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Second Session in Health Care Fraud and Abuse Seminar Focuses on False Claims Act

At BU yesterday, the Health Care Fraud and Abuse did its first deep dive into the False Claims Act, the government’s primary weapon in this field and an extraordinarily versatile tool.  The statute allows federal prosecutors to seek treble damages, plus penalties of $11,000 per false claim, plus possible exclusion and debarment from the government health insurance programs.

 

 

For reading, the class took on the statute itself, as well as Department of Justice statistical records showing how much money has been recovered over the years via the False Claims Act (over $40 billion).  Moreover, the trend is clear that increasingly each year, the government relies on whistleblower suits for its investigative leads, as these suits now account for a greater amount of recovery that suits initiated by the government itself.

 

 

Several key points were stressed in the review of the statute:

 

 

How the liability provisions include not only the submission of false claims but causing them to be committed, conspiring to have them be submitted, and also the retention of overpayments.

 

How the intent standard of the law does not require “specific intent” but can be satisfied with a lesser showing of intent, like “reckless disregard” for the law.

 

How certain hurdles are embedded on the statute that can make success in these cases difficult to predict, like:  the first to file requirement, the public disclosure bar, the Rule 9(b) specificity pleading standards, and 4) the “government knowledge” and “materiality” issues.  And

 

How the federal FCA and 30 state FCAs inter-relate and how law enforcement coordinates on these matters.

 

 

Of course, we covered as well the role of whistleblowers and their counsel in identifying these cases, bringing them to the government, and helping the government investigate and prosecute them.

 

 

The students asked excellent questions throughout.

 

 

Next week:  The FCA in action:  theories of liability, First Amendment defenses to “off-label” cases, and the new materiality standard of Escobar.

Data, Databases and Disclosure – What Can Whistleblowers Do with Publicly Available Data

A little known provision, of the Affordable Care Act, Section 6002, requires pharmaceutical companies and device manufacturers to report the payments they have made directly to physicians.  42 U.S.C. § 1320a-7h. The law also requires the Centers for Medicare and Medicaid Services to maintain a database of these payments and to release annual reports detailing this data, which they do annually a year behind the submission date. The Centers for Medicare and Medicaid Services recently released its 2016 data on payments to doctors by pharmaceutical and device manufacturers. The big headline is that industry paid more than $8.2 billion to physicians last year, slightly up from $8.1 billion in 2015.

 

As Biopharmadive reported, giants like Roche and Novartis spent hundreds of millions on physicians, with around half going to research projects and the rest to benefits like travel and consulting fees. Some, like GlaxoSmithKline, claimed they have cut back on payments for speaking engagements, but the data still shows the company paying $901,917 to doctors for such payments.

 

CMS warns that inclusion of particular payments in the database does not indicate “any wrongdoing or illegal conduct.” 78 Fed. Reg. 9457, 9460 (Feb. 8. 2013). There can be many legitimate reasons for a company to pay a doctor, for example for running a research project while being compensated at fair market value. Nevertheless, some of the largest False Claims Act cases in history have been based on companies paying kickbacks to physicians and fraudulently misrepresenting them as legitimate payments. For example, in 2016 Forest Laboratories and Forest Pharmaceuticals paid $38 million to resolve allegations that they had paid doctors kickbacks as part of speaker programs, and earlier this year Shire PLC Subsidiaries paid $350 to settle allegations that it had paid physicians kickbacks for bogus case studies and speaking engagements.

 

CMS data makes it increasingly easy to scrutinize these payment relationships by looking up the physician recipients of pharmaceutical payments in other databases, such as CMS’s Medicare Part D utilization datasets. Such data show what doctors are prescribing (and billing to the government). Some entities have created tools such as Propublica’s Prescriber Checkup, which links data from these and other sources to provide a more fulsome picture of physician and industry activity. Looking up companies of interest in these databases can provide additional evidence to supplement a whistleblower’s personal knowledge.

 

The extent to which such data can support an FCA case alone is more questionable. The FCA has a public disclosure bar that requires courts to dismiss actions based on certain public disclosures unless the whistleblower has information that “is independent of and materially adds to the publicly disclosed allegations or transactions.” 31 U.S.C. § 3730(e)(4). Those public disclosures include federal hearings, congressional, Government Accountability Office or other federal reports, or the news media. Case law has established that allegations released by government agencies through the U.S. Freedom of Information Act fall under the public disclosure bar. Schindler Elevator Corp. v. United States ex rel. Kirk, 563 U.S. 401, 410-11 (2011).

