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

Back in 2003, Bunny Greenhouse blew the whistle on no bid contracts to Halliburton that were doled out by the Bush Administration in the run-up to the Iraq War. Since then she has suffered her share of hardships, having been harassed and demoted from her position of Chief Contracting Officer for the US Army Corps of Engineers. Ms. Greenhouse realizes though, that the only way for federal employee whistleblowers to have a chance when they blow the whistle on corruption is to have a strong whistleblower law in place --- a law just like the one that Congress cut out of the stimulus bill last week.

Bunny has issued the following letter, which both supports the newly enacted whistleblower protections for state and local government employees, as well as government contractors and grant recipients, but also expresses her deep disappointment at Congress' failure to enact comprehensive federal employee whistleblower protections. She also urges all whistleblower supporters to continue to contact their Congressional Representatives on this issue.

Please Read Her Letter Here!!! 

Show Your Support For Bunny Greenhouse and federal government whistleblowers by visiting this facebook page and making a contribution to our cause

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On Wednesday, behind closed doors on Capitol Hill, House and Senate leaders hammered out a deal to pass the economic stimulus bill. Both the original House and Senate versions of this bill included protections for employee whistleblowers. By Wednesday evening, news sources such as Talking Points Memo were reporting that the whistleblower provisions in the bill had been cut.
 

Well, we got our hands on the final text of the bill, and it turns out that whistleblower protections for state, local, and government contractor employees have made the final bill! Unfortunately, the proposed protections for federal employees have been eliminated completely.

This is a partial victory, but a victory nonetheless. Now we must continue to fight for the rights of federal employees. Stephen and Michael Kohn, the President and General Counsel of the National Whistleblowers Center, released the following press statement this morning: 

 

"Private contractors and state and local government employees are covered. They have a right to file a claim and present their case to an independent court and jury. It is now up to Congress to finish the job, and ensure that federal employees have the same rights. It makes no sense to protect some workers who have responsiblity over the stimulus, but to deny protections to the federal regulators who will have the primary duty to police the spending and ensure that there is no political favoritism in the allocation of billions of dollars in taxpayer monies," said Stephen Kohn, the President of the National Whistleblower Center.

"Congress has started to listen," said Michael Kohn, General Counsel of the National Whistleblower Center and attorney for Bunny Greenhouse. "We need to redouble our efforts and obtain universal whistleblower protection coverage for all American workers, including federal government employees," Michael Kohn added. Earlier this week Greenhouse had asked that both the McCakill Amendment and the Platts-Van Hollen Amemdnets be enacted into law. The Senate approved the McCaskill amendents, but cut out the protections for federal employees.

"Senator Clare McCaskill did an incredible job getting these changes into the stimulus. It was a tough and fast paced environment and she was able to ensure strong oversight provisions for some of the workers involved in spending taxpayer monies. She worked in an open an bi-partisan manner and obtained the support from other key Senators, including Independent Senator Liberman and Republican Senator Collins. We hope that the reforms included in the stimulus package will be made permament, will apply to the use of all taxpayer monies and will cover federal workers."

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The National Whistleblower Center is reporting that the Civilian Agency Acquisition Council and the Department of Defense have approved new rules governing federal contracting which go into effect today.

 

For the full story on the NWC website, and to read the rules, Click Here.

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Did you know that whistleblowers reporting under the False Claims Act have accounted for over $1 Billion in recovered federal and state taxpayer dollars this (fiscal) year alone?  This Marketwatch.com article details the biggest fraud recoveries in '08, including hundreds of millions of dollars from companies such as Amerigroup, Merck, Bechtel, CVS, and Pratt & Whitney. 

Despite these results, the False Claims Act (a civil war-era law that was last amended in 1986) is in need of some retooling. Senators Grassley and Leahy are pushing an amendment package (Bill # S. 2041) that would close the loopholes created by destructive Supreme Court decisions, such as Allison Engine Co. v. U.S. . this legislation should be enacted immediately. Further, because we know that the DOJ is letting hundreds of FCA cases languish without investigation, the DOJ needs to hire more civil fraud attorneys and focus more resources on ferreting out government contractor fraud.

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This morning, the AP released a story detailing the failure of the Department of Defense Inspector General's (DoD IG) office to perform it's two essential functions: (a) protect military whistleblowers and (b)investigate their claims. As one whistleblower in the story says: "They are supposed to serve as the conscience of the Department of Defense. And they're not." The AP used Freedom of Information Act Requests and interviews with whistleblowers and advocates to determine multiple shortcomings:

 

• Although DoD IG received over 3,000 whistleblower claims over the past six years, it found no wrongdoing by the military over 90% of the time.

