The Sixth Circuit U.S. Court of Appeals issued a decision this week that local government officials can be held liable for accusations they make against citizens when it is "reasonably foreseeable" that their statements will cause the citizen to be fired from their job. Martha Paige worked as an accountant for Bunnell Hill Development Company in Warren County, Ohio. She and her husband owned a large farm in that county. When Paige learned about a proposed road project that would interfere with their farming, she organized the Residents' Association of West Central Warren County. On August 6, 2007, Paige attended a public meeting of the Warren County Port Authority. Kimberly Coyner is executive director of the Port Authority. Before the meeting started, Coyner asked Paige about where she worked, and Paige disclosed that she worked for Bunnell Hill. During the meeting, Paige identified herself as president of the Residents' Association, and expressed concerns about an interstate project. Paige alleges that on August 13, 2007, Coyner called Bunnell Hill and told a manager that Paige identified herself as speaking for Bunnell Hill. On August 16, 2007, Bunnell Hill fired paige for using the company name to oppose the interstate project, and disclosed Coyner's call as a basis for the termination.Continue Reading...
This week, the Legal Intelligencer reports on how some employers are routinely investigating the social network sites (SNSs) of employees who make claims against them. Called "How Facebook Can Make or Break Your Case," the article is mostly about how Facebook posts can make the employer's case and help break the employee's.Continue Reading...
CNBC released a story yesterday about the qui tam provisions of the new Dodd-Frank Act, the financial reform law. They call the whistleblower provisions "little-noticed," indicating that we here at the National Whistleblowers Center (NWC) still need to do a better job of informing the media about new developments in whistleblower protection.
In the article, NWC Executive Director Stephen M. Kohn tells CNBC, "If the law works, whistleblowers should be rewarded with millions of dollars. Those whistleblowers will save investors billions and billions of dollars." CNBC notes that the new provision could have helped whistleblowers like Harry Markopolos who tried in vein to get the Securities and Exchange Commission (SEC) to act against Bernard Madoff. If Dodd-Frank was in place then, Markopolos could have filed a qui tam claim, stopped Madoff's ponzi scam, and collected a portion of Madoff's ill-gotten gains. CNBC commented that NWC's seminar last Friday shows that lawyers are "chomping at the bit" for a share of the recoveries.Continue Reading...
Sixth Circuit sees "injustice that threatens the purposes" of the STAA and reinstates whistleblower case
I am pleased to announce that today the Sixth Circuit U.S. Court of Appeals has reversed a decision of the U.S. Department of Labor's Administrative Review Board (ARB) and reinstated the whistleblower claim that my client Harry Smith made against the trucking company CRST. In the photo, Harry Smith stands between his wife and fellow truck driver Scooter McNutt. Smith was fired right after he threatened to take the company's defective trailer to the Department of Transportation for inspection. The Department of Labor had dismissed Smith's complaint against CRST after the Occupational Safety and Health Administration (OSHA) sent him a dismissal notice, showing that a copy was sent to me, his lawyer. However, OSHA did not actually send me the copy of the dismissal notice until after Smith's time to appeal had expired. Smith does not recall receiving the dismissal notice at all. CRST and the Department of Labor (DOL) tried to blame Smith for failing to appeal on time. The Sixth Circuit says today that, "it appears to us that it falls even more heavily at the feet of OSHA, in failing to send the notice to Renner for some two months after the fact, despite the indication to Smith to the contrary."Continue Reading...