Whistleblower Law Collaborative & Our Client Help the Government Recover $13.5 Million For Healthcare Fraud

Helping whistleblowers report and prosecute fraud can be difficult and exhausting work for both the relators and their attorneys. When doing this work it’s important to celebrate successes. Along these lines, we are thrilled to announce that the United States settled a False Claims Act case brought by our client  against three companies, Medi-Lynx Cardiac Monitoring, LLC, AMI Monitoring, Inc., Spectocor, LLC, and individual defendants who had concocted a scheme to cause unwitting physicians to order their most lucrative services regardless of medical necessity or reasonableness.

 

As part of their service, defendants utilized an online enrollment portal that steered physicians to select the highest reimbursing monitoring service, even though less expensive monitoring services were often medically appropriate. Through this scheme, defendants submitted, and caused the submission of, false claims to Medicare for unnecessary and unreasonable telemetry services. Under the terms of the settlement, defendants have agreed to pay some $13.5 million to resolve these claims.

 

Our client, Eben Steele, an employee of AMI/Spectocor, had worked in the industry for many years and believes that healthcare companies should serve their patients’ needs, not line their own pockets. He was “offended by this underhanded scheme. Not only was it overriding the doctor’s judgment about what the patient needed, but it was lining the Defendants’ pockets at the expense of the taxpayer.”  Mr. Steele approached us in late 2013 to see if, together, we could do something to stop this fraud.   After investigating his allegations, compiling his evidence,  and conducting research, we drafted and ultimately filed his Complaint under seal in March 2014 and then served the Complaint along with a statement detailing his evidence on the government.  We then worked with the government over the course of the next three plus years until the settlement.

 

One of the most important factors in ensuring success for an FCA complaint is filing it in a district where the government prosecutors have the expertise and enthusiasm to ensure success. We filed Mr.  Steele’s complaint in the district of New Jersey, permitting us to work with the excellent office there. We simply cannot overstate the outstanding work of AUSA Bernard Cooney, who prosecuted this case from the beginning with the assistance of AUSA Andrew Caffrey, along with support provided by investigators in the Office’s Health Care & Government Fraud Unit and at the Office of Inspector General of the Department of Health and Human Services.”

 

Whistleblowers like Mr. Steele are vitally important in the fight against government fraud. Under the FCA, a private citizen-relator who suspects or knows of fraud against the government can act as a whistleblower and file a sealed complaint on behalf of the government. If the case is successful, as it was here, the relator is entitled to a share of the government’s recovery. In this case, after several years of hard work by Mr. Steele, his attorneys, and government prosecutors, our client will receive some $2.43 million for his part in stopping an ongoing fraud against the government was stopped, and helping ensure that government victims were compensated.

 

We offer Mr. Steele our congratulations and deep gratitude for his efforts on behalf of the government.

Whistleblower Dilemma: Should I Sign A Release?

Many whistleblowers we work with at the WLC are reporting fraud against their own employer, and are also in the process of leaving the company — either voluntarily or due to retaliation. Roughly a quarter of our clients are faced with a particularly stark dilemma: sign a release that waives the right to a whistleblower reward, or forfeit a severance payment. Employers regularly make signing such a release a condition of severance even when the payment was promised and counted on by employees. A company aware of its potential liability has an even greater incentive to structure severance payments to buy former employees’ silence. While severance payments are far smaller than the potential False Claims Act (FCA) rewards (which can include damages for retaliatory denial of severance as well as a share of the government’s damages), the promise of immediate financial assistance during a time of transition can be difficult to pass up in favor of the uncertain hope for a share of the government’s recovery after years of investigation or trial.

 

There is no one right answer to this dilemma, but one imperative is clear: never sign an employment release until you’ve sought legal advice, not just from an employment attorney but, from a specialist alert to the nuances of this area of whistleblower law.

 

Some whistleblower laws, such as the SEC whistleblower program, specifically forbid waivers of the right to a reward. Any release that requests you do so is not only unenforceable, but constitutes a separate illegal act on the part of the employer. Indeed in January, the SEC reached a $340,000 settlement with asset manager Blackrock, Inc. over charges it improperly included such waivers in the separation agreements for exiting employees. Upfront confidentiality agreements prohibiting communication of wrong-doing to the SEC can also be actionable as “pretaliation.”

