and burned to death after coming into contact with high voltage lines.  The Complainant fully cooperated in the ensuing investigation and was found not to be involved.  Shortly thereafter, the Complainant reported difficulty sleeping and emotional trauma.  The Complainant was ordered into an employee assistance program (EAP) and was diagnosed with anxiety and post traumatic stress disorder.

Upon learning that the Complainant would miss work as a result of his illness, the Superintendent accused the Complainant of manipulating the EAP counselor and malingering.  The Superintendent also launched an investigation, accusing the Complainant of “violating electrical operating instructions.”  Later the Superintendent also stopped the Complainant’s EAP pay.  After approximately six months, the EAP counselor cleared the Complainant to return to work in October 2008.  However, NJT then suspended the Complainant without pay until February 2009 for safety violations.

While in the EAP, the Complainant filed a complaint with OSHA claiming NJT violated the Federal Rail Safety Act.  OSHA found that the temporal proximity between the reported illness and adverse employment actions is sufficient to prove that the NJT retaliated against the Complainant.  As a result, OSHA ordered NJT to reinstate the Complainant and pay him back pay.  He has also been awarded $5,000 for pain and suffering; $50,000 for damage to his credit; and over $350,000 for the loss of his car and home.  NTJ must also pay $75,000 in punitive damages due to “its reckless disregard for the law and complete indifference to the Complainant’s rights.”  The Complainant and NJT have 30 days to object and request a hearing before the Department of Labor’s Office of Administrative Law Judges.

For information about The Employment Law Group® law firm’s Railroad Whistleblower Practice, click here.

ALJ Orders BB&T Bank to Reinstate SOX Whistleblower Who Disclosed Ponzi Scheme

April 07, 2010

On April 1, 2010, Administrative Law Judge Jeffrey Tureck found that BB&T violated the whistleblower provision of the Sarbanes-Oxley Act and ordered the bank to reinstate Amy Stroupe, awarding her approximately three years of back pay.  Stroupe, a corporate fraud investigator, uncovered a $100 million Ponzi scheme funded in part with $20 million of fraudulent loans made by her employer.  BB&T terminated Stroupe for pursing her investigation into a top loan producer and disagreeing with managers who were attempting to conceal the extent of BB&T’s involvement in the scheme.  BB&T contended that it terminated Stroupe for discussing the investigation with other employees and for missing a half day of work without permission.

Judge Tureck rejected BB&T’s defense, holding that BB&T failed to prove by clear and convincing evidence that Stroup would have been terminated absent her protected activity.  According to Judge Tureck’s opinion, BB&T’s classification of Stroupe’s behavior as insubordinate was not “reasonable or persuasive . . . Moreover, one thing that is clear from the evidence in this case is that the Complainant was never insubordinate.  The record shows that she did what she was told to do, even when she disagreed.”  Relying on comparator evidence, Judge Tureck also rejected the argument that Stroupe was terminated for missing a half day of work, concluding that “BB&T has not supported by clear and convincing evidence that it would have immediately terminated Stroupe for missing an afternoon of work without prior consent.”

The case is Stroupe v. Branch Banking & Trust Co. and a copy of the opinion is available here. 

For more information about The Employment Law Group® law firm’s Sarbanes-Oxley Whistleblower practice, click here. 

Supreme Court Rules That Public Disclosure Bar to False Claims Act Qui Tam Actions Applies to County and State Administrative Reports, Audits, and Investigations

March 30, 2010

On March 30, 2010, the Supreme Court issued an opinion widening the public disclosure bar to qui tam actions brought under the False Claims Act (FCA), holding that “the reference to ‘administrative’ reports, audits, and investigations” contained in the public disclosure bar of the FCA “encompasses disclosures made in state and local sources as well as federal sources.”  In Graham County Soil and Water Conservation District et al v. United State ex rel. Wilson, the Court ruled that a relator could not maintain a qui tam suit when the information that her suit is based on is contained in county and state administrative reports. 

Wilson filed suit in 2001, alleging that the defendants and a number of local and federal officials violated the FCA by submitting false claims under 1995 contracts which provided federal funds to aid with flood restoration.  The defendants argued that no federal court has the jurisdiction to hear Wilson’s claim because 31 U.S.C. § 3730(e)(4)(A) removes jurisdiction over qui tam actions based on information publicly disclosed “in a criminal, civil, or administrative hearing, in a congressional, administrative, or Government Accounting Office report, hearing, audit, or investigation. . .”  Examining the construction of the statute and legislative history, the court sided with the defendants, holding that the FCA’s public disclosure bar is not limited to federal disclosures.

