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Connecticut District Court Applies Dodd-Frank Retroactively and Sends SOX Whistleblower Case to Trial

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In Richard Trusz v. UBS Realty and UBS AG, Case No. 3:09-cv-00268,  Richard Trusz, a high-ranking executive for UBS, complained that the company followed improper procedures in its real estate valuation. These problems, Trusz claimed, resulted in valuation errors totaling as much as $27 million.

Trusz reported his concerns about these valuation procedures both internally and externally prior to the termination of his employment in 2008. According to UBS, it eliminated Trusz’s position because the company decided to outsource its valuation review duties. Trusz alleged three types of whistleblower retaliation claims, one a federal claim under the Sarbanes-Oxley Act and two state law claims.» Read more

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Whistleblowers Awarded $24 Million in Nursing Home Fraud Settlement

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On January 12, 2016, a nursing home company and two subsidiaries agreed to pay $125 million to settle a False Claims Act lawsuit alleging that they caused skilled nursing facilities to submit false claims to the government.  The relators’ combined share of $24 million represents just over 19 percent of the government’s recovery.  The case is United States ex rel. Halpin and Fahey v. Kindred Healthcare, Inc., et al., Case No. 1:11cv12139-RGS, and was filed in the U.S. District Court for the District of Massachusetts.

The qui tam action, in which the government intervened, was originally filed by two relators.  Janet Haplin is a physical therapist and former rehabilitation manager for Rehab Care; and Shawn Fahey is an occupational therapist who worked for RehabCare.

Kindred Healthcare purchased RehabCare Group, Inc. and RehabCare Group East Inc. in 2011.  The government’s complaint alleged that the companies submitted claims to Medicare for “rehabilitation therapy services that were not reasonable, necessary and skilled, or that never occurred,” according to the Department of Justice.» Read more

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Supreme Court Is Poised to Endorse ‘Implied Certification’ in FCA Cases

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By R. Scott Oswald
Managing Principal, The Employment Law Group, P.C.

If a government supplier quietly ignores vital rules but still bills taxpayers as if it had complied, can it be held liable under the federal False Claims Act — even if it never directly lies about its compliance?

In today’s arguments in Universal Health Services Inc. v. United States ex rel. Escobar, the U.S. Supreme Court heard two diametrically opposed views. There was little doubt about which side the justices preferred; their resulting debate was limited to sorting out the details.

» Read more

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Federal Judge in Tennessee Reiterates “Permissive Threshold” of Contributing Factor Standard in Whistleblower Retaliation Cases

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In a recent Federal Railroad Safety Act (FRSA) whistleblower retaliation claim, the United States District Court for the Eastern District of Tennessee reiterated the “permissive threshold” standard of the “contributing factor” test under the FRSA. This case demonstrates the importance of this standard in allowing whistleblowers to pursue retaliation claims, and ultimately to protect public safety.

Under the FRSA, an employee claiming that his employer has subjected him to unlawful retaliation for whistleblowing must show that: 1) he engaged in protected activity; 2) his employer had knowledge of his protected activity; 3) that he suffered an unfavorable personnel action; and 4) that his protected activity was a contributing factor in the unfavorable personnel action. After the employee makes out a prima facie case that his protected activity was a contributing factor, the employer must show that it would have taken the same adverse personnel action absent the employee’s protected activity.» Read more

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DOL Administrative Review Board Member Calls for ARB to Determine Whether Mandatory Arbitration Agreements Apply to Whistleblower Cases

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In a recent case before the Department of Labor’s Administrative Review Board, which is the appellate body within the DOL that issues final agency decisions, Judge Luis Corchado, in his concurrence, called for the ARB to decide whether whistleblower laws enforced by the DOL, such as AIR 21 (protecting airline employees) or Sarbanes-Oxley (protecting those who disclose securities violations), can be subjected to mandatory arbitration. A holding that definitively determined that all whistleblower anti-retaliation claims could be subjected to mandatory arbitration would likely have detrimental effects in furthering the purposes of those laws.