• 73% of the cases were closed after only a "preliminary review."
   
• A confidential survey of the workers and managers in DoD IG found that the workforce was "demoralized and ambivalent." and that one-third of the employees there were described as "disaffected.

Revalations of this kind would be of concern in any agency or area of government, but this story is particularly worrisome. We know that the men and women serving our country in the military witness countless acts of fraud, waste, abuse, and much worse (think Abu Ghraib). The size of the Defense Budget, and the volume of lucrative government contracts to private corporations in recent years (see Bunny Greenhouse), has increased the need for oversight and whistleblower protection for military employees. Further, military whistleblowers are often more vulnerable to retaliation, and they often have no recourse whatsoever if their claim is rejected by the DoD IG.

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US Army Corps of Engineers whistleblower Bunny Greenhouse is featured in a chapter of the new book, Your America: Democracy's Local Heroes. The book by John Siceloff and Jason Maloney arises from episodes of the PBS series "NOW" with David Brancaccio.

The book is available online for $24.95 plus shipping and handling from Powell's Books at: http://www.powells.com/biblio/2-9780230605336-0 
 

Bunny Greenhouse blew the whistle on the Army's contracting abuses in giving no-bid contracts to Halliburton to manage Iraq's oil after the invasion. Here, Bunny presents a copy of the book to her attorney, Michael D. Kohn:
 

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Two False Claims Act Settlements were reported yesterday, totaling approximately $280 million in fraudulently obtained government contract money that is now being returned to the US taxpayers.

• Health insurance giant Amerigroup has settled with the governments of the United States and the State of Illinois, agreeing to pay $225 million plus legal fees. Amerigroup was exposed by whistleblower Cleveland Tyson, who was the company's Government Relations executive. He brought the suit in 2002, which went to trial, where, according to a press release issued by his attorneys:
  
  "...the jury found that Amerigroup deliberately avoided enrolling recipients with costly health conditions or who were pregnant and in their third trimester. These actions were taken while Amerigroup received IDPA payments calculated on Amerigroup providing healthcare to all enrollees."
  
  
• CoxHealth, a large non-profit hospital chain in the Springfield, MO area, has announced a $60 million FCA settlement stemming from allegations of "improper Medicare billing and questionable business relationships."
  
  
  

The False Claims Act is the most effective whistleblower law on the books, as these settlements show, but it has been eroded in recent years by negative court decisions, such as  Allison Engine Co., Inc. v. United States, ex rel. Sanders. To counter these decisions, Senator Charles Grassley and other Congressional leaders have introduced a bill to amend the FCA. Most recently, the bill was approved by both the Senate and House Judiciary Committees.

 

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Yesterday the House Judiciary Committee approved legislation to amend the False Claims Act, sending the measure along to be voted on by the full House of Representatives. Companion legislation (S.2041) was passed by the Senate Judiciary Committee in April.


The False Claims Act Corrections Act will help undo some of the damage that has been done to the FCA in recent years by poor judiciary decisions, such as Allison Engine v. US.


I will post the full text of the approved language as soon as it becomes available.

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If you do the math on a Washington Post story yesterday it turns out the paper reported on what amounts to 225 scandals.

The Justice Department told the Post there is a backlog of approximately 900 False Claims Act cases, and that the backlog could take years to unclog. Obviously the time involved can damage the ability to pursue even the most meritorious cases. Justice also told the Post that they reject about 75% of all filed FCA cases, and most of those have little merit. I would bet that quite a few of the cases rejected have some merit but why quibble over that? If there are 900 cases in the system and a quarter represent cases that should be pursued, that means there are 225 good cases of fraud stuck in a black hole. That means we have not one scandal but as many as 225 scandals, because each such case deserves priority treatment the Justice Department simply does not have the resources to handle. These 225 cases have to be relatively big and they likely involve major contractors who can continue to commit fraud against the United States. Of the remaining 675 in which the Justice Department may investigate and see no merit, the inability to kick them back to private attorneys quickly does not help.

Private Attorneys would at least like to clear their own backlog but they would also like the chance to pursue some of those cases. Justice may have legitimate reasons not to pursue a case a private attorney might take a chance on, but if the case waited three years for an initial determination very few whistleblowers will still have the resources, time and ability to continue the fight even if they are right.

But the fact is, according to Justice there must be at least 225 cases that have merit. How can we let this continue? We know. We know by Justice's own procedures that there must be some 225 cases of major fraud and nobody can even get to deal with them. That's a pandemic of fraud and we are not fighting the disease. Within those 225 cases that means, important safety concerns and governmental functions are being undermined by unscrupulous contractors. The contractors who profit from fraud gain a competitive advantage and push out honest contractors who want to do good work. Fraud is very profitable and if you can get away with it provides a great competitive advantage. Right now you can get away with it.

