Category Archives: Whistleblower Tips

Is the Whistleblower Protection Act Strong Enough to Protect Federal Employees?

On November 4, the Supreme Court heard argument in Department of Homeland Security v. MacLean, a case that demonstrates the hurdles that federal employees must clear in order to receive whistleblower protection under the Whistleblower Protection Act. The WPA has often been criticized for not being able to do the one thing it’s supposed to – protect whistleblowers. Efforts have been made to bolster the WPA, but as we see in MacLean, the many requirements that whistleblowers must meet under the law make actually obtaining relief highly problematic.

downloadRobert MacLean was removed from his position as a federal air marshal in 2006 for giving a reporter “sensitive security information.” MacLean had contacted the reporter back in 2003, divulging plans the Transportation Security Administration (TSA) had to remove air marshals from long distance flights. He challenged his dismissal under the WPA. Now, the Supreme Court will decide whether MacLean’s divulging of “sensitive security information” was “specifically prohibited by law.”

Federal employees are not allowed to bring First Amendment claims, as they must go through the Civil Service Reform Act (CSRA) and the WPA for redress. So in Maclean’s case, the Supreme Court will determine whether his speech was “specifically prohibited by law” under the WPA rather than evaluating whether or not his speech was of public concern.

Justice Sonia Sotomayor has said the facts are in MacLean’s favor, but he has been embroiled in this case for eight years and counting, and if his case is sent back to the Federal Circuit, the painstaking wait could continue still longer. The bottom line is that MacLean and other federal employees may be denied relief when even when their First Amendment rights are arguably violated. The hoops they must jump through are many, the odds of actually achieving relief are daunting, and the time it takes to resolve these claims can exhaust both financial and emotional reserves. If we are really interested in having whistleblowers come forward and expose matters of public concern, why are we not doing more to protect them?

KBR and Halliburton Must Face Fraud Claims

A federal judge ruled today that Kellogg, Brown & Root (KBR) and Halliburton must face whistleblower claims that they bilked money from the government. A former KBR employee filed the whistleblower lawsuit in 2005, claiming that KBR, Halliburton, Service Employees International, KBR Services Inc. and KBR Technical Services inflated the amount of soldiers using KBR facilities in Iraq in order to boost the fees they could bill the government.

downloadThe defendants in the case had been contracted by the government to provide logistical and life-support services for the military in Iraq. This included camp construction, power generation, water services, laundry, dining facilities, fire protection and recreational facilities, among other things.

Relator Julie McBride was a coordinator at a KBR recreational facility (also known as Morale, Welfare and Recreation, or MWR facility) where she was responsible for keeping a head count of the soldiers that entered MWR facilities in Camp Fallujah. The head counts, according to McBride, were used to decide on staffing numbers as well as how much KBR could bill the government. AcFcording to the lawsuit, McBride claims that KBR instructed her to inflate the head counts by asking soldiers to sign in when they entered a facility, then she would take an hourly count of people in each room. She also counted equipment as military personnel, in some cases counting ping pong sets, towels or water bottles in the head counts. McBride claims that this artificially inflated the total head count, resulting in the government footing the bill for troops being counted multiple times.

McBride claims that she was fired in March 2005 after reporting the alleged fraud. She filed her whistleblower lawsuit in April 2005. In 2007, U.S. District Judge Henry Kennedy Jr. stripped away some of McBride’s allegations but allowed her to pursue her allegations of head count inflation.

In the most recent proceedings, KBR urged U.S. District Judge Frederick J. Scullin Jr. to toss all of McBride’s claims. According to Courthouse News, Judge Scullin dismissed one of McBride’s claims that KBR violated the False Claims Act by “siphoning” equipment meant for MWR facilities for company use. But in the end, the judge allowed McBride’s allegation of head count inflation to proceed.

 

Work in Health Care? Have Knowledge of Fraud? Become a Whistleblower!

Health care fraud is a serious crime that affects all of us. The National Health Care Anti-Fraud Association estimates that losses incurred by the country due to health care fraud are in the tens of billions of dollars every year. Regardless of your insurance plan, health care fraud leads to higher premiums, higher out-of-pocket expenses and lower quality of care. Sadly these fraud related costs can also mean the difference between someone being able to afford health insurance or not.