Under mandatory arbitration provisions, typically seen in employment agreements or settlement agreements after litigation, parties agree that legal claims that could be pursued in court or administrative bodies must instead be submitted to a private arbitrator. The outcomes of such cases are almost always confidential. Further, in most arbitration, the arbitrator’s decision is final and is immune from appeal to a court absent a showing of extraordinary circumstances. Arbitration often serves to promote judicial economy by reducing litigation costs and lessening judges’ caseloads.  But because of its inherently private nature, arbitration can also conceal wrongdoing from public knowledge.» Read more

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District Court, in Case Against Moody’s, Leaves the Door Open for Claims Against Rating Agencies Under the False Claims Act

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In United States ex rel. Kolchinsky v. Moody’s Corporation, Case No. 1:12-cv-01399 (S.D.N.Y. 2012), a former employee of Moody’s credit rating agency alleged that the agency engaged in rampant fraud leading up to the financial crisis. On February 4, 2016, the U.S. District Court for the Southern District of New York, in its opinion on Moody’s motion to dismiss, rejected several theories of liability against Moody’s but left open the possibility of liability under the False Claims Act for Moody’s use of an electronic “Ratings Delivery Service.”

Ilya Eric Kolchinsky was Moody’s Managing Director.  His first amended complaint alleges that he repeatedly attempted to raise concerns to his superiors about Moody’s false credit ratings. Moody’s ignored Kolchinsky’s concerns and ultimately terminated him. In 2009 and 2010, Kolchinsky testified at three separate congressional hearings regarding the concerns he raised while at Moody’s.» Read more

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Public Employees Fired for Filing Whistleblower Suit

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Two Charleston, South Carolina airport employees were fired for filing a whistleblower-protection lawsuit because their public employer said it was improper for employees to sue the agency while working for it. The Charleston County Aviation Authority fired the two employees one week after they filed a lawsuit alleging that they were wrongfully demoted for raising concerns about spending irregularities and failures of the leaders of the agency to follow purchasing policies.

The complaint was filed on January 25, 2015 under South Carolina law in Karina Labossiere and Darla Seidel v. The Charleston County Airport District, Case No. 2016-CP-10-388, by former accounting assistants, Karina Labossiere and Darla Seidel. Their jobs were reclassified several grades below administrative assistance after the two plaintiffs started complaining about lack of adherence to procurement processes. As part of their job duties, the two plaintiffs were required to maintain accounts payable and receivable files, process payment, reconcile statements, analyze financial information, and ensure the purchase order process is followed.» Read more

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Judge Holds that SOX and Dodd-Frank Allow Individual Director Liability

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On October 23, 2015, a federal magistrate judge in California held that individual corporate directors may be found liable under the Sarbanes-Oxley Act of 2002 (SOX) and the Dodd-Frank Wall Street Reform and Consumer Protection Act (Dodd-Frank).

Plaintiff Sanford Wadler brought a whistleblower action under SOX, Dodd-Frank, and state law, against Bio-Rad Laboratories, Inc. and the individual members of its Board.  Wadler claimed that Bio-Rad wrongfully terminated him in retaliation for disclosures he made to Bio-Rad‘s upper-level management regarding possible violations of the Foreign Corrupt Practices Act (FCPA) in China.  The defendants filed a motion to dismiss, leading to the October 23, 2015 ruling.

Bio-Rad manufactures and sells products around the world, and is subject to the FCPA.    Bio-Rad agreed to pay $55.1 million in fines for possible FCPA violations in Thailand, Vietnam, and Russia.  Subsequent to discovering these violations, Bio-Rad hired Steptoe and Johnson LLP to investigate possible bribery by Bio-Rad employees in China.  The firm found no evidence of improper payments.» Read more

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What’s It Like to Be a Whistleblower? An Interview with Dr. Ting

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THIS POST CONCERNS A CLIENT OF THE EMPLOYMENT LAW GROUP® LAW FIRM. THE RESULTS OF ALL CASES DEPEND ON A VARIETY OF FACTORS UNIQUE TO EACH CASE. PAST SUCCESSES DO NOT PREDICT OR GUARANTEE FUTURE RESULTS.

Our Founding Fathers called whistleblowing “the duty of all persons in the service of the United States,” and Abraham Lincoln signed the False Claims Act to foster the practice. But while federal laws reward people who report fraud against the government, whistleblowing isn’t always easy.

