Whistleblower Law Blog
Topic: Whistleblower Laws (Federal)
Judge Holds that SOX and Dodd-Frank Allow Individual Director Liability
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
What’s It Like to Be a Whistleblower? An Interview with Dr. Ting
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.
Whistleblower Petitions to Force SEC to Respond to Dodd-Frank Award Claim
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.
Senate Judiciary Leadership Seeks to Enhance Protection for FBI Whistleblowers
Last year, we wrote about a report from the U.S. Attorney General that reviewed protections provided to whistleblowers employed by the FBI. At the time, that report recommended, among other fixes, the following: (1) awarding compensatory damages to whistleblowers who suffered retaliation; (2) expanding the list of persons to whom protected disclosures could be made; and (3) equalizing whistleblowers’ access to witnesses within the agency. When the Attorney General released the report, then-Ranking Member of the Senator Judiciary Committee Chuck Grassley and Oregon Senator Ron Wyden expressed optimism that the report was a step in the right direction. More recently, Chairman Grassley and Ranking Member Patrick Leahy of the Senate Judiciary Committee introduced the Federal Bureau of Investigation Whistleblower Protection Enhancement Act of 2015.
Chairman Grassley stated that the new bill, introduced in December 2015, “expands outlets for protected disclosures and improves processes to halt reprisal.” Senator Leahy echoed Grassley’s statements, saying the bill would “help to ensure that FBI employees are able to blow the whistle on waste, fraud, or abuse at the FBI and not face personal repercussions when they do.”
Former Viacom Executive Files Suit for Alleged “Teenage Mutant Ninja Turtles” Tax Evasion Scheme
On January 5, 2016, former Viacom Vice President for Financial Planning and Analysis Nataki Williams filed suit under the Sarbanes-Oxley Act of 2002 and the Dodd-Frank Wall Street Reform and Consumer Protection Act against the entertainment company. In her complaint filed in federal court in the Southern District of New York, Williams claims that Viacom fired her in retaliation for questions she raised about a scheme in which Viacom allegedly sought to avoid paying taxes on licensing rights to the “Teenage Mutant Ninja Turtles” (TMNT) franchise.
Viacom acquired the international licensing rights to TMNT in 2009 from The Mirage Group and 4Kids Entertainment. Williams alleges that shortly after Viacom acquired the licensing rights, Viacom concocted a scheme to attribute TMNT’s revenue to the Netherlands to avoid the U.S. tax burden. TMNT is owned by a Netherlands-based entity, but Williams asserts that all of TMNT’s business took place in New York. She further claims that a Netherlands-based employee was tasked with making immaterial changes to draft contracts in order to legitimize business contacts outside of New York. Williams’ superiors were allegedly in on the scheme, joking that they do not “look good in orange.”
Pending Legislation Seeks to Expand Whistleblower Protections
Whistleblowers are a legal class of persons who expose what they reasonably believe to be unlawful activity to a person or entity that has the power to correct that wrongdoing. A number of laws at both the federal and state level protect whistleblowers from retaliation. These protections exist because whistleblowers often expose fraud or other unlawful activity that would otherwise remain undisclosed. The Department of Labor’s Occupational Safety & Health Administration, for example, enforces the anti-retaliation provisions of twenty-two different statutes that protect employees in the private sector. The United States Office of Special Counsel enforces the Whistleblower Protection Act, which covers most, but not all, civilian employees of the federal government. In recent years, whistleblower protections have been extended, through the National Defense Authorization Act of 2013, to employees of government contractors who disclose fraud or mismanagement related to a contract with the federal government. And in 2014, the Supreme Court extended the anti-retaliation provisions of the Sarbanes-Oxley Act to employees of contractors who provide services to publicly held companies.
