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Illinois Whistleblower Beats Summary Judgment, Heads to Trial in FCA Retaliation Case

March 17, 2010

On March 8, 2010, Judge Anderson issued an opinion broadly construing the scope of actionable retaliation under the False Claims Act (FCA), allowing whistleblower Ann Howard to proceed with her FCA retaliation claim in U.S. ex rel. Howard v. Urban Inv. Trust, Inc.. Howard was employed as an accountant for Urban, a property management company that worked for the U.S. Department of Housing and Urban Development (HUD) and the Chicago Housing Authority (CHA). Urban contracted with Synergy Affiliates to manage its payroll, benefits, and human resources. The two organizations considered themselves co-employers of Howard.

Howard alleges that she discovered Urban was misusing and embezzling HUD and CHA funds. She resisted pressure to participate in the criminal activity and in turn suffered harassment and retaliation. Howard reported these issues to her human resources representative at Synergy who failed to take any action. Howard then met with criminal investigators from CHA and informed Synergy of this meeting. Howard continued to experience harassment and resigned.

Synergy moved for summary judgment, claiming that in order for liability to attach, an employer must engage in an affirmative retaliatory action. The judge rejected this argument, holding that the FCA’s anti-retaliation provision “covers situations in which an employee is ‘in any other manner discriminated against in the terms and conditions of employment.’” Accordingly, by failing to execute its duties “with respect to a specific employee,” the employer “could be discriminat[ing] in the terms and conditions of the employment for that individual.” A copy of the order is available here.

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

OSHA Orders Employer to Reinstate Whistleblower and Pay over $600,000 for SOX Violations

March 16, 2010

On March 3, 210, the Occupational Safety and Health Administration announced that it ordered e-Smart Technologies, Inc. to reinstate a whistleblower and awarded the plaintiff over $600,000 in back pay and compensatory damages. The whistleblower was discharged after raising concerns about misinformation in a draft public filing. Both the employee and e-Smart have 30 days to file an objection 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.

The Employment Law Group® Principal Jason Zuckerman Quoted by Public Health Blog

March 15, 2010

On March 11, 2010, The Pump Handle, a blog focused on public health and environmental issues, quoted The Employment Law Group® law firm Principal Jason Zuckerman in a blog post entitled “Wherever I look, whistleblower issues abound.” The post discusses the urgency of reforming OSHA’s Whistleblower Protection Program and cites Mr. Zuckerman’s comments at a March 4, 2010 OSHA public meeting about deficiencies in the program. The post concludes with a compelling call for reform: “Labor Secretary Solis and Asst. Secretary David Michaels can turn this situation around by thinking boldly and promptly to transform the Department’s whistleblower protection program. There’s a huge opportunity to make it vibrant and effective—-the kind of program that the nation’s workers deserve. Support for transforming the program abounds and the opposition is…..is…..the status quo? If the Secretary is serious about her pledge to ‘give workers a voice,’ a transformed whistleblower protection program is a place to start.”

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

Eleventh Circuit Partially Reverses Dismissal of FCA Case

February 25, 2010

On February 18, 2010, the Eleventh Circuit partially overruled a district court’s dismissal of a False Claims Act case. In US ex rel. Sanchez v. Lymphatx, Inc., an employee brought a False Claims Act action against her former employer for fraudulent Medicare billing practices and retaliation. She also alleges that she was fired after complaining to her employer about “unlawful actions” and “warn[ing] them that they were ‘incurring significant criminal and civil liability.’”

The district court granted the employer’s motion to dismiss, holding that Sanchez failed to satisfy the pleading requirements of Rule 9(b) and failed to state a claim of retaliation under 31 U.S.C. § 3720(h). Sanchez appealed, claiming that she should have been granted leave to amend her complaint. On appeal, the Eleventh Circuit upheld the dismissal of the qui tam action but overturned the dismissal of the retaliation claim, holding that “[b]ecause her retaliation claim did not depend on allegations of fraud, Sanchez’s complaint only needed ‘a short and plain statement of the claim showing that [she was] entitled to relief’” under Rule 8(a).