Yesterday, the Seventh Circuit U.S. Court of Appeals affirmed a reinstatement order from the Department of Labor's Administrative Review Board (ARB). The decision keeps truck driver Peter Cefalu on the job driving for Roadway Express. The Seventh Circuit considered a previous appeal by Roadway Express and decided that the company deserved a chance to prove that it would be unsafe for the public to reinstate Cefalu. In that case, called Roadway Exp., Inc. v. United States Dep’t of Labor, 495 F.3d 477 (7th Cir. 2007), or Roadway I, the Seventh Circuit held that the ARB properly barred Roadway from using information about Cefalu's driving record with previous employers. Since Roadway refused to disclose the source of the information, after a judge ordered it to make this disclosure, the Court held that the limit on its ability to use the information was reasonable. However, the Court also held that an employer should not be compelled to reinstate a driver if the employer would have fired the driver anyway for being a safety risk even if that driver had engaged in no protected activity. On remand, the Department of Labor found that Roadway could not prove that it would have fired Cefalu in the absence of his protected activity. Roadway fired Cefalu in 2002 after he submitted an affidavit to support another driver in a grievance hearing. Cefalu's affidavit explained how management had instructed him to falsify his logbook of the hours he drove. Now, the Seventh Circuit makes clear that it wants to respect the automatic reinstatement provision of the Surface Transportation Assistance Act (STAA), 49 U.S.C. § 31105(b)(3)(A). It will recognize an exception only when reinstatement would compel a company to employ an "incompetent or unqualified employee." It also made clear that the employer has the burden of proving this exception to reinstatement. I note that STAA requires the employer to prove its same-decision defense by "clear and convincing evidence." Congratulations to my friend Paul Taylor on prevailing in this case after eight (8) years of vigorous opposition.
Last week, I posted here an amicus brief for the U.S. Department of Labor's Administrative Review Board (ARB) explaining how the Sarbanes-Oxley Act (SOX) protects corporate whistleblowers employed by the subsidiaries of publicly traded companies. What a difference a day makes. With President Obama's signature today on the Dodd-Frank Wall Street Reform Act, SOX is now amended to explicitly protect the employees of subsidiaries. What is more is that Senate Report 111-176 makes clear that the amendment was intended to restore SOX to the broad scope originally intended, and that defenses based on subsidiary status should now be unsuccessful. The National Whistleblowers Center (NWC) has now filed a supplemental letter brief with the ARB in its test case of Carri Johnson v. Siemens Building Technologies, Inc., ARB Case No. 08-032. The letter brief makes clear that the Dodd-Frank Act firmly establishes that SOX has always covered the employees of subsidiaries. NWC Executive Director Stephen M. Kohn led our work on this letter, with myself and NWC intern Margot Weisberg. The ARB, meanwhile, has invited supplement briefs on the effect of the Dodd-Frank Act on subsidiary coverage under SOX. The ARB has allowed an additional ten (10) days for these briefs, but ours is already filed.Continue Reading...
President Obama is scheduled to sign the Dodd-Frank Act tomorrow to enact the most significant reforms of our financial system in generations. Lawyers are already assessing some of those reforms, and we are focused on the new provisions for whistleblowers. My colleague, Lindsey Williams (Advocacy Director of the National Whistleblowers Center) already reported here on the substantive provisions of the new law. Yesterday the National Law Journal released an article with legal analysis of the whistleblower provisions. Management lawyers, including Richard Cassin of Singapore, are bemoaning the liability companies will face, and the change in incentives that will encourage insiders to become whistleblowers for the rewards provided by the new law. My friend Jason Zuckerman (pictured) of The Employment Law Group told the National Law Journal, "This new monetary reward program should encourage employees to blow the whistle and put more pressure on the SEC to conduct real investigations that would lead to appropriate accountability." He also expresses appreciation for the closure of loopholes in the Sarbanes-Oxley Act (SOX) and the False Claims Act (FCA). I do too.
The Wall Street Reform and Consumer Protection Act (H.R. 4173) passed 60-39 by Congress today includes a number of provisions designed to protect employees who report fraud in the commodity and stock exchanges. This is one of the most important whistleblower laws ever passed.
Although this bill is historic, it is important to note that these protections are for private employees. There is still work to be done to pass H.R. 1507, so that federal employees may also come forward to report waste, fraud and abuse without fear of retaliation.
The NWC has compiled the sections of this bill that pertain specifically to whistleblowers with a one-sentence summary of each (see below). Additionally, the NWC's upcoming seminar, scheduled for July 23, 2010, has been updated to include a presentation of the whistleblower provisions in the Wall Street Reform Act. To register, click here.
