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Presented by Hodgson Russ, the Whistleblower Blog is written by a team of lawyers experienced in successfully guiding both whistleblowers and companies accused by whistleblowers of wrongdoing through the False Claims Act process.
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Reetuparna (Reena) Dutta
Showing 19 posts by Reetuparna (Reena) Dutta.
False Claims Acts: Not Just the Federal Government Anymore
While the federal False Claims Act gets the big headlines and the correspondingly big recoveries, it is important not to forget that a number of states have their own false claims acts under which relators can bring claims that also have the potential for significant monetary recoveries. States with these acts tend to fall into two categories: states with generally applicable false claims acts (like the federal law) and states that limit their acts to health care fraud.
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Health Care False Claims Act Settlements Increasing
March 1, 2012, was a big day for New York State taxpayers, as both the state and federal governments announced significant settlements impacting the state. First, New York Attorney General Schneiderman announced two large settlements under the New York False Claims Act. Both settlements involve pharmaceutical companies, Dava Pharmaceuticals, Inc. and KV Pharmaceutical Company, with Dava misclassifying drugs to evade payments to Medicaid, and KV failing to advise the Centers for Medicare & Medicaid Services (CMS) that two unapproved drugs were not covered by federal and state health care programs, thereby improperly receiving reimbursement for those drugs. You can read the details of the Dava and KV pharmaceutical settlements here.
False Claims Act Violations: When Is a Claim 'False'?
Parties frequently battle over whether the conduct at issue was “false” such that False Claims Act liability is appropriate. Courts have recognized two types of false claims: factually false claims and legally false claims. A factually false claim is false as to a matter of fact (for example, a claim to have provided goods that were never provided). A legally false claim involves false certifications of compliance with laws or regulations that are prerequisites to payment. Courts have further divided legally false claims into express certification and implied certification claims.
Misappropriation of Confidential Information or Legitimate Whistleblowing?
There is an obvious tension between the desire to encourage employees to come forward with information necessary to report and expose fraud and the recognition that certain company information is truly private and confidential and should remain so. A recent decision from the U.S. Department of Labor Administrative Review Board further complicates the issue.
Celanese Corporation, an international publicly traded corporation, hired Matthew Vannoy to catalog and reconcile employee expense reimbursement submissions. In 2007, Vannoy filed an internal compliant about employees misusing company credit cards; around the same time, he began talking to an attorney about Celanese’s business practices with respect to its employee credit card-use program. Vannoy then filed a claim with the IRS Whistleblower Rewards Program, and he provided documents to the IRS that included Celanese proprietary and confidential information. A few months later, Vannoy’s supervisor began conducting an investigation into his email communications with employee cardholders and found that he sent a document containing 1,600 social security numbers of Celanese employees to a personal e-mail account. Vannoy was suspended without pay and ultimately terminated.
Important Laws to Trigger False Claims Act Liability
False Claims Act liability has been based on defendants falsely certifying their compliance with laws and regulations. But in deciding which laws and regulations can be used as a basis of this type of liability, such that defendants deserve the huge fines and penalties of the False Claims Act, courts often have to make subjective decisions about what laws and regulations are “important” enough for this type of liability.
To take a recent example, in United States ex rel. Wilkins v. United Health Group, Inc., the U.S. Court of Appeals for the Third Circuit had to decide which laws and regulations among the hundreds of thousands imposed on Medicare participants were sufficiently seriously to merit False Claims Act liability through their violation.
The WikiLeaks Scandal and the Whistleblower Protection Act
Federal employees may find themselves with greater whistleblower protection, if a new bill passes through Congress. The Whistleblower Protection Enhancement Act of 2011, introduced by a bipartisan group of senators, is aimed at strengthening protection for federal employees who disclose fraud and misconduct. The legislation would protect employees who blow the whistle on “gross waste or mismanagement, fraud, abuse, or illegal activity,” as well as those who disclose censorship of scientific or technical information. It will not protect disclosures of disagreements over policy.
Whistleblower Lawsuit Costs GlaxoSmithKline $750 Million
The Department of Justice (DOJ) has released its False Claims Act statistics for fiscal year 2010. According to this press release, the DOJ recovered $3 billion this year in False Claims Act recoveries, 83 percent, or $2.5 billion, of which involved health care fraud. The Obama Administration has made no secret of its focus on health care fraud, and health care companies have been in the news recently for getting caught up in false claims liability.
While the government made out pretty well this year, whistleblowers didn’t do too badly either, recovering $385 million. And one relator in particular has been in the news for her whistleblowing against one of the largest drug manufacturing companies in the world, GlaxoSmithKline, for one of the scariest health care frauds ever perpetrated.
Whistleblower Provisions in the Wall Street Reform Act
Commentators are talking about the somewhat under-the-radar whistleblower provisions in the Dodd-Frank Wall Street Reform and Consumer Protection Act, recently signed into law by President Obama. This massive law is a sweeping overhaul of the financial system, and it includes a number of provisions expanding opportunities and increasing protections for whistleblowers. The National Whistleblower Center has compiled the sections of the act pertaining to whistleblowers and has posted it here.
Whistleblower Lawsuit on “False Marking” Theory of Liability
The National Law Journal recently published an article about the increase in whistleblower lawsuits that are based on a “false marking” theory of liability in the wake of the recent appellate court decision in The Forest Group Inc. v. Bon Tool Co. The “false marking” theory of liability encompasses labeling products or packaging with an expired patent or one that doesn’t cover the product’s technology. This decision is bad news for companies with patents.
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