Whistleblower Law Blog

Whistleblower Speaks to ABC2 News About His Warnings on Aircraft Safety Issues Before Medevac

October 09, 2009

In an interview with ABC2 News, whistleblower Pete Peterson speaks about the crash of Trooper 2 that led to four deaths last year.  Peterson was the Maryland State Police (“MSP”) Pilot who wrote the whistleblower letter to the Department of Transportation’s (“DOT”) Inspector General last September before the crash of Trooper 2.  In his letter, Peterson raised concerns about MSP’s lack of regulatory compliance and safety issues affecting MSP’s aircraft.  Seventeen days after Peterson’s disclosure, an MSP helicopter crashed in Prince George’s county, killing four people.  Peterson’s whistleblower letter became public shortly after the crash.  More than a month later, MSP terminated Peterson for insubordination and not cooperating with the organization’s internal crash investigation.  Peterson has filed a complaint under AIR 21’s whistleblower protection statutes, alleging that the termination of his employment was in retaliation for his disclosure to DOT.  Peterson is being represented by R. Scott Oswald and Adam Augustine Carter of The Employment Law Group® law firm.

D.C. Whistleblower Wins Verdict Against UDC at Trial

October 08, 2009

On October 6, 2009, a jury in the District of Columbia decided in favor of D.C. Whistleblower Colin Browne in the case of Browne v. University of District of Columbia.  In the suit, Colin Browne alleged that his former employer, the University of the District of Columbia (UDC) violated the D.C. Whistleblower Protection Act (WPA) when it retaliated against him for raising concerns that Kevin Naiker, the former Director of UDC’s at-risk program, and his supervisors were intentionally misreporting the retention rate of UDC’s program for at-risk students.  Despite Browne’s repeated disclosures to management, UDC’s Board of Trustees and even to the President of the University, UDC failed to respond.  Browne also discovered that Naiker was unlicensed and did not have a doctorate even though he represented to Browne and others that he was licensed, possessed a doctorate, and would supervise Browne for his licensure. Browne reported Naiker’s misrepresentations of his license status but UDC failed to take action.  Instead, Naiker began retaliating against Browne by “auditing” his files, berating him in front of co-workers, passing him up for promotion and ultimately terminating his employment.

The jury awarded Browne compensatory damages based on its finding that UDC violated the D.C. WPA and was liable for negligent hiring and negligent supervision of Naiker.  The court will hear evidence on Browne’s economic damages claim on October 22, 2009.

R. Scott Oswald and David Scher, Principals at The Employment Law Group® law firm (www.employmentlawgroup.com), represented Mr. Browne and can be reached at 202-331-2806 and 202-261-2802, respectively.

D.C. District Court Rejects Employer’s Attempt to Carve New Loopholes Into Whistleblower Protection Statutes

September 17, 2009

Affirming a jury’s finding that Mohammed Kakeh, a Controller for the United Planning Organization (“UPO”) was terminated for his refusal to engage in fraudulent billing and for providing information to the Office of Inspector General, Judge Kessler rejected several arguments by UPO that would undermine the statutory whistleblower protections under which Kakeh brought his claim, the D.C. Whistleblower Protection Act (“WPA”) and the retaliation provisions of the False Claims Act (“FCA”) and the D.C. False Claims Act (“DCFCA”).
 
Gross Does Not Apply to FCA Retaliation Claims
UPO argued that the Supreme Court’s recent holding in Gross v. FBL Fin. Svcs., Inc., 129 S. Ct. 2343 (2009) requires courts to apply a “but for” causation standard to the retaliation provisions in the Federal and D.C. False Claims Acts.  Judge Kessler held that Gross does not apply to FCA retaliation claims, distinguishing Gross in part on the ground that it is an ADEA case.  The “because of” causation standard in the text of the FCA’s retaliation provision has been construed as a “motivating factor” causation standard, i.e., plaintiff can prevail by demonstrating that the adverse action was motivated, at least in part, by the employee having engaging in protected activity.
 
The “Duty Speech” Doctrine Does Not Apply to FCA Retaliation Claims
UPO argued that Kakeh’s disclosures were not protected because they were made pursuant to his “regular job duties.”  Relying on U.S. ex rel. Yesudian v. Howard Univ., 153 F.3d 731, 736 (D.C. Cir. 1998), which sets forth a favorable standard of protected conduct under the FCA’s retaliation provision, Judge Kessler held that “an employee engages in protected activity when he discloses fraud and corruption, as opposed to making a ‘complaint about mere regulatory compliance’. . . Plaintiff  repeatedly stated that he believed that Defendant’s billing practices were fraudulent and . . . . consistently framed these differences as matters of fraud and ethics, rather than routine disagreements about regulatory compliance. Therefore there was sufficient evidence for a reasonable juror to conclude that Plaintiff was engaging in protected activity.”
 