 

Releases of FCA liability are always unenforceable because liability for fraud against the government can only be released by the government, not by a whistleblower or potential whistleblower. However, waivers of a putative relator’s right to collect a future reward have been enforced by some courts, but generally only if the government was already informed of the fraud allegations. Courts enforcing these agreements have reasoned that where the government was so informed, the public policy argument justifying these awards doesn’t apply.

 

Last year, the Second Circuit Court of Appeals interpreted this narrowed enforcement rule in United States ex rel. Ladas v. Exelis, Inc. , 824 F.3d 16 (2nd Cir., 2016). The court held that a contractor’s vague disclosure to the government regarding a change in its manufacturing process was not sufficient to put the government on notice of its fraud to justify enforcement of a release. The court noted that the contractor downplayed the change as “inconsequential,” didn’t disclose that it had changed the adhesive it was using, and failed to reveal that there was any kind of fraud or fraud allegation. Ladas represents relatively good news for whistleblowers who have already signed a release, as it suggests that employers who haven’t been fully candid with the government may not be able to enforce the agreement even in jurisdictions that would otherwise permit it.

 

However, for whistleblowers who haven’t signed releases, there’s still a need for caution. Determining which disclosures will be deemed sufficient to justify a release is a highly fact-dependent inquiry and very difficult to predict at the beginning of a case. See, e.g., United States ex rel. Ritchie v. Lockheed Martin Corp., 558 F.3d 1161, 1170 (10th Cir. 2009) (disclosures of what employer considered “baseless” allegations of fraud deemed sufficient to serve the policy interest in disclosure). Moreover, a potential whistleblower may not know what facts, if any, their employer has disclosed. Furthermore, sometimes a potential relator has already disclosed information to the government through a pre-filing disclosure or tip to the government before filing an FCA complaint in court.

 

Ultimately whether a release is upheld will depend on a court’s views and biases about the whistleblower and the defendant’s motives. Even in the best of circumstances, predicting these outcomes is nuanced and uncertain. For a potential whistleblower facing the prospect of unemployment, it is not a determination that should be made alone. It requires competent legal advice based on the facts of the case, the precise law of the filing jurisdiction, and the client’s situation.

Photo credit: Adapted from BSG Studio

Really Expensive Food You Didn’t Know You Bought

By Robert M. Thomas, Jr.

How much can you spend on overpriced bananas?

 

Quite a bit, it turns out. Late last week the government announced a $344-million-dollar settlement in a case filed thirteen years ago under the False Claims Act (“FCA”) by a whistleblower alleging that Kuwaiti food contractor Agility was over-charging the military for fresh fruits and vegetables delivered to U.S. troops during the Iraq war. $344 million. I don’t know about you, but that seems like quite a food bill to me.

 

The case was brought under the FCA, as are many of the cases we bring at the Whistleblower Law Collaborative in Boston. One of the many interesting aspects of False Claims cases is their scale. Small discrepancies, or seemingly insignificant mark-ups, can in the context of large contracts, yield huge dollars in illegal profits. Yes, even for fruit and vegetables. In the Agility case, the $344 million was $95 million in damages, plus another $249 million in claims submitted that the company agreed to withdraw as inappropriately charged.

 

In a normal transaction, a 5% mistake, say an extra $2.50 on a $50 dinner bill, is negligible. Depending on one’s attentiveness or neurosis about money, one might choose to ignore it rather than going back to the restaurant to complain or ask for the money back.

 

However, when you add a bunch of zeroes to the number, things start to look different. A 5% fraud rate on a $100 million contract is $5 million in single damages (but could be trebled to $15 million under the FCA). A 5% fraud rate on a $1 billion contract is $50 million, before possibly being trebled. The Iraq War cost several trillion dollars all told. You start to see the nature of the problem.

 

Similarly, during the “Big Dig” highway project here in Boston a few years ago, where the feds agreed to underwrite the sinking of an interstate highway below the city’s streets, the price tag evolved from one billion to two, and then seven, ten, eventually fourteen. How does that happen? The steady drip, drip, drip of contract amendments, change orders, and the like, and next thing you know the taxpayers are paying fourteen times what was agreed to. Whistleblowers eventually came forward (towards the end of the project) to explain the mischief in the project’s finances, which had ballooned out of control.