On March 8, 2016, the U.S. Department of Justice announced that it would award whistleblower Joseph Ting more than $7 million for his role in a settlement under which 21st Century Oncology, the cancer-care giant, will return $34.7 million to taxpayers to resolve allegations that it overbilled government insurance programs including Medicare.

The outcome was a long-awaited vindication for Dr. Ting, who was represented in the case by The Employment Law Group® law firm. (Read more about our firm’s involvement in the case.) In this candid Q&A, Dr. Ting talks about the experience of being a whistleblower.

Do you remember the moment you decided to take this action against your employer?

I don’t remember an exact time, but it started in March 2014 — shortly after 21st Century took over South Florida Radiation Oncology, the cancer treatment center where I worked. 21st Century was pushing us to implement its so-called Gamma project as fast as possible. This was a huge undertaking and I did not see any medical benefit. 21st Century seemed to be concerned about maximizing its profits, not patient care. I knew I could not be part of that, so I had to do something.

What was the problem with Gamma, exactly?

I am a medical physicist; part of my job deals with calibrating radiation therapy for cancer patients. With Gamma, 21st Century was demanding that an extra measurement be taken for every radiation dose given to every patient — and that each extra measurement be billed to the patient’s insurance. They said it was to confirm proper dosing.

Precision is important, so I did everything I could to understand what Gamma does. But the more I looked into it, the more I had doubts about the whole thing. In my opinion the extra measurement provided no medical value. People were not properly trained to use Gamma, it did not work properly in many cases, and no one looked at the results anyway. Plus it made treatment sessions longer, which is unfair to patients. Later I found out it was being billed improperly, too.

Did you raise these concerns internally?

Yes. I talked to my immediate supervisor. His attitude was that there was nothing he could do about it — it was 21st Century policy. But he shared my concerns with the technology director of 21st Century, and the three of us had a meeting. The technology director said something like, “Oh, we don’t charge for that, it’s just for the patients’ benefit.” But I knew that was not true.

So you decided to file a whistleblower lawsuit on behalf of the taxpayers who were paying for this via Medicare. Did that make your work uncomfortable?

The lawsuit did not impact my work directly because no one knew I had blown the whistle. The process is kept secret from the defendant for a period of time. But I did feel more stressed at work. I avoided doing any Gamma work because I was not comfortable with it, so I felt separate from the rest of the group. I really believed they were doing something wrong, and I felt like I had alienated myself. No one said anything, but that was a significant part of my reason to depart in July 2014. I couldn’t be part of the group anymore. I could not be a silent participant.

Do you have any regrets about blowing the whistle?

No. It was the right thing to do. I suppose that if news had broken before I found a new job, then maybe I would have had trouble finding employment — I don’t know. I could retire if necessary, but I enjoy my work and I’m not willing to retire yet. If I were younger, maybe I would have thought this was more of a risk. But it is important to listen to your conscience.

Tell us a little about your new job.

It’s a relief from the stress I experienced at South Florida Radiation Oncology. Where I work now is a very friendly environment and everybody is part of the culture together. We’re transparent and open and talk about things. I am part of the group again.

Is your employer abusing Medicare? The Employment Law Group can help you to take action.

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Whistleblower Petitions to Force SEC to Respond to Dodd-Frank Award Claim

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A petitioner has filed a Writ of Mandamus directing the Securities and Exchange Commission to issue a determination on an award claim filed under the Dodd-Frank Act.  The Writ, filed in the United States Court of Appeals for the District of Columbia Circuit, is intended to reduce the time period between filing an award claim under the SEC’s Whistleblower Program before receiving a determination from the SEC.

The SEC’s Whistleblower Program, established by Section 922 of the Dodd-Frank Act, requires the SEC to pay a monetary award to whistleblowers who voluntarily provided original information to the SEC that led to the successful enforcement of a covered judicial, administrative, or related action.  The Whistleblower Program has proven effective, as it incentivizes whistleblowers to come forward and report illegal activities to the government.  Due to the amount of award claims filed, however, the SEC has faced delays in issuing determinations on filed claims.

Although it remains to be seen how the Court will rule on the Writ, the petitioner’s filing illustrates the popularity of the Whistleblower Program, the laudable goals of the Program, and the delays currently affecting the SEC’s administration of the Program.

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