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

The Employment Law Group® Law Firm is Quoted in an Article on the New ARB Members

February 24, 2010

Jason Zuckerman, a Principal at The Employment Law Group® law firm, is quoted in a Law360 article titled “Solis’ Whistleblower-Friendly Board May Reshape SOX.” The article discusses the recent appointment of Paul Igasaki as ARB chair and Cooper Brown as vice chair and predicts that the ARB’s interpretation of the Sarbanes-Oxley Act will become more favorable for whistleblowers.

Mr. Zuckerman discusses loopholes in whisteblower statutes created by past ARB decisions which “ignored the plain meaning of whistleblower protection statutes,” and “[made] it more difficult for whistleblowers to prevail.” Regarding the new appointees, Mr. Zuckerman noted that “it will be refreshing to have ARB members who are not hostile to whistleblower rights.”

For more information learn more about The Employment Law Group® and its Sarbanes-Oxley Whistleblower Practice, click here.

The Employment Law Group® Law Firm Principal Jason Zuckerman Quoted in Article about Impact of Obama’s 2011 Budget on Employment Law

February 24, 2010

In an article titled, “Labor Issues Loom Large,” Human Resource Executive Online reports on the potential impact of President Obama’s 2011 budget on the enforcement of employment laws. The article discusses the potential impact of Congress providing OSHA with additional funding for investigations and enforcement.

While employment practitioners speculate that increased OSHA enforcement will have a negative impact on employers, Mr. Zuckerman notes that increased enforcement benefits public interest. Zuckerman observes that misclassification of employees harms the public interest in that employers fail to pay unemployment taxes and to provide health insurance. Mr. Zuckerman also notes an important benefit of in enforcing discrimination laws. “An employer who discriminates against employees on the basis of race or gender loses the competitive advantage of having diverse perspectives in its workforce.”

Mr. Zuckerman is optimistic that increased resources will allow OSHA to improve upon what in his experience are often “inadequate investigations of whistleblower complaints.” He hopes “that with more financial recourses, OSHA will comply with the statutory mandate to enforce whistleblower-protection laws.”

For more information on Mr. Zuckerman and The Employment Law Group® law firm, click here.

The Employment Law Group® Law Firm is a Contributing Author of ABA Update on Sarbanes-Oxley Whistleblower Retaliation Claims

February 12, 2010

The Employment Law Group® law firm is a contributing author of the 2010 annual update on the whistleblower retaliation provision of the Sarbanes-Oxley Act, a copy of which is available here. This annual update is a project of the ABA Section of Labor and Employment Law Committee on Federal Labor Standards Legislation Subcommittee on the Sarbanes-Oxley Act of 2002.

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

Adam Carter Quoted by Law360 About Successful Appeal in SOX Case

January 05, 2010

Adam Augustine Carter, a Principal at The Employment Law Group® law firm, was quoted in a January 4, 2010 article published by Law360 about TELG’s success in a SOX case before the Fourth Circuit. The article discusses the Fourth Circuit’s decision in Stone v. Instrumentation Laboratory Company which we blogged about here. Stone was a case of first impression clarifying that a SOX whistleblower had the right to de novo review of a SOX claim in federal court once the complaint has been pending before DOL more than 180 days, as long as DOL has not issued a final decision in the case.

In the article, Mr. Carter points out that “‘[o]thers have taken the position that if you go all the way down the line with the DOL. . . it would be absurd to get another trial after that. . . . [t]his decision rejects that.’” Regarding the impact of the decision, Carter notes that it will “‘make clear that if the DOL is not going to move quickly, then the whistleblowers are free to come right to district court and start afresh.’”