23(A) - qui tam for whistleblowers under the Commodities Exchange Act
23 sub (H) - anti-retaliation provision, which permits whistleblowers to go to federal court if they are retaliated against for filing fraud claims under the Commodities Exchange Act
21F(a) qui tam for securities fraud: new qui tam rewards and incentives for whistleblowers who blow the whistle on securities violations
21F sub (H)(1) anti-retaliation provision for employees who file qui tam claims under securities law
(H)(1)(A)(iii) anti-retaliation for employees who make disclosures under SOX, any violation of SEC art or who make protected disclosures under obstruction of justice act
Claims filed in federal court - employees entitled to double back pay
(B) statistical ratings organizations (Moody's & Standard & Poor's) now protected under SOX anti-retaliation provisions (C) SOX whistleblower protection act enhanced and amended to increase the statute of limitations, guarantee jury trials, and prohibit mandatory arbitration agreements
Section 923 - Conforming amendments
Section 924 - SEC regulations to establish special whistleblower office and impose regulations enforcing whistleblower rules.
Section 929A - SOX anti-retaliation law is clarified to ensure subsidiaries of publicly traded companies are fully protected under the whistleblower protection law
Section 966 - Federal employees are losers under the Act and regulators obtain no protections except a glorified "suggestion box"
Section 1057 - New whistleblower protection for employees who make disclosures to the newly created consumer protection board
Section 1079B - Amends the False Claims Act anti-retaliation law to provide for universal national 3 year statute of limitations to file wrongful discharge claims under the False Claims Act.
*Meryl Grenadier (NWC Fellow) drafted this post.
David J. Graham, M.D., M.P.H., is a drug safety whistleblower working at the Food and Drug Administration (FDA). On November 18, 2004, Dr. Graham testified before the U.S. Senate Committee on Finance about Merck's withdrawal of the popular anti-inflammatory drug Vioxx. He testified that FDA policies could not protect the public from drugs with unacceptable risks. "I would argue that the FDA, as currently configured, is incapable of protecting America against another Vioxx. We are virtually defenseless." His words ring prophetic today as the FDA's Joint Meeting of the Endocrinologic and Metabolic Drugs Advisory Committee and the Drug Safety and Risk Management Advisory Committee convenes at the Hilton Hotel in Gaithersburg, Maryland. Dr. Graham is scheduled to speak at 3:00 pm today on "Risk of Acute Myocardial Infarction, Stroke, Heart Failure, and Death in Elderly Medicare Patients Treated with Rosiglitazone [Avandia] or Pioglitazone." Dr. Graham and one of his FDA colleagues, Kate Gelperin, have previously called for the popular diabetes drug Avandia to be pulled from the market. Their study of the drug found possible evidence of an increased incidence of mortality.
Dr. Graham's research has helped protect the public from other unsafe drugs, including Omniflox an antibiotic, Rezulin, a diabetes treatment, Fen-Phen and Redux, weight-loss drugs, and phenylpropanolamine, an over-the-counter decongestant, Lotronex, Baycol, Seldane, and Propulsid.
A story in today's New York Times discloses that Avandia's maker, GlaxoSmithKline, knew about Avandia's heart attack dangers since 1999. Coincidentally, the Los Angeles Times is reporting today that GlaxoSmithKline ill pay $460 million to settle claims by Avandia victims. The LA Times reports that this is good news as the market had anticipated that the company would suffer $6 billion in losses from Avandia. Troy Media is reporting today VIOXX caused 140,000 heart attacks that killed 60,000 people. It adds:
[F]ormer FDA medical reviewer Dr. David B. Ross stated, “industry has become FDA’s client. People at FDA know that they have to be careful about upsetting industry” and that “even if a product doesn’t work, . . . there is pressure on managers that gets transmitted down to reviewers to find some way of approving it.” Former FDA medical reviewer Dr. Robert L. Misbin, now deceased, likewise observed: “One of my superiors said something . . . I have never forgotten, that we have to maintain good relations with the drug companies because they are our customers.” In each case, these career government scientists spoke out, aware that doing so invited agency retaliation; FDA has a long, sordid history of retaliating against whistle-blowers.
I must wonder if Avandia really is another VIOXX. I would hope that another 60,000 deaths would be enough to get the U.S. Senate to pass meaningful protections for federal employee whistleblowers.
By the way, I have now learned that Dr. Misbin is not deceased. Troy Media erred both in reporting that his is "former FDA" and "now deceased." I received an email from him that you can read in the comments to this blog entry.
