California Whistleblower Protection
Whistleblower claims have become more prevalent in California and across the nation in recent years. One of the main reasons for the increased action is that various government agencies responsible for policing and prosecuting whistleblower claims have instituted policies whereby employees who are willing to bring whistleblower claims and aid in the investigation and prosecution of the cases are able to take part in the recovery received from trials and settlements. The IRS, the Department of Justice, the Defense Department and various other state and federal agencies have created task forces which have targeted fraudulent practices on the part of contractors and are taking these cases very seriously.
Employees report fraudulent practices on the part of their employers on a daily basis. These employee ‘whistleblowers’ are essential to the government’s ability to stop the loss of trillions of dollars a year from illegal activities.
Whistleblowers are generally employees who have discovered some illegal or fraudulent activity on the part of their employer and who report that activity to either a supervisor or to some government agency responsible for policing such activity. The illegal activity may be classified in many ways; for example, a violation of a law, rule, regulation and/or a direct threat to public interest, such as fraud, health and safety violations, and corruption. Whistleblowers may make their allegations internally (for example, to other people within the employer’s company) or externally (to regulators, law enforcement agencies, to the media or to groups concerned with the issues).
The policy of whistleblower protection dates back to the late 1700s. In the late 1770’s the fledgling Continental Congress deemed it wise to adopt policies designed protect whistleblowers when Richard Marven and Samuel Shaw blew the whistle and suffered severe retaliation by Esek Hopkins, the commander-in-chief of the Continental Navy. The Continental Congress, needing the help of the two men and the evidence they could provide declared that the United States would defend the two men against any actions filed against them by Commander-in-Chief. The legislators also declared it the duty of “all persons in the service of the United States, as well as all other the inhabitants thereof” to inform the Continental Congress or proper authorities of “misconduct, frauds or misdemeanors committed by any officers in the service of these states, which may come to their knowledge.”
Many years later, during the Civil War, Congress enacted one of the first laws that protected whistleblowers, the 1863 United States False Claims Act (revised in 1986), which was enacted in order to stem the rising tide of fraud by military suppliers. In an unheard of attempt to gain support from the employees of suppliers and contractors, the act promises reward for whistleblowers by dealing them a percentage of the money recovered or damages won by the government. The Act also protects them from wrongful dismissal.
Previously referred to as ‘snitches,’ the term ‘whistleblower’ was coined in the 1970’s by Ralph Nader, a famed civic activist.
Today there are multiple pieces of legislation enacted to protect whistleblowers from retaliation and to encourage them to report illegal employer behavior. One of the most common and the earliest of the Acts is the False Claims Act. Still in operation, though revised in the late 1990s, the FCA has resulted in recoveries of trillions of dollars against the fraudulent practices of employers and government contractors around the globe.
There are several types of fraudulent behavior on the part of employers that are subject to various whistleblower protections. Among them are:
- Defense Contractor Fraud
- Medicare and Medicaid Fraud
- Pharmaceutical Fraud
- Tax Fraud
Defense Contractor Fraud
According to a report prepared by the Department of Defense for Senator Bernie Sanders of Vermont, “Hundreds of defense contractors that defrauded the U.S. military received more than $1.1 trillion in Pentagon contracts during the past decade.”
Senator Sanders stated, “The ugly truth is that virtually all of the major defense contractors in this country for years have been engaged in systemic fraudulent behavior, while receiving hundreds of billions of dollars of taxpayer money.”
The numbers and analysis done by the Department revealed the gross abuse of the system, indicating that there were approximately 300 government contractors involved in civil fraud cases that, despite their involvement, continued to receive over $570 BILLION dollars in government contracts. These civil cases resulted in judgments of more than $398 billion dollars. When awards to “parent” companies are counted, the Pentagon paid more than $1.1 trillion during the past 10 years just to the 37 top companies engaged in fraud.
Another $255 million went to 54 contractors convicted of hard-core criminal fraud in the same period. Of that total, $33 million was paid to companies after they were convicted of crimes.
Some of the federal government’s biggest defense contractors were involved.Defense Contractor Fraud can take several forms, i.e. cross charging, failure to comply with contract specifications, improper cost allocation, product substitution, and violations of the ‘Truth In Negotiations’ Act.
Defense contractor fraud has led to trillions of dollars being awarded to unscrupulous contractors each year. Because whistleblowers are allowed to participate in the recovery of the money received from these settlements and judgments, they can often recover millions of dollars once their employers are found liable.
