Whistleblower Lawyer & Attorney : National Whistleblower Legal Defense and Education Fund : Whistlebower Protection, Fraud Claims : Washington DC

In the wake of the deadly 2006 Sago mine disaster in West Virginia, angry miners came forward to say that the company that managed the mining company had blatantly sacrificed routine maintenance in favor of greater productivity. Why didn't these workers come forward sooner? Because they were afraid of losing their jobs. Even now, over 2 years after the January 2006 explosion that claimed 13 lives, lawmakers are dragging their feet on mine safety reform and specifically, whistleblower protections.

Last Friday, this West Virginia newspaper reported that the WV Senate had shot down a bill that would protect mine safety whistleblowers from retaliation when they report unsafe conditions in their mines. The lawmakers that voted against the bill were also spineless enough to request that their votes be anonymous -- fortunately for the voters of West Virginia, that request was not granted.  It is shocking to think that the WV legislature would turn their backs on the safety of the hardworking miners in their district.

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The Washington Post is reporting that Democrats and Republicans in the U.S. Senate have reached a compromise on legislation to reform the Consumer Product Safety Commission (CPSC). This essentially ensures that the legislation (S.2045) will pass the Senate within the next couple of months, and  then move on to the House of Representatives, where a companion bill is already in the works. This legislation was prompted by the rash of recalls over the past year, which peaked our awareness of unsafe consumer goods, including toys made with lead-based paint.

The Good News: S.2045, the Senate bill, includes a very strong provision to protect whistleblowers who work in manufacturing, distribution, or retailing of consumer products.  These employees would have the right to report retaliation to the Department of Labor, and to appeal that decision in federal court.

The Bad News: The House companion bill, which is currently stalled the House Committee on Energy and Commerce, does not include any whistleblower protections. Further, big business lobbyists have expressed vocal opposition to any bill that includes whistleblower protection, and they are fighting very hard behind the scenes to make sure that it is left out of the final language.

The National Whistleblower Center has issued an Action Alert on this issue, and is urging all concerned citizens to take part.

Click here to view the Alert>>

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In a recent University of Chicago study, researchers determined (again) that whistleblowers are the best tool for fighting corporate fraud. One unfortunate, but not surprising, finding was that  of whistleblowers whose identity was revealed, 82% of them were either forced from their position or quit under duress.

This new research comes on the heels of another study done by Price Waterhouse which found that whistleblowers expose more fraud than anyone, including corporate auditors or the SEC.

• View the Study Here>>
  
• Canadian Business Online reports on this study here>>

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This week, President Bush signed the National Defense Authorization Act for Fiscal Year 2008 (HR. 4986). Section 846 of this bill is a provision designed to protect employees of defense contractors when they report fraud to Congress, an Inspector General, the Government Accountability Office, or a Department of Defense employee charged with overseeing contracts.

The Bush administration has consistently opposed whistleblower rights for employees of the federal government and its contractors. Veto threats have been issued against the whistleblower protection legislation that has been proposed by the Congress (click here for the latest on those bills). The administration claims that protecting whistleblowers could harm national security, but the truth is the exact opposite: strong whistleblower laws can help keep this country safe and secure, as well as save us billions of dollars in wasted revenue.

In this case, the President had no choice but to sign the Defense Authorization bill into law, but then he went out of his way to express sharp disapproval of the whistleblower provisions in his signing statement. This statement (below), goes against the spirit of the law, and gives the president justification to ignore a congressional mandate.

“Provisions of the Act, including sections 841, 846, 1079, and 1222, purport to impose requirements that could inhibit the President's ability to carry out his constitutional obligations to take care that the laws be faithfully executed, to protect national security, to supervise the executive branch, and to execute his authority as Commander in Chief. The executive branch shall construe such provisions in a manner consistent with the constitutional authority of the President.”

In short, the new law is a victory worthy of great praise, but the President’s brash treatment of legislation designed to protect honest employees is deplorable.

See the full text of HR. 4986, sec. 846 after the jump...

