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Jul 29, 2013 by |

Whistleblowers are under pressure from employers

ATTORNEY NEWSLETTER

Whistleblowing employees face unique challenges in building qui tam cases against their employers for violations of the False Claims Act. Challenges such as shielding oneself from workplace retaliation, the perils of internally reporting the violations, making the choice to undertake an internal investigation and risks faced while negotiating severance packages.

Current FCA law works to protect an employee who decides to build a qui tam case against their employer’s retaliation. Falling under the protection of the anti-retaliation provision of the FCA requires the employee to be (1) engaged in FCA-protected activity, such as investigations and testimonies, (2) be victim to an employer’s adverse actions, which were; (3) at least partly motivated by the employee’s engagement in the protected activity. Whistleblowing employees are eligible for FCA protection regardless of whether they have filed a qui tam lawsuit, so long as their actions work to stop the violations.

Oftentimes, internally reporting FCA-violations is mandatory, but nonetheless lined with pitfalls employees must consider when deciding to report. Whistleblowers must assess their job status and security; their responsibilities to their employer; the extent to which they know and understand the problem; and the exact nature of the violation they are alledging.

The decision to internally report FCA violations should not be taken lightly

Internal Reporting
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  • Employees simply raising questions about possible violations are sometimes treated as whistleblowers, on the other hand, employees fully aware of violations but choose to remain silent risk allowing others the opportunity to bring the violations to the government’s attention.
  • Internal complaints requires consideration of several factors;
    • their job status and security;
    • responsibilities;
    • degree of knowledge about the problem and;
    • the type of alleged violation.
  • Possible problems facing plaintiff attorneys- employers may argue that non-reporting employees are often money-driven.
  • When employees do internally report, employers may argue the report was not FCA-protected activity, but instead part of the regular job duties.
  • Dodd-Frank Act has expanded whistleblower protections, leading to employers encouraging internal reporting. Where the employee doesn’t report any when asked, the employer may argue the employee has not good-faith concerns.
  • Be sure to ask your client whether they have participated in questionnaires, which could entail coercion on the employer’s behalf, suggesting their own knowledge of the violations.

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When pursuing a Qui Tam case against a client’s violations of the False Claims Act, you must be aware of various issues, from the potential trade-offs of internal reporting to how to preserve a retaliation claim for wrongful termination.

Whistleblowing employees face challenges in trying to navigate their own employment relationship or separation while simultaneously building a potential qui tam case for violations of the False Claims Act.

Pressure points include;
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  • preserving retaliation;
  • internal reporting;
  • internal investigation;
  • negotiating a severance.
  • FCA imposes treble damages against any person who knowingly makes false claims material to a false claim.
  • Where the government intervenes in the lawsuit, the relator is entitled to 15%-25% of the recovery, without intervening, its 25-30%.
  • FCA is supposed to encourage private relators to bring fraud, but not to reward those filing lawsuits already known to the government.

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Employee Self-Help
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  • Collecting documents is useful because employees need reliable evidence of FCA violations to convince the government the case is manageable and to intervene.
    • Employees with potential claims should keep documents they are entitled to possess;
    • with counsel’s aid, should consider whether disclosing them in litigation presents a risk of liability;
    • avoid retaining privileged materials by removing them from evidence;
    • maintain thorough (location & titles of other employees.) notes about what they witnessed.
  • But FCA’s policy of encouraging document collection can conflict with confidentiality requirements- FCA protects “lawful acts in furtherance of a claim, but not unlawful conduct that violates confidentiality agreements.
  • Courts tackling this issue have sided with the public’s interest in preventing fraud, particularly where the government has intervened, and vice versa where individuals have brought claims pursuant to section 3730(h).
  • State law does not necessarily follow federal law, and state qui tam cases may be more favorable.

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Negotiating a Severance & Release of Claims
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  • Exiting employees who are seeking severance packages must consider three points before signing releases of claims against their employer:
    • (1) Valid releases will bar individual FCA retaliation claims, except for those with valid employment claim they intend to litigate.
    • (2) Because an employer may try to argue the relator is not eligible for government’s recovery because the employer often states the parties understand the release includes FCA claims, the relator should politely disagree and take the position the agreement will speak for itself.
    • (3) the law is not universally supportive of prospective relators who have signed a release, and evidence supporting an employer’s contention that the government already knew of the violations and had adequate time to investigate, courts will enforce the settlements.

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Attorneys at Evans Law Firm, Inc. will continue to thoroughly investigate and prosecute elder abuse and insurance fraud cases.  Evans Law Firm, Inc. handles elder abuse, financial elder abuse, physical elder abuse, annuity fraud, consumer fraud class actions, insurance and banking fraud cases.  If you think that you have witnessed or are the victim of elder abuse, or financial fraud by a life insurance company, bank or individual then, contact the Evans Law Firm, Inc. at 415-441-8669 for a free and confidential consultation, or email us at info@evanslaw.com

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