 

Another source of FCA fraud cases on an enormous scale is the government health insurance programs, such as Medicaid and Medicare. These are a huge problem for much the same reason (a 90% compliance rate in a trillion-dollar health care economy translates into a $100 billion per year problem). Health care fraud cases constitute the majority of our FCA cases at the Whistleblower Law Collaborative. Why are these so prevalent? Because federal reimbursement systems are largely based on a type of honor code: the systems allow the contractor to submit claims electronically, and coding manipulations can be hard to detect in the absence of a witness coming forward to help the government see what it cannot see on its own. The government typically pays the claims and chases the bad ones after the money’s been paid out, the so-called “pay-n-chase” model. For people and entities willing to engage in gamesmanship, it’s a lucrative game to manipulate these vulnerable honor systems. Whistleblowers have become the government’s primary weapon for making the lucrative game more risky — and for recovering the money wrongfully obtained.

 

False Claims Act cases can arise in any number of situations in which the government spends money. The Pentagon’s massive expenditures are certainly fertile ground. As documented in L.A. Times reporter Chris Miller’s 2007 book, Blood Money: Wasted Billions, Lost Lives, and Corporate Greed in Iraq, huge sums of money were lost and fraudulently spent in the Iraq War, as the price of that conflict (originally touted as a self-funding enterprise costing the taxpayers nothing) ballooned into the trillions of dollars and turning a national surplus into a national deficit. As whistleblower lawyers, the frustrating aspect of that situation was knowing that fraud existed but that it would be incredibly hard to get to the facts in sufficient detail to bring legal action. Very little paper existed for the contracts and sub-contracts; witnesses were in Iraq and throughout the Middle East. Traveling to those areas for fact-finding was almost impossible and would involve prohibitively expensive security details and the like. Because of this, the Iraq conflict became known among whistleblower lawyers as a “Free Fraud Zone.”

 

The money flowed and flowed in Iraq, but the whistleblower cases did not come, at least not right away. Just like the Big Dig, towards the end of the conflict when things had quieted down somewhat, people began to surface to make claims against defense contractors like Blackwater and Halliburton for a variety of over-charging schemes. And thirteen years after it was first filed, the Agility case shows that the money stolen in that conflict is still being recovered.

 

Taxpayers bear the brunt of these schemes. Whether it’s a city tunnel that cost fourteen times what was originally projected, or up-coded medical bills, or the most expensive bananas in the history of the world, you and I are stuck with the bill.

 

About the author: Bob Thomas is a Boston-based attorney and a principal in the Whistleblower Law Collaborative, whose work is the representation of whistleblowers. In addition to his work on behalf of whistleblowers, Bob is a board member of the ACLU of Massachusetts and an adjunct professor of law at Boston University, where he teaches a course on Health Care Fraud and Abuse.

 

John Oliver Explains Dialysis

John Oliver recently devoted most of his show “Last Week Tonight” to explaining how America funds kidney dialysis.  Oliver admitted the topic was likely to make his viewers push the button on your TV remote marked “Dear God Literally Anything Else.”

 

 

 

But it’s an important topic.  The United States “continues to have one of the industrialized world’s highest mortality rates for dialysis care,” despite spending more on it than other nations.

 

Since 1972, the federal government has covered all kidney dialysis.  We now spend 1 percent of the federal budget just on kidney dialysis.  That’s half as much as we spend on the entire Department of Education!

 

Why do we spend so much? You can probably guess, fraud and greed. Two large companies, Fresenius Medical Care and DaVita, control 70 percent of the market.

 

Megallan Handford, a former DaVita employee who was fired for trying to unionize its employees, explained that:

 

“When I was working at DaVita, the priorities for transitioning patients was to get them on dialysis and get the next patient on as soon as possible,” Handford told Oliver. “You would have sometimes 15, maybe 25 minutes to get that next patient on the machine, so you were not properly disinfecting.”

 

This focus on profits above patients is reflected in the nearly $1 Billion in False Claims Act Settlements that DaVita has paid out in the last several years:

 

 

Nor do these settlements appear to represent the end of DaVita’s legal issues.  DaVita faces a lawsuit and related government subpoenas over use of a non-profit, the American Kidney Foundation to push patients from government healthcare to Healthcare Exchange-offered private plans in order to dramatically increase its reimbursements.