1314902_medical_doctorThe good news is that something can be done to combat health care fraud.  It starts with people involved in the health care industry coming forward and holding companies accountable for their misdeeds. If you are a hospice worker, a nursing assistant, physician, or anyone working in health care with intimate knowledge of Medicare or Medicaid fraud, it is vital that you come forward. Those that blow the whistle on fraudulent health care providers are eligible to receive a significant reward if their information leads to a successful case. At the same time, you would be protecting your fellow citizens from rising health care costs and lower standards of care, and discouraging other providers from engaging in similar illegal activities.

A question you might ask is what you should do if you have first-hand knowledge of fraud. The whistleblower law firm of Baum, Hedlund, Aristei & Goldman has these suggestions:

  • If you decide to come forward and blow the whistle, do not go to the government first. The DOJ has a very large caseload act acts slowly and deliberately in whistleblower cases.  Your information may get lost in the shuffle.  Even if the government is successful because of the information you provided, without filing a legal case you will not be eligible for a reward.
  • Do not go to the media with your claims.  Without filing a legal case first, publication of your inside information could jeopardize a successful prosecution and complicate the chances of you receiving a reward for blowing the whistle.
  • If you report fraudulent activity to a government contractor or corporation, filing a whistleblower case can protect you from termination or other forms of retaliation.

A few months ago, the Justice Department filed a lawsuit against Chemed Corporation and their hospice subsidiaries (Vitas Hospice Services LLC and Vitas Healthcare Corporation), alleging that they submitted false claims to Medicare in an effort to steal money from the government. Specifically, the lawsuit claims that Vitas staff members were encouraged to increase crisis care claims to Medicare, even in cases where the care provided was significantly less than what was billed for. The company allegedly distributed bonuses to employees that successfully enrolled patients for hospice care and similarly took action against those that did not meet hospice admission quotas.

This is just one recent example of health care providers cheating taxpayers and government health care systems.  It is particularly difficult for honest employees who are being pressured into unethical, dishonest or illegal behavior in order to keep their jobs.

If you have insider knowledge of a government contractor or private company committing fraud against the government, contact the whistleblower attorneys at Baum, Hedlund, Aristei & Goldman.  Building a case against those engaged in health care fraud is the right thing to do and is one of the most effective ways to prevent these crimes from happening.  It may also result in you receiving a significant financial reward and protect you from retaliation.

Anonymous SEC Whistleblower to Receive Record $14 Million Reward

The identity of a whistleblower usually becomes public at some point, but did you know that a whistleblower working with the Securities and Exchanges Commission (SEC) has the option of remaining anonymous? Such was the case with a recent anonymous whistleblower for the SEC, who will receive a record $14 million payout from the government.

securities-and-exchange-commissionOfficials with the SEC announced today that information provided to them by an anonymous whistleblower led to a successful enforcement action. The company and the nature of their crimes were not made public by the SEC because the whistleblower chose to remain anonymous. What is known is that the whistleblower’s information allowed the SEC to bring action against the company in question a mere six months after the initial tip. The whistleblower’s reward, which is a share of the money recovered from the company, was the highest payout since the SEC whistleblower program went into effect in 2011.

The SEC’s Office of the Whistleblower offers rewards for original information that leads to successful enforcement of sanctions totaling over $1 million. The whistleblower can receive a reward of up to 30 percent of the money recovered by the government. “Our whistleblower program already has had a big impact on our investigations by providing us with high-quality, meaningful tips,” said SEC chair Mary Jo White after delivering the news of the $14 million whistleblower reward. “We hope an award like this encourages more individuals with information to come forward.”

If you are thinking of becoming an SEC whistleblower, it is important to remember that you can choose to remain anonymous throughout the process of your claim. This anonymity may provide more protection to the whistleblower and their family against any retaliation by the company in question. Remaining anonymous also shields the whistleblower and their family from media scrutiny in larger cases. If you wish to file your whistleblower claim anonymously, it is best to do so through an experienced whistleblower attorney.

OMG – My Company is Cheating the Government – What Should I Do Now?

Anyone can be a whistleblower so long as he or she has insider knowledge about false claims made to the United States government and is not an active member of the military. Most whistleblowers never suspected that they would be reporting their employer for fraud. They are like you – a hardworking scientist, nurse, health care worker, physician, office manager, bookkeeper, CNA, test pilot, manufacturing technician, engineer – or anyone else who works for a company that provides products or services to the government (Department of Defense, Army, Navy, Air Force, Medicaid or Medicare or state government, county government or local government agency).