Medicare and Medicaid Fraud
The Department of Justice has targeted Medicare and Medicaid fraud as one of its main areas of focus, because of its increasing prevalence, and its damage to the elderly and underprivileged as well as to already underfunded government programs. This type of fraud can result in the loss of tens of billions of dollars every year. Stephen Danz has worked alongside DOJ attorneys using the False Claims Act to punish the perpetrators of this fraud and reward the whistleblowers who make the recovery possible. If you are aware of Medicare or Medicaid coverage or reimbursement fraud, it could be in your best interest to make a whistleblower, or “qui tam”, claim.
Federal regulators have aggressively prosecuted health care fraud since the early 1990s, leading to billions of dollars in financial recoveries. Nearly all major cases today are qui tam actions, involving whistleblowers with inside knowledge of the allegedly illegal schemes. These activities result in billions of dollars of unnecessary charges to federal and state healthcare programs each year. Some of the ways in which pharmaceutical companies defraud the people of the United States and California are: Good Manufacturing Practice (GMP) Violations, Off Label Marketing, Best Price Fraud, CME Fraud, Medicaid Price Reporting, and Manufactured Compound Drugs. The Federal Bureau of Investigation (FBI) estimates that health care fraud costs American taxpayers $60 billion a year. Of this amount $2.5 billion was recovered through False Claims Act cases in FY 2010. Damages from fraud can be recovered by use of the False Claims Act, most commonly under the qui tam provisions which reward an individual for being a “whistleblower.”
The IRS indicates on its website that is allows whistleblowers to participate in the rewards from prosecution of tax fraud or tax evasion cases, by awarding them with a percentage of the tax money and penalties recovered with the information provided. Whistleblowers can receive up to 30% of any tax revenue recouped by the IRS as a result of the information provided and participation in the investigation.
The IRS recently awarded Bradley Birkenfeld $104 million as a whistleblower for his revelations that the Swiss bank UBS abetted tax evasion by 19,000 American clients. The award was the largest whistleblower payout in history, to either an individual or a group. The IRS explained its decision by citing Birkenfeld’s “exceptional cooperation” and the “breadth and depth” of the information he provided, all of which led to “unprecedented actions” against UBS. The IRS and the U.S. Department of Justice used Birkenfeld’s information to negotiate a $780 million settlement with UBS in 2009. Under that deal, UBS admitted to helping U.S. clients cheat on their taxes. The bank later turned over the names of nearly 5,000 U.S. clients suspected of tax evasion. IRS amnesty programs have since collected $5 billion from people who participated in UBS’s illegal scheme based on the information provided by Birkenfeld.
If you are aware of illegal tax activity on the part of your employer, you may be moved by a sense of civic responsibility to report the behavior, but you will also be happy to note that the rewards for helping the IRS put a stop to and recover lost revenue from the behavior could also result in substantial rewards for you, as well.
Stephen Danz is an expert in whistleblower claims and can guide you through the complicated and sensitive process of putting together your case, gathering evidence and making a claim. He has over thirty years of experience defending the employees of California, put him to work for you.
How does the process work?
Any person, (an employee, customer or simply a concerned citizen) that is aware of wrongdoing on the part of a government contractor or an employer can gather evidence and bring a whistleblower action. Reporting wrongdoing on the part of your employer is a tricky matter, often producing severe levels of anxiety, especially when you are contemplating reporting the behavior to your supervisor or the owners of your company. In many cases, supervisors and owners are fully aware of and have endorsed the wrongdoing, as it creates a bigger profit.
If you complain, you may very well be retaliated against and possibly fired, demoted or punished. Reporting to an outside agency may be just as upsetting, as there are the mountains of red tape that must be navigated as with any government agency. Fraud task forces are notorious for demanding a high degree of cooperation and are often very selective in the cases they take, rejecting claims without proper evidence or those with evidence that has been collected improperly.
In either case, Stephen Danz can guide you through the process of gathering evidence, building a solid case, approaching your supervisor or an outside agency and avoiding retaliation.
We will schedule a free consultation where you can sit down with Stephen and one of his associates and discuss your concerns and your suspicions about your employer’s behavior. Once we have established the basis for your case, we will help you create a plan of action to collect evidence properly and legally, without alerting your employer.
Remember, the level of proof required by many agencies is very high, and you will need to have everything put together in a logical fashion in order to increase the likelihood that they will take your claim and launch an investigation.
We will go over this process with you until you feel comfortable and are aware of exactly what needs to be done. We never suggest that you remove original copies of any documentation from your employer’s place of business, as those are your employer’s property. Making copies however, is generally permissible. In many cases, your case could face dismissal if you have not presented sufficient documentation to support your claims, including in many cases “time, date and place” allegations.