 

Nor should you think that Fresenius is without blame.  For example, in 2000,  a team led by Suzanne Durrell  secured the largest global settlement to date in a health care fraud case against Fresenius Medical Care. The investigation resulted in a record-setting $101 million criminal fine; an aggregate civil settlement payment of $385 million; and the withdrawal by the company of more than $130 million in pending claims for reimbursement with the Medicare Program.

 

If you have concerns about patient harm and fraud against the government by a healthcare company, please contact us to discuss how whistleblower laws including those above can protect and reward you and help ensure that the patients and taxpayers are protected.

 

Today is Patriots’ Day, a Uniquely Massachusetts Holiday

 

Today we celebrate Patriots’ Day in Massachusetts. What is it? Held on the third Monday of April, it is a state holiday commemorating the start of the American Revolutionary War on April 19, 1775 at the Battles of Lexington and Concord. Famously recounted in the poems the Midnight Ride of Paul Revere by Longfellow and The Concord Hymn (better known as the “shot heard round the world” poem) by Emerson, there are many events commemorating and reenacting the historical events.

 
 

Also, the Boston Marathon, first held on Patriots’ Day in 1896, is run on this day, and the Boston Red Sox play a morning game at Fenway Park, timed so the end of the game coincides with the Marathon runners passing through Kenmore Square (it used to be timed to see the leaders in the race pass by, but alas, baseball games have gotten longer, runners have gotten faster, and the start time of the Marathon has moved because it is now so crowded).

 
 

The long, interesting, somber, and sometimes raucous history of Patriots’ Day is chronicled here. And we should mention that the Patriots’ Day holiday is also celebrated in Maine—because Maine was once part of Massachusetts (it became a separate state in 1820).

 
 

So Happy Patriots’ Day! May we all do our part every day to be true patriots!

Material Instincts: Wood, Escobar & the CMS Provider Form Jungle

Alleging health care fraud is no picnic. It inevitably involves a journey into a morass of government regulations, not made easier by the fact that the heart of any case, the false or fraudulent claims, tend to be found in one or more of a plethora of forms for Medicaid or Medicare reimbursement. No wonder that the Supreme Court, in a transformative 2016 case advancing a new standard for determining what fraud really matters, lamented that “billing parties are often subject to thousands of complex statutory and regulatory provisions.” Universal Health Services v. United States ex rel. Escobar, 136 S. Ct. 1989, 2002 (2016). Good lawyers can help navigate this jungle, and to their aid comes a new case out of the Southern District of New York, United States ex. rel. Wood v. Allergan, Inc., 10-cv-5645 (March 31, 2017), which elaborates on the circumstances under which violations of one of those thousands of provisions should be taken seriously, in the process cutting through a lot of uncertainty about the exact wording of claims forms (while also drawing on a case in which our firm played a key role, United States ex rel. Westmoreland v. Amgen, Inc., 812 F. Supp. 2d 39 (D. Mass. 2011), in which we prevailed after the 1st Circuit reversed an earlier unfavorable decision, New York v. Amgen Inc., 652 F. 3d 103 (1st Cir. 2011)).

 
 

In Wood, a former Senior Manager at Allergan, which makes prescription eye care drugs, alleged that the company had “violated the FCA and the Anti-Kickback Statute (“AKS”) . . . by providing substantial quantities of free drugs and other goods to physicians in exchange for their prescribing to beneficiaries of Medicare, Medicaid, and other government programs the company’s brand name drugs.” Id. at 3. Wood identified false claims resulting from Allergan’s activities by pointing to the Centers for Medicaid and Medicare Services (“CMS”) Provider Agreement for Medicare Part D and Form 855I, which contain certifications of compliance with the AKS. Id. at 53. Violations of the AKS made those claims expressly false (and the pharmaceutical company could be held liable under the False Claims Act for “causing” those false claims even though it wasn’t the submitter of them). Furthermore, even though Wood did not identify express certifications or references to the AKS on Medicaid provider applications and state claims forms or on the CMS Form 1500, instead alleging only generally that many states require AKS certifications, references on the forms to “applicable Federal or State laws,” sufficed to imply that claims on the forms were false or fraudulent if there had been noncompliance with the AKS. Id. at 60. That reasoning accords with Amgen, 652 F. 3d at 112-14, in which the court looked to state anti-kickback statutes and regulations in four states, and provider agreements that had sufficient express wording in two more, to find that noncompliance with the AKS can result in false or fraudulent claims.