1305802_businesswoman_1Many whistleblowers have never been involved in the legal system before bringing a qui tam (federal false claim act) case. Although the law is complex, the basis is simple: It rewards those individuals who have evidence and personal knowledge about someone who gets more money than they are entitled from the government. This is called a False Claim Act or qui tam case. The falsification can involve many things. For example, it can include:

(1)     billing for products or services that are not provided;

(2)     billing for products or services that the law does not permit; or

(3)     billing for products or services that do not meet the government requirements.

It can also involve a company that fails to pay all that it owes to the government. This is a “reverse false claims act” case. An example would be a company that understates the value of goods imported from overseas in order to reduce the US Custom duties that must be paid. By falsifying import documentation the company pays less than they should for import duties, tariffs and penalties.

The federal law is the “False Claims Act” and it is found at 31 United States Code Section 3730 (31 U.S.C.A. §3730) and some related statutes. Many states have also enacted their own versions of False Claims Act laws and most have similar provisions or penalties.

Here’s an example of how a whistleblower is “born”:

After months of searching for a new job in the barely recovering economy, you land a great job. You are the new office manager for a small veteran-owned business. The company provides cables for government computers.

As you settle into the job you learn that the president of the company enters some of the accounts into the computer himself. This is unusual but not your concern. After a few months, you begin to wonder why the boss only enters data into the accounting computer on the one day of the week that the part time assistant is not scheduled to work. Out of curiosity, you check the data entered under the absent worker’s code. You learn that the boss has input billing statements for materials that were never delivered. All of the false billings are for government contracts. Immediately your Mother’s admonition “curiosity killed the cat” comes to mind and you decide to keep this knowledge to yourself.

A year later the boss is still improperly inputting data and you read about a qui tam (Federal False Claims Act) case where the whistleblower saved the government (and taxpayers) millions of dollars and received a large payment for his help. You wonder if you should report the false claims by your boss but you have no idea how to do it or if the case would be worth the risk. You are fearful (with good cause) that if the boss finds out that you discovered his fraud he will fire you immediately and you have a child to consider.

In the situation described above, the potential whistleblower would need to consider a few things:

Do I have evidence that I can show the government to prove what I am saying is true? Even if you know that something “wrong” is going on, that is not evidence. Hunches and suspicions may make for great T.V., but in reality only evidence can be relied upon to prove a case. Evidence can be documents proving the fraud, photographs, text messages, telephone messages, video tapes, computer data or other materials. If the fraud involved a defective product that is being sold to the government, a sample of the product would be evidence. So in the example above, if you can bring the billing documents, a list of the employee codes and pay or attendance records these would help prove your case. Did you complain to the boss about the billing in an email and did he email you back? If so, that may be evidence. Finally, do you have these items? Sometimes things kept at work disappear, so before bringing a claim you will want to have copies of the evidence.

Who else knows about the false claims? If more than one person knows about the fraud and the false claims being made, you will want to know their name and if possible some contact information. This is especially important if that person is no longer with the company. So in the example above, you may find out that your predecessor found out about the scheme by the boss and when he confronted the boss he was fired. That would be a very helpful witness for the government.

How much is the government’s loss? In some situations you cannot figure out how much the government has lost as a result of the false claims. But the lawyers for the government who handle these cases are so busy (particularly after the Sequester reduction in funding) that they only want to consider cases in the millions of dollars. So in the example above, if the company only provides a few thousand dollars of cables to the government each year, the case may not be of great interest to the government.

Do I go to the government without an experienced qui tam lawyer? If you know about fraud and false claims and you have the courage to report it, you should do so. But do you go on your own or wait to have a lawyer? In most instances it is not a priority of the government to look out for the whistleblower. They will take the evidence and your statement and thank you, but you may never hear anything again and almost certainly will not receive a reward. Having an experienced qui tam lawyer provides the best protection for several reasons. If the Federal (or State) False Claims act case is filed, it will most likely keep your involvement confidential for months if not years. Also, your interest in obtaining part of the moneys recovered by the government will be protected. You should know that in these types of cases, lawyers generally do not charge you anything unless there is a recovery from the wrongdoer. A lawyer can also help protect your rights should you be wrongfully terminated. Finally, many courts insist that only a lawyer can file a Federal False Claims Act case on your behalf.

 

 

What Happens to a Qui Tam Case if the Whistleblower Dies?

A question that I have been asked is whether a qui tam action can proceed if a whistleblower (known as the “relator”) dies. The answer is YES.

Generally, a regular civil case will have to be dismissed if the plaintiff dies because he or she is the only party that has an interest in the outcome of the case and has the ability to sue. This is legally referred to as “standing.” This is not so in a federal whistleblower case. The case can survive, even if the relator dies.