Two letters to the editor printed in today's Washington Post reminded me of a meeting I attended in May of the FAA Whistleblowers Alliance. One of today's letters was from the Potomac TRACON local of the National Air Traffic Controllers Association. The other letter, by FAA Administrator Randy Babbitt, extolled the virtues of the FAA's Partnership for Safety program which seeks "to encourage employees to speak up when they see a mistake or a safety issue." He adds, "Voluntary reporting is a key element of our safety culture . . .." I am glad that we agree on the need to have employees come forward with safety issues. I cannot help but think, though, that such programs would be more effective if all federal employees felt secure that they would be protected from retaliation. When federal employee whistleblowers have their cases limited to the Merit System Protection Board (MSPB) which rules in their favor in only 1.7% of the time, they would face a strong incentive to shut up and save their careers. To me, this is a good reason to support the House version of the Whistleblower Protection Enhancement Act (WPEA), HR 1507, to assure all federal employee whistleblowers that they can have access to our customary legal process of jury trials.
At the FAA Whistleblowers Alliance meeting, Gabe Bruno (standing in photo) spoke about regulatory capture. It is the phenomenon in which government agencies tend, over time, to align themselves with the industry they are supposed to regulate. He is a former FAA manager, and now an AIR21 expert. He was thinking about the FAA. I think about MMS and the Gulf oil spill. Gabe Bruno also spoke about the margin of safety. He handed out the chart pictured here (follow this link for a PDF version). The point is that we have aviation regulations to keep every day operations safe, and as far away as possible from the conditions that cause disasters. This is the margin of safety. Every time anyone violates a regulation, suppresses a maintenance need, or intimidates a whistleblower, we move one step closer to a catastrophe. Our margin of safety gets narrower. When Congress makes whistleblower protection laws stronger, we have a wider margin of safety. People have less fear of retaliation and are more likely to speak up. We might not know when or how, but over time, the wider margin of safety will save lives. Gabe Bruno also passed out a 2008 letter from the House Transportation Committee that reveals some of the regulatory capture problem at FAA, and two of his letters to the FAA about what that agency can do now to increase our margin of safety.
Moe Hamdan owns the upscale Washington restaurant called The Reserve on L St. NW. Instead of using the restaurant's income to pay the workers' wages, he used it for his own lavish lifestyle. Some workers went six months without being paid what they are owed. "I worked really hard as a bar boy at this restaurant," says former Reserve employee Luis Ducas, "and the owner refuses to pay me my back wages." D.C. Jobs with Justice's Arturo Griffiths says Hamdan owes workers over $25,000 in unpaid wages. Hamdan "has no intentions of paying his workers or even meeting with them" a former manager told Boaz Young-El, an AFL-CIO Union Summer intern. "He is unethical, immoral, and has no remorse for what he has done." So, when DC Jobs with Justice called on friends to literally blow the whistle at The Reserve this evening, my wife and I joined in. Management responded by calling the police. Officer A. O. Wilson came to the scene and said, "I have no problem with these protesters." Still, I have a problem with stealing workers' wages. It will be nice when police take wage theft as seriously as they take shoplifting.
Sen. Charles Grassley today released copies of his letters to 16 big pharmaceutical companies about their whistleblower policies. Bloomberg news service is also reporting on these inquiries. The letters review Sen. Grassley's efforts to strengthen the False Claims Act (FCA), and ask what the companies are doing to inform employees about the FCA, and then to protect employees who come forward with information about frauds. Sen. Grassley notes that since the 1986 amendments, the government has recovered $22 billion that had been obtained by fraud. He notes that Section 6032 of the Deficit Reduction Act (DRA) required contractors receiving over $5 million a year to issue written policies to employees about their rights under the FCA. The Bush administration then determined that this Section 6032 did not apply to pharmaceutical companies. Sen. Grassley disagrees, but still wants to know if the 16 biggest pharmaceutical companies nevertheless have the policies that would be required by Section 6032. Of the $22 billion recovered, Pfizer paid $2.3 billion in one settlement. Pfizer's Chris Lodertold Bloomberg that it is responding to the letter and “shares the senator’s desire to detect and report any false claims that may lead to unnecessary costs to our health-care system.” Pfizer, he said, has invested “substantial resources” to “create a compliance program that consists of mandatory training for every one of our employees, proactive monitoring and surveillance, and strict enforcement of all federal and state health-care laws.” I wonder if Pfizer is more highly motivated since it paid that $2.3 billion. Sen. Grassley letters are available in the continuation of this blog entryContinue Reading...