 
 

Escobar demands that for liability, the noncompliance must be “material,” that is, it must really matter, preventing unfairness to potential defendants by holding them liable for running afoul of some trivial provision amid the jungle of forms and regulations. Escobar, 136 S. Ct at 2003. How do we know what really matters? Wood cuts through some of the cryptic factors that Escobar discussed with an appeal to policy; violations of the AKS matter not because they involve rule-breaking but because “violation of the AKS is a far cry from an ‘insubstantial’ regulatory violation like, say, requiring ‘that [government] contractors buy American-made staplers’ rather than foreign staplers.” Id. at 61 (quoting Escobar, 136 S. Ct. at 2004.) There the Wood court builds on its comment, in identifying falsity, that “[k]ickbacks are designed to influence providers’ independent medical judgment in a way that is fundamentally at odds with the functioning of the system as a whole.” Id. at 60 (quoting United States ex rel. Westmoreland v. Amgen, Inc., 812 F. Supp. 2d 39, 53-54 (D. Mass. 2011)). Another kickback case, United States ex rel. Hutcheson v. Blackstone Medical, Inc., 647 F.3d 377 (1st Cir. 2011), also took AKS compliance language in provider agreements and hospital cost reports as indicative of materiality, suggesting that testimony from parties to the contract could help establish it further. Id. at 394-95.

 
 

This refreshing application of Escobar avoids getting mired in a fact-intensive counterfactual investigation into whether or not government officials would have paid the Allergan-caused false claims, had they known of the kickbacks at issue, and relies on our instinct about why kickbacks matter, as much as the language of the statute. This builds on the best of Escobar; an appeal to common sense. At the Escobar Oral Argument, Justice Kagan drew a powerful analogy between an unlicensed doctor and guns that don’t shoot as examples of fraud that anyone would recognize, which made its way into the opinion in the compelling quote that “because a reasonable person would realize the imperative of a functioning firearm, a defendant’s failure to appreciate the materiality of that condition  would amount to ‘deliberate ignorance’ or ‘reckless disregard’ of the “truth or falsity of the information” even if the Government did not spell this out.” United States ex rel. Escobar, 136 S. Ct. at 2001-02; Transcript of Oral Argument at 16 (No. 15-7). Signs that the lower courts have picked up on Escobar’s theme of indignation is good news for righteous whistleblowers, since they can convince courts to rule in their favor by an appeal to the overarching policy damaged by the fraud, as much as by digging into the regulations.

Now is a Time for Heroes

What Government Whistleblowers Can Do

 

We make our living representing whistleblowers.  It’s fascinating work, and not many days go by that we aren’t inspired by the courage of our clients to speak the truth when it would be easier not to, and the determination to stand up for something and to see it through.

 

We represent mostly whistleblowers under the False Claims Act or the relatively new SEC or IRS Whistleblower Programs.  They are usually insiders at private companies that cheat under government programs and contracts.

 

But there’s another universe of whistleblowers that we want to talk about — the government whistleblower.  The federal employee who is aware of something terribly wrong going on at his/her place of work and feels compelled to speak out.  What rights and protections do these people have?   While they may not be entitled to a “relator’s share,” in most situations, they do have legal protections, most notably under the Whistleblower Protection Enhancement Act (“WPEA”) of 2012.

 

The issue is a timely one, as the chaotic first weeks of the Trump Administration have seen an unprecedented disruption to the normal functioning of the government.  Just look back to the sudden rollout of the immigration order (now stopped by the courts) and think of the airport scenes, the confusion, the changing interpretations from the White House, and so on.  It is indeed a very new day.

 

In this intimidating environment, we know that many federal employees are wondering what to do when they are forbidden from communicating with the public or given an order from a superior that is, in their view, illegal. We hope this article will help.

 

Silence is not the only option.  Look at what’s happened already:

 

• In the National Park Service, alt government accounts have popped-up to oppose the President’s gag orders relating to climate-change and science, or to correct the President’s misinformation about the crowd size at his inauguration.
 

• Federal employees at several other agencies, including the embattled E.P.A., began posting similar alt government  sites on social media as a result of the President ordering the official agency sites down.
 