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

Fourth Circuit Holds SOX Whistleblowers Entitled to De Novo Review in Federal Court

December 31, 2009

On December 31, 2009, in a case of first impression, the Fourth Circuit held in Stone v. Instrumentation Laboratory Company that a Sarbanes-Oxley (SOX) complainant may seek de novo review in federal court after the complaint has been pending before DOL for over 180 days without a final decision by the Secretary of Labor. In Stone, the whistleblower lost a Motion for Summary Decision before the DOL’s Administrative Law Judge (ALJ) and successfully petitioned the Administrative Review Board (ARB) for review. Before his initial brief was due, Stone followed all necessary procedures and brought an action in federal district court seeking de novo review. The employer filed a Motion to Dismiss which the district court granted, relying on comments in DOL implementing regulations stating that “the Secretary anticipates that Federal courts will apply [preclusion] principles” when a SOX claim is removed to federal court. The district court held that allowing de novo review of a “final judgment” would be absurd and an inefficient use of judicial resources. The district court remanded the case to the ARB for a faster review of the ALJ’s decision.

On appeal, the Fourth Circuit unequivocally rejected the lower court’s decision, finding that:

• The ARB’s dismissal of a SOX claim due to the complainant’s removal of the case to federal court does not result in a final decision being issued by the Secretary of Labor;

• Comments from the Secretary of Labor do not inform the literal interpretation of a federal statute, nor do they override congressional intent;

• Congress, in enacting SOX, “expressly provided for de novo non-deferential review in district court;”

• Deferring to an administrative agency, “even if more efficient, is in direct conflict with the unambiguous language of [SOX];”

• “‘Courts do not, of course, have free rein to impose rules of preclusion. . . the question is not whether administrative estoppel is wise but whether it is intended by the legislature.’”

In essence, the Fourth Circuit held that a right to a de novo review means just that. “The plain language of § 1514(b)(1)(B) unambiguously establishes a Sarbanes-Oxley whistleblower complainant’s right to de novo review in federal district court if the DOL has not issued a ‘final decision’ and the statutory 180-day period has expired.”

Mr. David R. Stone is represented by Adam Augustine Carter and R. Scott Oswald, Principals at The Employment Law Group® law firm. To learn more about the firm’s Sarbanes-Oxley Whistleblower Practice, click here.

DC City Council Unanimously Approves the DC Whistleblower Protection Amendment Act of 2009

December 17, 2009

Monday, the DC Council approved the Whistleblower Protection Amendment Act of 2009, which strengthens the DC Whistleblower Protection Act (DC Code § 1-615.51 et seq.) and The Employees of District Contractors and Instrumentality Whistleblower Protection Act of 1998 (DC Code § 2-223.01 et seq.). The Whistleblower Protection Amendment Act of 2009 eliminates loopholes in the existing DC statutes and provides critical enhancements, including the following:

Clarifying that a whistleblower need not be an original source of a protected disclosure. The legislative history states: “prospective whistleblowers should not have to guess about whether a supervisor already knows about misconduct in government.”

Eliminating the “duty speech” loophole, i.e., protected conduct includes blowing the whistle in the course of performing one’s job duties. Protected acts under the DC WPA include “disclosure[s] made in the ordinary course of an employee’s duties.”

Clarifying that retaliatory investigations are a form of actionable retaliation. The DC WPA now defines retaliation to include “conducting or causing to be conducted an investigation of an employee or applicant for employment because of a protected disclosure made by the employee or applicant who is a whistleblower.” An investigation includes a fitness for duty examination.

Extending the statute of limitations to 3 years and clarifying that § 12-309 (the pre-suit notice provision) does not apply to DC WPA claims. Under the revised DC WPA, a “civil action shall be filed within 3 years after a violation occurs or within one year after the employee first becomes aware of the violation, whichever occurs first.”

Clarifying that a DC WPA action can be brought against a DC supervisor or official having personal involvement in the prohibited personnel action. “Any person” who is found to have participated in prohibited retaliation may be “subject to appropriate disciplinary action including dismissal.”

Providing a financial incentive for whistleblowing. In particular, a whistleblower may receive an award of up to $50,000 for providing information that enables the District to recover or prevent the loss of more than $100,000 in public funds.