However, the impact of this decision is minimal as the Patient Protection and Affordable Care Act of 2009, signed by President Obama on March 23, 2010, replaces 31 U.S.C. 3730(e)(4) with language clarifying that the public disclosure bar only pertains to information disclosed “(i) in a Federal criminal, civil, or administrative hearing in which the Government or its agent is a party; (ii) in a congressional, Government Accountability Office, or other Federal report, hearing, audit, or investigation. . .”  In addition, under the new statute, the public disclosure bar is no longer jurisdictional and the Government may object to the dismissal of a claim based upon publicly disclosed information.  For more information about the impact of the Patient Protection and Affordable Care Act of 2009’s impact on whistleblowers, click here.

For information about The Employment Law Group® law firm’s False Claims Act Practice, click here.

Health Care Reform Bill Creates New Whistleblower Protections

March 23, 2010

The Patient Protection and Affordable Care Act of 2009 (H.R. 3590) that the House approved on March 21, 2010, creates new whistleblower protections for health care workers and strengthens the coverage of the False Claims Act.  The following is a summary of these provisions and the text of the relevant sections is available here.

Health Care Worker Whistleblower Protections

Section 1558 prohibits retaliation against an employee who provides or is about to provide to an employer, Federal Government, or a state Attorney General, information that the employee reasonably believes to be a violation of Title I of the Bill.  The provision also protects individuals who participate in investigations or object to or refuse to participate in any activity that the employee reasonably believes to be a violation of Title I of the bill.   Title I contains a wide range of rules governing health insurance, including a prohibition against denying coverage based upon preexisting conditions, policy and financial reporting requirements and prohibitions against discrimination based upon an individual’s receipt of health insurance subsidies.  Accordingly, Section 1558 will likely protect a broad range of disclosures.

The procedures, burden of proof, and remedies applicable to this new retaliation claim are set forth in the Consumer Product Safety Improvement Act of 2008, 15 U.S.C. 2087(b), including (1) a 180-day statute of limitations; (2) a requirement to initially file the complaint with OSHA, which will investigate the complaint and can order preliminary reinstatement; (3) the option to litigate the claim before the Department of Labor Office of Administrative Law Judges or to remove the claim to federal court 210 days after filing the complaint; (4) the right to try the claim in federal court before a jury;  and (5) a broad range of remedies, including reinstatement, back pay, special damages, and attorney’s fees.  Similar to Section 806 of the Sarbanes-Oxley Act, the causation standard and the burden-shifting framework are very favorable to employees.

A complainant can prevail merely by showing by a preponderance of the evidence that her  protected activity was a contributing factor in the unfavorable action.  A contributing factor is “any factor which, alone or in connection with other factors, tends to affect in any way the outcome of the decision.” Once a complainant meets her burden by a preponderance of the evidence, the employer can avoid liability only if it proves by clear and convincing evidence that it would have taken the same action in the absence of the employee engaging in protected conduct, an onerous burden.

Protections for employees of federally funded long-term care facilities.

Long-term care facilities that receive more than $10,000 in federal funding in the preceding year must notify all officers, employees, managers, and contractors of the facility that they are required by law to report any reasonable suspicion of a crime to at least one law enforcement agency.  Failure to report a suspected crime can expose an employee, manager, or contractor to civil fines of up to $200,000.  A long-term care facility is prohibited from engaging in retaliation against an employee “because of lawful acts done by the employee.”  Facilities violating the anti-retaliation provision may be subject to a fine of up to $200,000 and exclusion from federal funds for up to two years.

Implementation of standardized complaint forms for nursing homes and prohibition against retaliation.

Section 6105 requires nursing homes to implement a standardized complaint form and requires each state to develop a complaint resolution process to track and investigate complaints and to ensure that complainants are not subjected to retaliation.

Expands the definition of an “original source” under the False Claims Act.

Section 10104(j)(2) strikes 31 U.S.C. 3730(e)(4)(A) and replaces it with language expanding the definition of an “original source” to include “individual who either (i) prior to a public disclosure under subsection (e)(4)(a), has voluntarily disclosed to the Government the information on which allegations or transactions in a claim are based, or (2) who has knowledge that is independent of and materially adds to the publicly disclosed allegations or transactions, and who has voluntarily provided the information to the Government before filing an action under this section.”  This new definition of “original source” will bring much-need uniformity to this critical issue that arises in most qui tam actions and increase the likelihood that relators will be able to meet the original source exception to the public disclosure bar.