Plaintiff Need Not Use “Magic Words” to Engage in Protected Conduct
Defendant argued that to be covered by the WPA, Plaintiff’s disclosures must use “the language or terminology of fraud, waste, or misuse.”  Judge Kessler concluded:  “As Plaintiff correctly states, however, Plaintiff was not obligated to use “magic words” to trigger the protections of the WPA. As the WPA indicates, a disclosure is protected if the employee “reasonably believes” that he is revealing a gross misuse of public funds or a violation of a law, rule, regulation, or contract term. D.C. Code 2-223.01(7).”
 
Disclosure of Public Information Can Constitute Protected Conduct
UPO asserted that plaintiff did not disclose to his supervisor any information that “was not already known as [sic] result of the prior year-end audit reports, Mr. Eboda’s preliminary report, the Head Start monitoring review and/or The Washington Post articles.”   Judge Kessler held that “[e]ven if this information was already public and even if Jones already had knowledge of it, Plaintiff was the one responsible for disclosing it in the first instance.”

Whistleblower Suit Against Student Loan Companies Unsealed in Federal District Court

August 31, 2009

The United States District Court for the Eastern District of Virginia today unsealed a lawsuit against a number of student loan companies, including Nelnet, Inc and Sallie Mae, filed on behalf of the United States by Dr. Jon H. Oberg. The action seeks the return of approximately $1 billion in “special allowance” payments wrongfully extracted from the United States Department of Education by the defendants. Under a federal student loan program that was intended to be phased out beginning in 1993, student loan companies were eligible for “special allowance” payments that provided interest rates subsidies guaranteeing a 9.5% return on a limited class of student loans generated from monies raised prior to 1993 with tax-free obligations. Faced with a prohibition on generating new eligible loan pools, the loan companies used sham transactions known internally by names such as “dipping” to multiply the loans on which subsidy payments were claimed and thereby swell their profits at taxpayer expense. The result was an approximately $1 billion windfall which Dr. Oberg now is seeking to recover for the government.

Federal law provides a qui tam remedy to recover government payments made pursuant to illegal claims. Qui tam claims can be brought by knowledgeable individuals, acting as “private attorneys general” on behalf of the government. Dr. Oberg, who filed the Complaint, retired in 2005 after a distinguished career in academia and public service.  As a researcher at the Department’s Institute of Educational Sciences, an arm of the Department legislatively separated from loan administration, he discovered the illegal claims described in the Complaint and reported them through his chain of command.

After being directed by his supervisor not to pursue the issue, Dr. Oberg conducted an investigation that revealed the magnitude of the fraudulent claims. In describing the suit, Dr. Oberg stated that “I have always been a strong supporter of the mission of the Department of Education.  However, particularly in these difficult times, it is critical for both taxpayers and students that federal funds be used to support students in need, not to enrich lenders unlawfully.” 

The case is expected to go to trial in Federal District Court early next year. All inquiries regarding the case should be made to Bert W. Rein (202.719.7080, brein@wileyrein.com) of Wiley Rein LLP, which is serving as counsel for Dr. Oberg along with The Employment Law Group law firm (202.261.2802, dscher@employmentlawgroup.com).

The Employment Law Group® Law Firm Publishes Column on Seminal SOX Decision

August 25, 2009

Today, Law360 published a column by principals R. Scott Oswald and Jason Zuckerman of The Employment Law Group® law firm on the Ninth Circuit’s recent decision in Van Asdale v. International Game Technology.  The column discusses how the Van Asdale decision is a substantial victory for SOX whistleblowers in that it resolves ambiguities in favor of employees and rejects arguments that employers commonly assert in SOX whistleblower cases.  To read the column, click here. Additional information on The Employment Law Group® law firm’s Sarbanes-Oxley Whistleblower Practice is available at https://www.employmentlawgroup.com/what-we-do/whistleblower-protection-rewards/sarbanes-oxley-whistleblower-attorney/. 

Compliance Week Quotes Scott Oswald on High Profile SOX Decision

August 25, 2009

In an article titled, “Recent Court Decision Clarifies Whistleblower Law,” Compliance Week reports about the Ninth Circuit’s recent decision in Van Asdale v. International Game Technology about the scope of the whistleblower retaliation provision of the Sarbanes-Oxley Act (“SOX”).  According to Scott Oswald, a principal with The Employment Law Group® law firm, the Ninth Circuit’s decision “signals that SOX is still a robust remedy for corporate whistleblowers” despite the Labor Department “undermining the statute in its narrow interpretation of the statute.”  For information on The Employment Law Group® law firm’s Whistleblower Practice, click here.