The specific facts of each case ultimately determine whether a case is likely to survive the whistleblower’s death. The following scenarios illustrate some of these issues:

Example One

John works for a government defense contractor that builds replacement parts for military vehicles used overseas. Although all of the parts are required to be tested, only about 1 of every 100 parts is actually tested. John is responsible for testing at the plant and knows that most of the parts that are tested fail, but the contractor still sold the parts to the government. John has complained to his boss, who says there is no safety risk to the soldiers because the worst that can happen is that the vehicle will just stop.

John has all of the test records for the parts that failed on his office computer. He has notified the government that the documents are stored there, but he has not yet given the documents to the government. John filed a lawsuit, but is killed in a plane crash before he gets the documents from his office computer.

In Example One, the government may still be able to access the records from John’s computer. Without John to interpret them and testify about what actually occurred, however, the case will be far more difficult to prove. If John was the person responsible for completing the documents and they could not be verified without him, although the law would allow the case to proceed, the government may not believe it can prove its case without him. In this situation, the estate would probably not litigate the case alone.

Example Two

Mary is a nurse at a hospital where they have a rule that every emergency room patient on Medicare must be held for “observation” for 48 hours. The intake personnel place a unique code on every Medicare patient’s admission records (“MPH”), which is a signal to the nurses that the patient must be admitted and held for 2 days.

Mary has complained to her supervisors but nothing is done. Mary notifies the government about the scheme and provides the FBI with several patient charts with the MPH notification (although she blacks out the names of the patients). Mary files a whistleblower complaint and attaches these documents to her “disclosure memorandum,” but gets pneumonia and dies before she can meet with the government attorneys.

In Example Two, since Mary has filed a qui tam action and has given the government important evidence about the illegal scheme – which will likely lead investigators to more proof of the false claims filed by the hospital – the government will likely elect to continue the case. If Mary gave the evidence to a government investigator as a “good citizen” but without legally filing a False Claims Act case, even if the government investigates the case and recovers millions of dollars from the hospital, Mary’s estate would not receive a reward.

Echoing other court decisions, a recent case decided in the District of Columbia concluded that a qui tam (False Claim Act) case could continue after the death of a relator. The court reminded us that the False Claim Act’s “chief purpose … is to prevent the commission of fraud against the federal government and to provide for the restitution of money that was taken from the federal government by fraudulent means.”

Fortunately, this issue does not come up often, but it is worth knowing that some courts have  held that the family of a deceased whistleblower may recover the whistleblower’s reward. (U.S. v. NEC Corp., 11 F.3d 136 (11th Cir. 1993); (U.S., ex rel. Hood v. Satory Global, Inc., 2013 WL 2274798, *9+ (D.D.C. May 23, 2013)). This is not to say that it will be an easy road; the successful litigation of a qui tam action is never easy, and the death of the relator makes it much more difficult.

Many courts have little or no experience with a relator dying in a False Claims Act case, and the government will want to be convinced that it can prove the case without the whistleblower. An experienced qui tam attorney can help the estate of the deceased navigate through these complex legal and evidentiary issues. If you know that a loved one or relative was a whistleblower and filed a lawsuit, try to contact their lawyer as soon as possible after his or her death.  If you cannot find the lawyer or lawsuit, the Estate should hire an experienced Qui Tam lawyer to represent the estate and protect the interests of the whistleblower’s heirs.

Whistleblowers Should be Revered for Courage, Not Vulnerable to Retaliation

Whistleblowers have again made national news recently. This time, however, their treatment has left many wondering if they are properly shielded from harassment, threats and retaliation. This is a travesty, because blowing the whistle is a way for individuals within a company, agency, organization or community to hold people accountable for illegalities, abuses of power and threats to public safety.

We’ve seen it in both the private sector and the public sector – the CEO of a bank or a pharmaceutical company receiving a golden parachute with retirement benefits that allows them to live the rest of their days in lavish comfort, despite a whistleblower case that points to them being involved in some form of fraud. Or the head of a government agency that is given a high-paying job in the private sector, despite a whistleblower case showing the official turned a blind eye to fraud committed in the very same private sector they now work in. So what does the whistleblower get? While it’s true that whistleblowers can receive substantial rewards in qui tam cases, they can also be bullied, harassed and threatened. It’s time for this to stop.  