ALJ Order Expands Joint Employer Liability Under the Surface Transportation Assistance Act

March 23, 2010

On March 11, 2010, Administrative Law Judge Rae issued an order holding that an agreement which provides a joint employer with the ability to accept or cancel the assignment of a leased employee may be sufficient to establish liability under the Surface Transportation Assistance Act (STAA).  In Myers v. AMS Staff Leasing, the respondent contracted with trucking company New Rising Fenix, Inc. to provide payroll, benefits, and human resource services.  The respondent moved to dismiss, arguing that they did not exercise sufficient control over the complainants to establish liability under the STAA.  In support, the respondent cited cases holding that employment leasing contract provisions required by Florida law are not sufficient to create liability under the Fair Labor Standards Act (FLSA).

Judge Rae agreed that the FLSA and STAA are sufficiently similar to exempt an employer from liability on the sole basis of statutorily mandated contact provisions.  However, the respondent still failed to demonstrate that it did not have the ability to control the complainants since the joint employers’ contract provided the respondent with the discretion to cancel the assignment of certain employees.

For more information about The Employment Law Group® law firm’s Commercial Motor Carrier Whistleblower Practice.

ALJ Awards Trucker Punitive Damages After Being Fired for Refusing to Drive in Dangerous Conditions

March 23, 2010

On March 15, 2010, Administrative Law Judge Daniel Leland awarded Cynthia Ferguson over $151,000 including $75,000 in punitive damages, holding that she was terminated in retaliation for refusing to drive in hazardous conditions.  On a cross country trip, Ferguson encountered extremely inclement weather approaching Donner Pass in the Sierra Nevada Mountains.  Ferguson observed a truck in a ditch and another forced to stop in the middle of the road due to black ice.  She also received reports from other drivers advising her not to cross the pass until the conditions improved.  Ferguson told her employer of the situation and her decision to stop driving.  Her employer pressured her to continue on and later terminated her.

Judge Leland held that a reasonable person in Ferguson’s position would have concluded that the weather conditions presented a serious danger and if Ferguson had not stopped, she would have violated federal regulations prohibiting the operation of commercial motor vehicles in conditions that are likely to cause an accident or breakdown.  The employer argued that it fired Ferguson for carrying a negative balance with the company. 

Judge Leland acknowledged that the negative balance could be a legitimate reason to terminate Ferguson but found that comments made by Ferguson’s supervisor and the temporal proximity between Ferguson’s protected activity and termination established a mixed motive.  As a result of her employer’s “total disregard not only for her and her co-driver’s safety but for the safety of other drivers on the road,” Judge Leland awarded Ferguson $75,000 in punitive damages, $50,000 for emotional distress, back pay, reinstatement, costs, and attorney’s fees.  The case is Ferguson v. New Prime, Inc. and a copy of the order is available here.

For information about The Employment Law Group® law firm’s Commercial Motor Carrier Whistleblower Practice, click here.

OSHA Orders Tennessee Commerce Bank to Pay Over $1 million for SOX Violations

March 23, 2010

On March 17, 2010, the Occupational Safety and Health Administration ordered Tennessee Commerce Bank to reinstate a former chief financial officer and pay more than $1 million for violations of the Sarbanes-Oxley Act.  Former CFO George Fort filed a complaint with OSHA on April 4, 2008 alleging that the bank terminated him in retaliation for raising concerns about weak internal controls, potential insider trading, and meeting with state and federal regulators after the bank’s audit committee failed to address his concerns. 

Finding for Mr. Fort, OSHA relied in part on emails displaying “evidence of animus and intent to retaliate” against the complainant.  One email sent by a board member said that he was “in a ‘get even’ mode and…enjoying every minute of it.”  OSHA ordered the bank to reinstate Mr. Fort and awarded him pay back pay and compensatory damages for medical expenses and lost benefits.  Both parties have 30 days object to the order and request a hearing before the Department of Labor’s Office of Administrative Law Judges.

For more information about The Employment Law Group® law firm’s Sarbanes-Oxley Whistleblower Practice, click here.

TELG’s Win in Stone v. Instrumentation Lab. Co. Helps SOX Whistleblower Proceed to Federal Court

March 18, 2010

On March 10, 2010, Judge Rae issued an order clarifying the right of SOX plaintiffs to remove their claims federal court.  In Miller v. Stifel, Nicolaus & Co. Inc., the complainant changed counsel three times and failed to respond to discovery requests.  Miller then moved to remove her claim to federal court on the basis that she had not received a final decision within 180 days of filing her complaint.  The employer objected, asserting that Miller’s failure to cooperate with discovery constituted bad faith.  Relying in part on Stone v. Instrumentation Lab. Co., Judge Rae granted Miller’s motion, holding that the sole continuance resulting in a delay was requested by the employer and remarked that “[a] mere allegation of bad faith is insufficient to successfully oppose removal under the relevant SOX provision.”

For more information about The Employment Law Group® law firm’s Sarbanes-Oxley Whistleblower practice, click here.  For more information on the Stone decision, click here.