California Governor Signs into Law New Electronic Discovery Act

August 20, 2009

On June 29, 2009, California Governor Arnold Schwarzenegger signed into law California’s Electronic Discovery Act.  The new law, which became effective on June 29, 2009, establishes new procedures for parties requesting production to obtain discovery of electronically stored information (ESI) and offers, for the first time, specific definitions of what constitutes electronically stored information.  Other key provisions of the Act include:

1. Requesting Party Can Specify the Form of Production – Under the new law, the party requesting production of ESI can specify the form in which the responding party must produce the requested information.  If however, the form is not specified in the request for production, the responding party must produce the ESI either in the form that it is ordinarily maintained or in a form that is reasonably usable.
2. Discovery of Inaccessible Information – The Act permits parties to seek discovery of ESI that is from a source that is not reasonably accessible and unlike the federal rules, the burden is on the responding party to bring a motion for a protective order or to make written objections to such a request, i.e., that the requested information is from a source that is not reasonably accessible because of undue burden or expense.
3. No Sanctions for Lost, Damaged, or Altered Data – Absent exceptional circumstances, the Act prohibits the court from imposing sanctions on a party for failure to provide ESI that has been lost, damaged, altered, or overwritten as the result of the routine, good faith operation of an electronic information system.
4. Subpoenas – The Act expressly provides for the use of subpoenas to obtain ESI from nonparties to the suit.                

This bill is significant because it provides needed guidance on the discovery of ESI in California state court litigation and in particular California whistleblower litigation.  To read the bill, click here.

Contra Costa Times Publishes Article About Whistleblower Suit Against Pittsburg School District

August 19, 2009

In an article titled, “Whistle-blower suit filed against Pittsburg school district,” Contra Costa Times reports about Tim Galli’s whistleblower retaliation lawsuit against the Pittsburg school district.  Tim Galli, a 35-year educator and former Pittsburg High principal, suffered retaliation when he raised concerns about the school district’s questionable budgetary practices, and undisclosed financial conflict of interest between the superintendent and a school board member.  According to the suit, the district “engaged in a cover-up effort to hide their retaliation by dredging up an incident that was months old, undergoing an unconstitutional investigation and ultimately voting to terminate Galli without just cause and without following the most basic due process requirements.”  The Employment Law Group® law firm is representing Mr. Galli in his retaliation action under the California Whistleblower Protection Act.  For information on The Employment Law Group® law firm’s Whistleblower Practice, click here.

Boeing Company Settles False Claims Act Suit for $2 Million

August 17, 2009

The Boeing Company has agreed to pay $2 million to resolve claims that the company overbilled the government from 2002 to 2005 for work done at a San Antonio Plant.  According to the suit, brought under the qui tam provisions of the False Claims Act, Boeing inflated its estimates for the number of hours required to do non-routine repairs and maintenance on the Air Force KC-135 tankers.  The suit also alleged that the company manipulated its billing records to inflate the number of workers that maintained the Air Force tankers.  The whistleblower who exposed the fraudulent billing practices is entitled to a share of 15 percent to 30 percent of the $2 million settlement.  For information about The Employment Law Group® law firm’s False Claims Act practice, click here.  

Ninth Circuit Confirms the Broad Scope of Protected Conduct Under SOX

August 14, 2009

On August 13, 2009, the Ninth Circuit issued a key decision on the scope of protected conduct under the whistleblower provision of the Sarbanes Oxley Act, rejecting the district court’s holding that SOX whistleblowers must prove that they blew the whistle on actual shareholder fraud.  In Van Asdale v. Int’l Game Tech., the court held that the “success, or failure of a [SOX] lawsuit does not depend on [whistleblowers’] ability to show any actual fraud, only that they reasonably believed that fraud had occurred” and that “[a]n employee need not cite a code section he believes was violated” to trigger the protections of § 1514A.  

The plaintiffs in Van Asdale  were former in-house attorneys at International Game Technology (“IGT”) who were terminated for reporting possible shareholder fraud in connection with a merger.  The district court granted IGT’s motion for summary judgment, concluding that the attorneys did not engage in protected conduct in that they “hadn’t reached a conclusion” that IGT engaged in actual shareholder fraud.  The Ninth Circuit reversed, holding that “[r]equiring an employee to essentially prove the existence of fraud before suggesting the need for an investigation would hardly be consistent with Congress’s goal of encouraging disclosure.”  Noting that the legislative history of Section 806 of SOX makes clear that it protects “all good faith and reasonable reporting of fraud,” the court held that plaintiffs’ “subjective belief that the conduct that they were reporting violated a listed law” sufficed to demonstrate protected conduct.  Moreover, the court concluded that merely requesting an investigation of potential shareholder fraud constitutes protected conduct.

The Ninth Circuit also held that in-house counsel may proceed with a retaliation claim that may require the disclosure of attorney-client privileged information.  According to the Ninth Circuit, “confidentiality concerns alone do not warrant dismissal of [an employee’s] claims.”  The Ninth Circuit further concluded that “Congress plainly considered the role [in-house] attorneys might play in reporting possible securities fraud,” and thus, to the extent that a suit may implicate confidentiality-related concerns, a court must use “equitable measures at its disposal to minimize the possibility of harmful disclosures, not dismiss the suit altogether.”