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

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 entry

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The Maryland Senate yesterday passed a state version of the False Claims Act (FCA) by a vote of 37 in favor and 8 against. Before passing this bill, however, the Senate watered it down with an amendment. The Maryland False Health Claims Act of 2010, SB 279, as amended, no longer allows the state (or a whistleblower acting on behalf of the state) to obtain compensatory damages. The amendment also requires a court to dismiss the action if the State of Maryland declines to intervene. The Senate's amendment also waters down the provision for attorney fees. It now provides that attorney's fees and costs "may" be allowed by the court, and that the court must consider the amount of penalties and damages recovered. This last provision is contrary to prevailing law that calls on courts to award attorney fees based on market rates, without regard to any proportionality to the amount of recovery. The Senate's bill also allows courts to reduce the amount of the whistleblower's recovery if the court finds that the whistleblower participated in the violation. A more enlightened view would have barred recovery only if the person caused the violation through actions other than following orders of a superior. Also, I mentioned before that Maryland could gain even more if this bill covered all frauds, and not just those arising in medical care programs. Perhaps the Maryland House will consider these shortcomings when its Judiciary and Appropriations committee conducts the bill at its first hearing on April 1. The Senate bill does include an anti-retaliation provision, Section 2-607, that would allow employees to sue if they suffer retaliation for participating in a lawsuit, objecting to a violation, or refusing to participate in a violation. According to a Baltimore Sun article, the state administration estimates that between 5 and 10 percent of the state's $6 billion in annual medical spending is lost in fraudulent claims. The article quotes a spokesperson for the hospital association as saying that the amendment would cost the state the extra 10% it would receive from federal false claims lawsuits in the state. This refers to the Grassley Amendment to the federal FCA which increases a state's share if the state's law meets certain minimum requirements.  Apparently, making hospital administrators happy is more important to Maryland's Senators than protecting taxpayer dollars.

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WBAL-TV of Baltimore reports that the Maryland legislature is moving forward with a bill to create a "Little FCA" in Maryland.  Modeled on the federal False Claims Act (FCA), and looking for the benefits of the Grassley Amendment, Little FCAs provide financial rewards to whistleblowers who file sealed complaints against fraud by government contractors. Under the Grassley Amendment, state and local governments with Little FCAs receive a higher percentage of the fraud recoveries in their states. The WBAL story reports that Virginia has recovered $228 million a year since adopting their Little FCA.

Who can say no to free money for the state treasury? WBAL reports that medical providers and the Chamber of Commerce have opposed the bill.  However, none would speak to WBAL.  What would they say? "We should be able to get away with fraud"? WBAL says critics have previously claimed that the reward provision would encourage frivolous lawsuit and put pressure on businesses to settle. The $228 million Virginia gets every year does not sound frivolous to me.  The pressure to settle, though, sounds pretty good. Indeed, the FCA's reward provision is the most effective tool ever in the detection and proof of frauds against the government.

The administration of Gov. Martin O'Malley said the bill is likely to be amended.  My suggestion: don't limit the bill to medical fraud. Maryland deserves to get the enhanced recovery for all frauds in the state.

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Sen. Charles Grassley (R-Iowa) has introduced a bill that will make changes to the False Claims Act (FCA) in response to court decisions that limited the rights of whistleblowers.  The main features of S. 2964 (introduced January 28, 2010) would add administrative procedures designed to make it more difficult for crooks to set up phony medical providers to submit false bills to Medicare and Medicaid.  However, in a third branch of the bill, Sen. Grassley proposes to fix a writing error introduced last year to the anti-retaliation provision. Sen. Grassley also proposes a nationwide two-year statute of limitations for retaliation claims.  The national statute of limitations would address the Supreme Court's holding in Graham County Soil & Water Conservation Dist. v. United States ex rel. Wilson, 545 U.S. 409 (2005). The Supreme Court said that the FCA's six-year statute of limitations did not apply to the FCA's whistleblower protection claims.  Whistleblowers would have to respect the statute of limitations in their home state instead. (Karen Wilson's retaliation claim was then dismissed because she missed North Carolina's three-year statute of limitations.) Sen. Grassley also proposes to expand the definition of "original source" so that a whistleblower can still receive rewards if he or she has, "knowledge that is independent of and materially adds to the publicly disclosed allegations or transactions, and has voluntarily provided the information to the Government before filing an action . . .." The Senate has referred S. 2964 to its Finance Committee.