But there are limits to the many protections that already exist for whistleblowers. The WPA, for example, specifically excludes members of the Intelligence Community. Members of the Intelligence Community are covered instead under the Intelligence Community Whistleblower Protection Act, which lacks an anti-retaliation provision. Even Presidential Policy Directive 19, which President Obama signed in October 2012 to provide some protection from retaliation to those serving in the Intelligence Community, fails to provide a private right of action to an aggrieved employee. And in recent years, there have been a number of cases involving whistleblower retaliation in the Department of Veterans Affairs.
SEC Paid $37 Million to Whistleblowers in FY 2015
Fiscal 2015 was arguably the most successful year in the short history of the whistleblower program at the Securities & Exchange Commission: In the 12 months ended September 30, almost 4,000 tips were received from whistleblowers around the world — a record number — and more than $37 million was paid out in rewards.
The whistleblower program was created by the Dodd-Frank Act of 2010: Under the statute, people who report securities violations may be eligible for a reward if the SEC uses their information to recover more than $1 million for taxpayers.
The 2015 tallies are reported in the SEC program’s new annual report. Beyond the monetary rewards being paid to whistleblowers, the report highlights a number of steps taken by the SEC to help insiders who share information about corporate wrongdoing.
Sen. McCaskill Requests Briefing on Admiral Accused of Whistleblower Retaliation
Senator Claire McCaskill (D-MO) asked the Navy for a briefing on the case of an admiral who avoided disciplinary action despite an investigation finding that he retaliated against staff members he erroneously suspected of being whistleblowers.
In an October 26, 2015 letter to Secretary of the Navy, Ray Mabus, McCaskill said she was disturbed to learn that Rear Admiral Brian Losey was not being “held accountable” for retaliatory actions taken against subordinates cited in a Department of Defense Inspector General report. McCaskill’s letter followed an October 21, 2015 Washington Post article that reported the Navy’s decision not to discipline Losey for violating whistleblower protection laws and to promote him. The article did note that the Navy issued Losey a “letter of counseling” asking him to be “thoughtful and careful” when handling such matters in the future, but not finding any wrongdoing on his part.
A Crucial Debate on Constructive Discharge
On Monday morning the U.S. Supreme Court will hear arguments on the rules federal employees must follow when they’re forced out of their jobs by discrimination or retaliation.
The case in question, Green v. Brennan, is about legal deadlines. That sounds technical, but really it boils down to simple justice. If the Court affirms a lower judgment, it will become far too easy to deprive federal workers of their day in court.
OSC Investigations Lead to Settlements in Two Whistleblower Cases
Two Office of Special Counsel investigations into whistleblower cases recently resulted in settlements. In October 2015, the OSC reported that the Army settled a claim filed by Teresa Gilbert. The next month, the OSC announced that the Department of Veterans Affairs settled claims brought by David Tharp.
Gilbert worked as a civilian infection control analyst at the Womack Army Medical Center in Fort Bragg, North Carolina. In January 2014, she reported concerns to the Joint Commission about infection control problems at the Medical Center. During the Commission’s investigation, Gilbert’s supervisors prevented her from participating in the investigation. After its investigation, the Commission found that the hospital was not following required protocols. Shortly thereafter, in April 2014, the Army began an internal investigation based on the Commission’s findings. Gilbert provided information to the Army investigators. As a result of both investigations, various senior employees at the hospital were disciplined.
The Employment Law Group® law firm produces this blog to provide general news and information about the field of whistleblower law. The blog does not contain any legal advice upon which you should rely or act. Please read our disclaimer.
Editor-in-Chief
R. Scott Oswald
Contributing Editor
Laurence Hooper
Popular Topics
- Administrative Review Board (ARB)
- Dodd-Frank Act
- False Claims Act (FCA)
- Foreign Corrupt Practices Act (FCPA)
- Internal Revenue Service (IRS)
- Medicare Fraud
- Occupational Safety and Health Administration (OSHA)
- Sarbanes-Oxley Act (SOX)
- Securities and Exchange Commission (SEC)
- Securities Fraud
- Tax Fraud
- Title VII of the Civil Rights Act of 1964
- Whistleblower Protection Act (WPA)