• Over 1000 State department officials signed a “letter of dissent” cable opposing the Executive Order barring immigration from seven predominantly Muslim countries.
 

• HHS employees rose up in protest and forced the White House to temporarily withdraw its order that the agency cease advertising the deadline to enrolle in Affordable Care Act.
 

• And most notably, Acting Attorney General Sally Yates notified all Department of Justice employees that as long as she was in charge of the department, it would not defend the President’s travel ban in court.

 

Sally Yates, as she surely expected, was fired immediately.  But the her actions had a powerful impact, reminiscent of the principled stand taken by Archibald Cox and Eliot Richardson during the Watergate crisis.

 

As these examples make clear, federal whistleblowers — at all levels — can have a real impact in fighting executive overreach. With one party in control of both the executive and legislative branches and an executive acting forcefully and bluntly, the need for government whistleblowers is real.

 

Blowing the whistle on wrongdoing in government is both part of our national history, and specifically protected under federal law.

 

I.  The History.  We have always relied on courageous government employees to come forward and expose wrongdoing by our government.  The Continental Congress enacted America’s earliest whistleblower law in 1787, declaring it “the duty of all persons in the service of the United States” to provide information of any “misconduct, committed by any persons in the service of these states, which may come to their knowledge.”   The law was prompted by an incident in which sailors and marines serving on board the warship Warren had secretly informed the Continental Congress of wrongdoing – including torturing prisoners of war – by Commander-in-Chief of the Continental Navy, Commodore Hopkins.  Hopkins eventually sued two of the whistleblowers, lieutenant Marven and midshipmen Shaw.  The Continental Congress, recognizing the importance of their actions and our young nation’s duty to protect whistleblowers, provided funds to successfully defend the suit.

 

In 1863, President Lincoln urged the passage of and signed the False Claims Act, incentivizing whistleblowers to come forward in response to rampant defense contractor profiteering during the Civil War.  In 1986, the statute was amended in substantial ways and has given rise to a bar of lawyers (of which we are proudly members) that has, with the aid of our whistleblower clients, returned tens of billions of dollars to the federal treasury.

 

In recent years, laws have been passed making it illegal for the federal government to try to silence employees who are speaking out about wrong-doing.  These laws will be getting a workout, we predict, in the years of the Trump Presidency.

 

II.  Current Protections.  Here are some resources for government whistleblowers, under current law.

 

Most government employees are protected from retaliation for disclosing violations of laws, mismanagement, waste, abuse or danger to health and safety. Employees are also protected against censorship of scientific research and analysis. Even inaccurate disclosures, if made in good faith, are protected.  See the following link for a list of the kinds of employment actions that are prohibited by the Office of Special Counsel – an independent government agency that that looks out for federal whistleblowers.  Examples include coerced political activity, nepotism, inappropriate recommendations, abuse of authority, and whistleblower retaliation.  The OSC also advises agencies on compliance with whistleblower protections, like the anti-gag rule.  See here and here.

 

Employees who believe they have been retaliated against can file a grievance with their union, or a complaint with the Office of Special Counsel, or an appeal with the Merit Systems Protection Board.  Remedies include reinstatement, back pay, and attorneys’ fees.  No, you won’t be made rich as a federal employee whistleblower, but you do enjoy substantial legal protections, and vindication can sometimes be its own reward.

 

In short, “Federal Employees have the right to make disclosures of wrongdoing” and cannot be punished for doing so.  The WPEA passed both houses of Congress unanimously in 2012, and makes it clear that speaking up is legally protected activity.

 

We never say “never” to clients or prospective clients, but it would be very difficult for the President to abolish this law or this agency.  He might try to  staff it with do-nothing types to weaken it, but it seems highly unlikely that the OCS or the laws it enforces won’t still be on the books for the duration of his Presidency.

 

No, this is not a normal time.  It is a time of risk.  There are some things a President can do, and some that he/she cannot do.  It is a time for heroes to stand up when the circumstances compel it.

 

And there is precedent:  Shaw, Marven, Ellsburg, Yates.  The risks are as real as they always have been, and greater than any time since the 1970’s.  The law provides protection, and lawyers of conscience both inside and outside the government are available to help.

 

Sometimes Less is More

 

One of the questions we deal with most frequently from our whistleblower clients is: what documents can I take out of my place of employment? What can I show you? And for us as lawyers the question is (and we’ve written about it before): Is there anything in this pile of paper (or in these thumb-drives) that we can’t even look at all?