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I would like to take this opportunity to remind everyone that the False Claims Act is supposed to be a Whistleblower law. Something is strange when there's a 670 Million Dollar settlement under this law and it’s actually pretty hard to find out what happened. (The only reports I could find were in the Corporate Crime Reporter and a paragraph five mention in this Associated Press article)

There's a lot of good news in the fact that Merck had to pay this money, but we'll have to wait for all the details because it seems many of the documents are still under seal. False Claims Act Plaintiffs always have a hard time adjusting to the idea that they have to keep their mouths shut to let the Government investigate their claims. In this case, the Government should be congratulated - they got a huge result. Yet one of the points of the law is to deter the type of behavior Merck engaged in, and it's hard to see how keeping the results quiet does that.

We were able to find one court document, the Complaint filed in Nevada under that State's False Claims Act. If that complaint can be believed, and there are 670 million reasons to give it credibility, Merck went about "increasing market share" as they call it, pretty much the way a drug pusher does. Only drug pushers don't get the US taxpayer to underwrite sales.

The complaint filed in Nevada district court outlines a scheme to defraud the taxpayer. Merck essentially gave away their drugs, drugs for chronic conditions, to hospitals so that patients would be dependent on the prescription when they left the hospital. Then Merck charged higher prices when the patient left. Only problem is that by discounting drug away earlier they were supposed to report that as the new price of the drug and re-imburse the government accordingly. Ooops. You can't say the pill is 10 cents in the hospital but costs 2 dollars when the patient leaves and get two dollars per pill from the government which pays the bills each time.

In a special irony, one of the drugs whose "market share" this scheme Improved was Vioxx. So now Merck has more Vioxx liability for that drug's cardiac problems than if they marketed the drug legally. That would almost be funny if it didn't put so many patients' lives at risks.

Anyway, the US Department of Justice is to be congratulated for winning such a huge settlement. The Lawyers who won the case and certainly the Plaintiff who brought it have all earned their reward. I just wish that instead of keeping everything quiet everybody would do a little more bragging. Get all the documents out of seal and tell the world that the False Claims Act works to recover funds stolen from the government even in complex schemes. Let's encourage the whistlebowers to report fraud as the False Claims Act was enacted to do. When you win $670 Million, its time to tell the world.

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What Federal laws protect whistleblowers who report corporate fraud?

In 2002, Congress passed the historic Sarbanes-Oxley Act which protects employees of publicly traded companies who report violations of Securities and Exchange Commission regulations or any provision of federal law relating to fraud against the shareholders.

Who is protected?

Employees of publicly traded companies and contractors, subcontractors, and agencies of publicly traded companies.

What is “protected activity?”

The Sarbanes-Oxley whistleblower law broadly defines protected activity to include reports made to federal regulatory and law enforcement agencies, Congress, an employee’s supervisor, internal corporate investigators. The law also protects employees who participate or testify in SEC regulatory proceedings or other federal proceedings related to fraud against shareholders.

What is illegal discrimination?

Adverse changes to the whistleblowers terms and conditions of employment are prohibited. This includes a wide range of actions from reprimands to termination and blacklisting.

Where should complaints be filed?

U.S. Department of Labor
Office of the Assistant Secretary
Occupational Safety and Health Administration - Room: S2315
200 Constitution Avenue
Washington, D.C. 20210
(202) 693-2000

What is the statute of limitations?

A complaint filed under the SOX whistleblower law must be filed with the Department of Labor in writing within 90 days of the time an employee learns that he or she will be, or has been, subjected to discrimination, harassment, or retaliation.

What remedies are available to employees under the Sarbanes Oxley whistleblower law?

Employees who prevail are entitled to

• Reinstatement
• Backpay with interest
• a complete “make whole” remedy (including restoration of seniority/sick leave, etc)
• “Special Damages” (for emotional distress and loss of professional reputation)*
• Attorneys’ fees and costs
• “Affirmative Relief” (such as requiring a letter of apology and formal posting of the decision)

*If an employee is seeking “special damages,” that relief should be requested in their initial complaint.

Do other laws protect corporate whistleblowers?

Many other federal and state laws have been enacted laws to protect whistleblowers. The National Whistleblower Center has produced several publications which outline these laws, some of which are offered as free downloads for whistleblowers and their advocates. For more information, visit the NWC publication page.

Also, the Occupational Safety and Health Administration operates an informative site for whistleblowers here.

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