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Here is an update to our earlier posting on S. 386.

The Office of Management and Budget issued a Statement of Administration Policy to the Senate on Monday, April 20th stating that the Obama Administration “strongly supports enactment of S. 386.”  The statement explained that the Fraud Enforcement and Recovery Act of 2009 (S. 386) would “benefit U.S. taxpayers by both addressing existing fraud and deterring waste, fraud, and abuse of public funds.”  It also pointed out that the bill would “amend the False Claims Act (FCA) in several important respects so that the FCA remains a potent and useful weapon against the misuse of taxpayer funds.”

Notably, the statement supporting the Fraud Enforcement and Recovery Act is the only statement the Office of Management and Budget has sent to the Senate since the beginning of the Obama Administration.

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On Monday, Senator Grassley (R-IA) expressed his support for the Fraud Enforcement and Recovery Act of 2009 (S. 386) saying “we simply cannot allow unscrupulous individuals to defraud the government and rip off taxpayers.” The bill provides new tools for the federal government to fight fraud and makes much needed amendments to the Federal False Claims Act.

Under the False Claims Act, whistleblowers bring lawsuits against companies who defraud the federal government. As a reward for their courageous actions, whistleblower receive a portion of the amount the federal government recovers.  As Senator Grassley correctly pointed out in his floor statement,  “we would not have the case or the money returned if it wasn’t for the information of the whistleblower.”  This law has been used to recover more than $22 billion since 1986 and has deterred an incalculable amount of fraud.  

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On Tuesday, Senator Charles Grassley asked the Acting Commissioner of the Food and Drug Administration to clarify the Agency’s position on the rights of employees to communicate with Congress and the Inspector General.  Grassley was responding to a memo issued last week that warned FDA employees about releasing information.

In the letter, Grassley stated, ““Federal laws protect whistleblowers and allow people who work in the federal bureaucracy to discuss what’s happening inside an agency with other officials.  Attempts to silence whistleblowers are illegal.  If the memo sent last week was intended to have a chilling effect on FDA employees who want to speak up about problems, then that memo is contrary to the President’s call for open and transparent government, and the Acting Commissioner needs to set the record straight.”

We applaud Senator Grassley’s continued commitment to protecting federal employees and hope other Senators follow his lead.   All federal employees, including FDA employees, need adequate whistleblower protection.

To read the Senator Grassley’s letter click here.

 

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The National Whistleblowers Center, along other good government groups will be hosting the 2009 National Whistleblower Assembly from March 8-12. This event, which brings scores of public and private sector whistleblowers to Washington, DC, has been extremely successful in getting the attention of Congress over the past three years.

Back in 2007, when the whistleblower community held the first such event (it was called "Whistleblower Week in Washington"), one of the major events that week was an award ceremony at which representatives from approximately 30 public interest groups presented Senator Charles Grassley with an achievement award for all that he has done for whistleblowers. During his acceptance speech, Senator Grassley explained to us his support for whistleblowers, and there are two lines of that speech that I will never forget. 

First, the Senator expressed his view that "Whistleblowers are treated like a skunk at a picnic." While this statement is somewhat humorous, we know it's true. Whistleblowers who risk their livelihood to expose wrongdoing are often seen as breaking up the party of greed and corruption. Senator Grassley realizes that whistleblowers are heroes, and they deserve our respect. That brings me to the second thing that I remember from that speech: the Senator calling for the President of the United States to hold nothing less than a Rose Garden ceremony honoring whistleblowers. At the time, Grassley said that "this would send a message from the very top of the bureaucracy about the importance and value of whistleblowers."

As we know, the Bush Administration was for the most part not friendly toward whistleblowers, and this idea never got off the ground. In recent weeks, though, Senator Grassley has  proposed this idea to President Obama, who has long supported whistleblower rights. Hopefully this becomes a reality! 

This year's National Whistleblower Assembly is sure to be as exciting, informative, and successful as in the past. I encourage anyone in the DC area to check it out! For more information, and to RSVP for events, click here.

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