The teenage children of Aurelia Fedenisn answered the door to their suburban Washington, D.C. home to find two diplomatic security agents standing in the doorway. Fedenisn, a former investigator for the State Department’s Inspector General, had recently disclosed to a U.S. Senator that her office was forced to cover up allegations of high-level State Department officials using drugs and soliciting prostitutes.

According to an article in USA Today, the two men verbally threatened Fedenisn’s children, demanding to speak to the former investigator. Additionally, Inspector General staff initiated a stake out on her front yard in an attempt to bully her into admitting that she had done something wrong.

This type of retaliation is nothing new, as many whistleblowers, like Jeff Black, have found out the hard way. P. Jeffrey Black was an Air Marshal that spoke out against the Department of Homeland Security and the U.S. Air Marshal Service. During his tenure, he testified before Congress, complaining about agency shortcomings. His bosses accused Black of leaking reports of budget cutbacks. Black told CNN that his actions resulted in a demotion to a menial desk job and his home being placed under surveillance.

After he retired, Black appeared in a documentary critical of U.S. airline security measures, entitled, “Please Remove Your Shoes.” On the same day the documentary premiered, an agent from the Internal Revenue Service (IRS) showed up at his door. Black endured a yearlong audit that saw a lien placed on his home. Oddly enough, the audit found that the government actually owed him more money than he owed the government – thousands more. Black paid what he owed. Did he ever receive any of the money owed to him? Nope. The government claimed the statute of limitations had run out.

Whistleblowers should be lauded for their courage and protected from persecution rather than being vulnerable to threats and harassment.

The Severance Agreement: Money That May Cost You Dearly

Many potential whistleblowers are legitimately concerned that complaining about illegal conduct at work will get them fired. The False Claims Act gives honest whistleblowers that are fired a way to sue their employers and obtain compensation and maybe even reinstatement at their job if they can prove they were wrongfully fired.

Severance Agreeement

Employers know that these lawsuits can take years before they are resolved. This leaves the whistleblower without a job and in a difficult financial situation. Employers try to take advantage of this by offering the fired employee a cash payment in exchange for signing a severance agreement. The agreement commonly requires confidentiality and a promise that the employee will not file any complaint against the employer.

Clients often ask if they should take the money and sign the severance agreement. Each case is unique and the facts and law must be analyzed carefully, but we generally discourage signing the agreement.

Here is a very simple hypothetical that illustrates the point:

Jane has worked for a community hospital for 12 years as an RN. She knows that the hospital bills Medicare and Medicaid patients for items they do not need and will never use. For example, each patient is given a cane when they arrive at the hospital and the government is billed for the cost of the cane.

Many of the patients never used the cane and left it in their room when they were discharged. The hospital then gave the cane to a new patient and billed the government for the cane a second time.

Jane complained to her supervisor who did nothing. She also complained to upper management with no results. Instead, for the first time, Jane began to get bad performance reviews. A few months later she was put on temporary position status and was only allowed to work 10-12 hours per week. After a few months Jane was told that her position was being downsized and she was no longer needed.

After being fired, Jane was offered a confidential “severance package” which required her to sign a document giving up all her rights to make a claim against the hospital in exchange for a payment of $15,000.

Unemployment has hit Jane and her family hard and she needs the money. She wants to know if she should take the money and sign the document.

We would advise Jane not to sign the agreement, particularly if the release must be signed  before Jane has filed her Qui Tam action or brought the claim to the government’s attention. In most cases we discourage signing any waiver/severance agreement even after the False Claim Act is filed.

Although Jane may be able to “take the money” and still bring a Qui Tam (Federal False Claims Act) case against the hospital, U.S. v. Northrop Corp., 59 F.3d 953 (9th Cir. 1995), many courts have upheld broadly drafted releases and waivers finding that the whistleblower gave up her right to bring or prosecute a Qui Tam action. U.S. ex rel. Ritchie v. Lockheed Martin Corp., 558 F.3d 1161 (10th Cir. 2009); U.S. v. Purdue Pharma L.P., 600 F.3d 319 (4th Cir. 2010).  In other cases it has been argued that the whistleblower is not entitled to the relator’s share of the qui tam fees and sanctions the government recovers.

Even if she can bring her Qui Tam case in federal court after signing a release and waiver of claims, the hospital could sue Jane for violating the confidentiality agreement. While Jane would likely prevail, she would have to deal with the attorney fees, time and aggravation of a law suit.

Please remember to always consult an experienced Qui Tam attorney if you believe your employer is cheating the government and before signing any legal document or release.