Once the agency receives your documentation it will review what you have provided. A lawsuit will be filed ‘under seal.’ A qui tam action must be confidentially filed under seal in federal district court following the proper rules of court and procedure, or it could be dismissed immediately. The entire case file must then be delivered to and confidentially served on various prosecutorial agencies.
An action under the False Claims Act must be filed, in camera and under seal. The complaint and its contents must be kept confidential until the seal is lifted. The complaint is not served on the employer. If you violate the provisions of the seal, your complaint could be dismissed.
We will enforce your rights to join in the government’s prosecution of the case, which is necessary if you are hoping to recover a portion of the final judgment or settlement. You will be required to aid the government in their investigation, often also testifying on behalf of the prosecution. We will defend you against retaliation even if the government agency declines to prosecute, giving you the option of prosecuting the case yourself ‘in the name of’ the government. All settlements are approved by the government. A little-known advantage of government declination is the higher attorney fee payable to the relator (person bringing the suit).
Stephen often acts as an expert witness or as co-counsel with attorneys around the Nation. He speaks at conferences involving whistleblower claims, and has contributed to the National Qui Tam Handbook. He is proud of the fact that one of his whistleblower cases was chosen as the best example of all qui tam complaints filed and would be happy to share it with any attorneys of potential clients on request.
A claim under the False Claims Act is subject to strict and confusing time limitations. In some cases you only have 6 years from the date of the violation to file a claim, in others it is 3 years from the date the government ‘knew or should have known’ of the violation. In no instance will you have longer than 10 years to file a claim.
Violators of the False Claims Act are liable for treble damages (or three times the dollar amount) plus additional penalties of $5,000 to $10,000 for each claim brought under the Act. Oftentimes employees can take part in the recovery in percentages ranging from 15-30 percent. To be eligible to recover money under the Act, you must file a qui tam lawsuit. Merely informing the government about the violation is not enough. You only receive an award if, and after, the government recovers money from the defendant as a result of your suit.
There are many cases where it behooves an employee to file a personal lawsuit along with the qui tam action. A lawsuit filed on your behalf for wrongful termination or retaliation allows us to open the discovery process much faster than the government would normally do on its own. We want to avoid lengthy delays by the prosecutors as there are times when evidence may be lost to due to the passage of time and/or wrongful destruction on the part of your employer. We want to gather evidence while it is still fresh in everyone’s mind and before your employer has a chance to act.
In these cases it is essential to hire one law firm that can manage both cases, your personal one and the government prosecution. Going back and forth between attorneys and law firms can cause miscommunication and can seriously jeopardize your case. Stephen has established the relationships with the various prosecuting agencies that will be responsible for following up on your case.
Whether the company should be notified of the wrongdoing before a lawsuit is filed is not susceptible to a one-sized fits all response. Generally, new federal legislation has provided that a whistleblower is protected under some causes of action if the company is given a chance to correct their behavior.
In addition, California law dictates that where the working conditions be so outrageous that an ordinary employee would feel compelled to resign, then the company must be given an opportunity to fix the conditions, allowing the employee to return to work under better circumstances. Under Section 3730(h) of the False Claims Act, any employee who is discharged, demoted, harassed, or otherwise discriminated against because of lawful acts by the employee in furtherance of an action under the Act is entitled to all relief necessary to make the employee whole. Such relief may include:
- Double back pay
- Compensation for any special damages including litigation costs and reasonable attorneys’ fees.
As mentioned previously, many employees are shocked to learn that their employers are engaged in illegal or fraudulent activity. Once they have decided to take action, often because it is the ‘right thing to do,’ they are faced with the question of ‘what to do next?’
Bring that question to Stephen Danz & Associates. Stephen has decades of practice prosecuting employers for wrongful actions and in participating with government agencies in whistleblower claims.
Contact our office through our toll free number, (877) 789-9707 or use the Contact form on our website, and we will schedule you for a free consultation. All scheduling is done through our Los Angeles Office but we have offices throughout California and can easily arrange to meet you at a location that is more convenient for you. Stephen represents clients all over the state and regularly travels between cities to attend court hearings and to meet with clients. He and one of his associates will meet with you to discuss any potential claims, to outline the process your case will follow and to put together a plan to gather evidence properly.
Once you have decided to proceed he will guide you along the treacherous path of court hearings and agency meetings which will allow you to participate in the government’s ultimate verdict or settlement against your employer.
Put the experience of one of the most well respected employment law attorneys to work for you. Call Stephen Danz today.