 

For any lawyer unfamiliar with the False Claims Act or the SEC and IRS whistleblower programs, these questions can be daunting. The wrong answer can subject a relator with otherwise valid claims to dismissal and expose the client and lawyer to substantial sanctions: You don’t want to mess up a potential case before it even begins.

 

Fortunately, there’s fairly clear guidance that emerges from an examination of how courts typically deal with these kinds of problems — in litigated cases where employers and their former employees are duking it out over who took what, whether they had the right to, and whether anyone’s going to pay for the removal of documents.

 

The basic framework is this (leaving aside just for the moment the special issue of privileged documents):

 

    • Companies have a legitimate property interest in the emails, papers, and other documents generated by their employees.

 

    • These property interests are routinely recognized by courts, particularly in the context of former employees trying to use these materials to start up a new business or work for a competitor, for example. (Think trade secrets.)

 

    • But the property interests only go so far, and they can collide with other interests, as they do in the case of statutorily protected whistle-blowing activity.

 

    • The government has a right to use its powers to collect evidence of criminal wrong-doing, e.g., by subpoena or search warrant, and no company can use their property rights argument to defeat that interest.

 

    • Similarly, the FCA empowers relators (acting on behalf of government interests) to pass along company documents as evidence of fraud. Indeed, the statute creates an obligation on the part of relators to convey to the government everything they know about the problem, including any supportive documentation. So a relator could actually get some heat from the government if he/she came in and told the story but did not produce relevant documents from the employer.

 

    • So you have a competition between competing values. This sometimes plays out when companies file counterclaims against relators (e.g., for the theft of property) in non-intervened unsealed cases. These are where the interesting written opinions are.

 

    • You’ll see in the cases that where relators keep copies of selected relevant documents that they would normally have seen in the ordinary course of their business, courts generally say that’s o.k. and protected by your statutory rights under the FCA or other similar law.

 

    • Often an employer will argue that the removal of documents violates an express confidentiality agreement or a common-law duty of loyalty. Neither of these arguments trump whistleblower protections when a court determines that an employee is acting reasonably.

 

    • Courts generally do not approve, however, of relators who go snooping around the company looking for evidence that they normally wouldn’t have the right to see.

 

    • They also do not approve, generally, of a whistleblower who takes the only copy of a document from the premises (e.g., an original where there are no copies). (This is rare in the electronic age, but is still possible.)

 

    • This dividing line makes sense from a “rough justice” sense, even if it may be hard to square with the general purposes of the FCA. It’s a reflection of the human reaction of judges to the notion of whistleblowers as internal spies as opposed to do-gooders, i.e., there must be some limit to how far an employee can go in gathering evidence at his/her place of employment. Courts feel uncomfortable blessing unrestricted licenses to poke around.

 

So in practical terms, we typically advise clients to give us what they have in their “wingspan” and nothing else. In other words, if it’s a document that you saw or would normally see in the ordinary course of your work, it’s probably o.k. to share that with us.

 

But — there’s always a “but” in the law — then we have to give clients special care instructions with respect to anything potentially privileged, which could be the subject of a whole additional article. The basic approach is that we quarantine any documents where we think there’s an arguable claim of privilege, and we come back to them only if we need to. If we need to, we will often engage separate “taint” counsel for that purpose, so we don’t run any risk of disqualifying ourselves. The unfortunate corollary to this rule is that it is very risky for in-house counsel to serve as a False Claims Act relator as much of what they work on is privileged.

 

A recent case out of the 11th Circuit Court of Appeals is consistent with this general pattern described in the bulleted points above. Although it was not a False Claims Act case, the dispute between the former employee and the employer revolved around the employee’s having accessed other employee’s’ email accounts (which did not have personalized passwords). Gaining access using a universal password, the former employee found evidence of wrongdoing which he then reported to compliance. But the tables were turned when ultimately the investigation turned focused on him for having improperly obtained the information. He was fired and the courts upheld the firing. The case is Brown Jordan International et al. v. Carmicle.

 

So there’s a lot of nuance in this issue. If you’re not sure, err on the conservative side. Or get advice first. Good advice can keep you safely in the zone of “protected activity” under the applicable whistleblower laws, without having to worry about later claims by the employer of document theft and the like.