These aren't small cases. Nobody takes the trouble to file a False Claims Act case these days if they can't find at least millions in damages because by the time the Relator gets their share, it does not leave much for what now appears to be years and years of legal work. Billions of dollars of fraud are lost this way. The whole point of the FCA is to punish and deter fraud. How do you deter fraudulent activity when it is clear to everybody that the Justice Department does not have the people power to stop it?

At least some of the fraud must compromise vital government activity. More and more contracts are being used to do what we used to think of as inherently governmental functions. The very mail room in the Justice Department where these cases arrive is run by a private contractor now. Its scary to think about how dependent national security is on private contractors who can commit fraud in this environment. It is also hard to think of anything that corrodes our basic faith in government more readily than the extensive nature of this fraudulent activity.

The Post story blew the whistle (if you will pardon the expression) on the problem, but who are we to blame? Certainly not the career Justice lawyers who are overworked beyond reason. Assistant United States Attorneys working on False Claims Cases have dockets of 60 cases. Open the file on each case and look at it and a whole week is gone. Main Justice has only 75 lawyers they can assign to these cases. The people trying to deal with these cases want to investigate the cases responsibly and they want to win even in a judicial environment hostile to whistleblowers. There are simply not enough attorneys and investigators to go around.

Justice has approximately the same number of attorneys working on these cases that they did in the early 1990s when far fewer cases were brought, far less government functions were handled by private contractors and when the kinds of cases were not generally as complicated or big. How do you investigate a fraud, which may have occurred in Afghanistan or Iraq? How does the same lawyer become an expert on Medicare regulations AND Defense contract procedures overnight?

Here's a starting suggestion. Hire all the lawyers. There has never been a better time. The only area of law experiencing growth right now besides fraud is bankruptcy, so there should be plenty of attorneys looking for work. I don't care if the Justice Department has to appoint special attorneys general to investigate one case or if they want to just take the first 750 resumes that come across the door, we have to do something. There are private law firms that have that many attorneys. Why is it so outrageous for the federal government to hire enough attorneys and investigators to deal with a serious issue of national importance, which would, if they did it save as opposed to cost tax money? We hear lots of talk about cutting waste fraud and abuse in an election year.

We don't hear much talk of a bill to specifically expand Justice by enough lawyers and more investigators to fight fraud. What else could the government spend money on which would certainly return money to the taxpayer directly and also improve the quality of work done for the government? Here is a law that actually gives investigators and lawyers at least some chance of fighting fraud in a courtroom. Now if we could only get enough people involved in bringing the cases there we might be able to find out what is going on in those 225 scandals sitting on a shelf in a Government office.

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In Allison Engine Co., Inc. v. United States, ex rel. Sanders, the plaintiff was a whistleblower, or relator, who filed a qui tam lawsuit on behalf of the U.S. government under the False Claims Act seeking the recovery of hundreds of millions of dollars of taxpayer money resulting from alleged false statements about work performed by a subcontractor to a huge multi-billion dollar Navy contract. The Supreme Court faulted the plaintiff for not proving that the subcontractor's invoices or false statements to the contractor, in this case a huge shipyard, were actually submitted to the government to get the claim paid. 


Although the plaintiff-relators in Allison Engine Co. assert in the aftermath of today’s Supreme Court decision that the proof in their case satisfies this heightened standard, today’s decision now creates a huge loop-hole in the False Claims Act and severely undercuts the ability of the government and whistleblowers to hold subcontractors accountable for fraud on the taxpayers that is committed by subcontractors.


Often the U.S. government is not billed directly for the work of subcontractors, and the subcontractors’ invoices are not submitted directly to the government.  Rather the subcontractors bill the contractor and get paid from funds that were paid by the government to the contractor.  For example, when the U.S. government hires a contractor to deliver a ship, a plane, or a weapons system, the government does not review and approve every invoice for work performed by subcontractors.


However, the Supreme Court has now held in Allison Engine Co., that without an invoice from the subcontractor submitted to the government, or other proof that the government relied on the false statements or fraud of the subcontractor to pay the claim of the contractor, then there is no recovery for the U.S..  In other words, it is not enough to prove that the subcontractor cheated to get paid on a government contract.


This decision is a green light for subcontractors to steal.  The real losers here are, once again, the US taxpayers.


It is now up to Congress change the law to stop subcontractors from robbing the taxpayers on huge government contracts, and to hold subcontractors fully responsible for their fraud.

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