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

Yesterday, I blogged about a pending multi-million dollar False Claims Act (FCA) lawsuit agains Pharm giant Wyeth. Today's news brings another example of how the FCA can be used to bring gross misconduct to light. This case, involving a western Pennsylvania psychiatric institution has settled for far less money than many of the more highly publicized FCA cases, but the shocking allegations are what really caught my attention.

The whistleblower in this case, Dr. Stefan Kruszewski, was a psychiatrist reviewing records of the Southwood Psychiatric Hospital. Southwood is a private facility that houses over 100 juvenile boys who are wards of the state. For the care of these kids, Southwood is paid through state and federal contracts. Dr. Kruszewski reported that Southwood, in order to inflate their government payments, "...held juveniles who did not require hospitalization, prescribed and administered unnecessary medication to increase government reimbursements, and billed the government for care that was not provided." (Pittsburgh Tribune Review)

The Department of Justice has settled this lawsuit and Southwood is paying $150,000 and is being forced to make necessary changes to raise its standard of care and clean up its act. Under the settlement, Southwood is not admitting any wrongdoing, but it is unthinkable that a hospital would take advantage of, indeed abuse,  vulnerable young children in order to make a quick buck off of the taxpayers. The story also shows how valuable the False Claims Act can be in bringing to light all kinds of misconduct when government money is involved. Congress should continue to work to pass current legislation which is designed to strengthen the FCA.

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The United States Government, along with the governments of 15 states and the District of Columbia, have joined with two whistleblowers who allege that drug manufacturer Wyeth bilked US taxpayers out of hundreds of millions of dollars. As reported in the Wall Street Journal and the FierceHealthcare website, Wyeth is accused of overcharging Medicare and Medicaid programs nationwide for purchases of it's acid-reflux drug Protonix. Under federal law, drug companies are required to offer prescriptions to federal aid programs at the lowest possible price. Wyeth, however, the suit alleges, was offering Protonix at a 90% discount to private hospitals, while charging the federal government much higher rates.

The lawsuit was filed under the False Claims Act, which has its roots in the civil war era, and remains  the United States' most powerful tool for rooting out fraudulent government contracts. President Obama's administration has recently expressed its support for strengthening the law, and legislation to do so is currently pending in Congress.

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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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Today, the Public Employees for Envirnonmental Responsibility (PEER) released a study and ranking of state whistleblower laws.  PEER found that more than 20 states have broadened their whistleblower laws since 2006.  Please click here to read the highlights of the study.

If you are looking for more information on state whistleblower laws please visit the new interactive map of the U.S. on the National Whistleblowers Center website.  The map shows the qui tam laws, whistleblower statutes, and common law remedies for each state.

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The Madison Wisconsin Capitol Times has this story today about Tom Nanstead, an electric company whistleblower who was terminated in 2005 after reporting that his employer routinely overbilled its customers for their utilities. Now, four years later, it has been determined by the Wisconsin Public Service Commission, that Xcel energy did indeed overbill their customers, but Mr. Nanstead has found no legal recourse that can return him to work or provide him with compensation. This well-written story highlights the need for a national whistleblower protection  law, and especially the trouble faced by private-sector whistleblowers.

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As you know, we have been waging an intense campaign for new whistleblower protection laws. We have experienced recent victories and setbacks. And now, prominent whistleblowers like Bunny Greenhouse are calling us all to action. Throughout this campaign, our staff has been incredibly impressed with the level of support shown by our blog readers, facebook users, and all other online grassroots supporters. We have sent thousands of letters to Congress and we are achieving real change!!! 

This groundswell of support is driving a national conversation about whistleblower rights, which is evidenced by the fact that the national news media is paying very close attention to these recent developments. Just today, there are two stories in the Washington Post detailing the struggle for whistleblower protections for federal employees, and especially national security whistleblowers. See the links below for the articles.

"Advocates Determined to See Whistleblower Protections Pass"

"Obama, Gates at Odds Over New Whistleblower Protections"

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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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The Washington Independent published an article addressing the lack of protection offered to whistleblowers in the stimulus bill.  The article quoted Stephen Kohn, who states: "The biggest defect in the current language in the House and Senate versions, is about blowing the whistle internally." The bill protects only employees that report wrongdoings to Congress or an Inspector General, but does not provide protection to those that make internal reports to their own employers. Protecting taxpayer money with strong oversight and accountability safeguards is of extreme importance, therefore Congress must provide adequate protection for all whistleblowers. 

"Whistleblowers Vulnerable in Stimulus" by Daphne Eviatar

*Thelma Lizama (a NWC intern) contributed to this posting

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At 3:00 PM TODAY there will be a Rules Committee meeting to vote on amendments to the stimulus legislation. One of the amendments under consideration would include whistleblower protection in the bill This is the optimal time for Congress to pass meaningful whistleblower protection! We are urging everyone to Take Action and tell your Congressman to support amending the bill to include whistleblower provisions.

Click here to read more on the NWC website

Click here to take action on this issue!

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