“What exactly is a whistleblower?” I thought to myself when first given the task of updating some content on our website. I had heard the term and had a general understanding that it meant you couldn’t get in trouble by your employer for telling on them. Little did I know there is an entire area of law dedicated to the subject and new legislation was bringing about some major changes.

Luckily, the law seems to be heading in the right direction for employees on whistleblower issues. The government has expanded the law to allow better incentives for corporate employees who are reporting fraud to the Securities Exchange Commission (SEC) including monetary incentives for certain claims up to 30% of total funds recovered as a result of the SEC claim. These changes were brought about with the enactment of the Dodd Frank Act, which also created a whole new office to handle corporate whistleblower claims.

But, corporate employees were not the only ones to see beneficial whistleblower changes as the Food Safety Modernization Act (FSMA) was recently passed. FSMA gives workers in the food industry an easy outlet to express their claims against companies concerning food safety issues. The act is meant to help prevent foodborne illnesses and promote safety in food handling. Also, the government has extended the reporting claims deadline to 180 days for most all industries.

With giving more days to file a complaint and offering better rewards and incentives, it is clear the law is moving in the right direction. The Occupational Safety & Health Administration (OSHA) provides the ease of online complaints as well as the option to call in and give the complaints over the phone. These changes are all in an effort to give incentives to employees to speak out when they see things going wrong in the workplace and not have to fear they will be retaliated against by their employer.

We want these violations in the workplace to be reported for the safety of workers everywhere and for the safety of the general public. Some whistleblower complaints can uncover major health hazards, economic downturns or disasters. Please speak out if you see illegal practices or activities going on in your workplace.

Whistleblower laws continuously are changing across numerous industries to protect your employment rights by making adverse actions against you illegal when you come forward with claims against your employer. Please explore the Workplace Fairness Worker’s Rights section for more information regarding whistleblowing as well as any other employment issue. It is important to know your rights and make sure you are heard.

About the Author: Jesci Drake is a current law student and legal intern for Workplace Fairness.

“It was a choiceless choice,” claimed Janet Chandler last Thursday night in a special discussion panel put together by GAP (Government Accountability Project) and Georgetown Law. Her choice was to blow the whistle.

Janet was one of three famous whistleblowers on the panel Thursday night discussing their stories and promoting the new book, The Corporate Whistleblower’s Survival Guide by Dylan Blaylock. Whistleblower Larry King, who blew the whistle while project manager for the cleanup at the infamous Three Mile Island nuclear power plant meltdown said he wished there was a comprehensive guide around like this when he chose to blow the whistle. Larry’s efforts uncovering reckless cleanup practices may have helped avoid another huge disaster and saved lives. He had no idea what would happen to him and his family, and not only did he lose his job, but his house as well. He also spent time in the hospital battling bouts of depression. He claimed if he had to do it all over again he would, knowing the dangers that can occur in his line of work. Although he said he would have remained anonymous, had he known it was an option. When asked why he did it, knowing some of the consequences, he exclaimed, “At the end of the day, you have to be able to stand yourself.”

Janet took her case all the way to a Supreme Court victory on a False Claims Act lawsuit against a hospital she was working with. (whistleblowers.org). She was working with federal funds granted to the hospital for supporting mothers and children suffering from drug addictions. The money granted was not allocated correctly, while the hospital was forging data and failing to comply with regulations. She said she was not prepared for the consequences which followed her blowing the whistle. She struggled for years as a single mother during the litigation process which took over 12 years.

Finally, Wendell Potter shared his story as a former VP for Corporate Communications with CIGNA, one of the U.S.’s largest health insurance companies. He spoke out about the deceitful tactics used in the private health care industry leading to more Americans without insurance protection. He also discussed the questionable uses of public relations budgets used to deceive the public, and engage in advertising and lobbying efforts to defeat reform initiatives in congress. (wendellpotter.org). Potter even wrote a book, The Deadly Spin, to detail what he experienced and how the company was deceiving Americans. Wendell took full advantage of his situation by turning it into a career. He now works with and provides education to members of Congress about what the private health insurance industry is really like.

Wendell said if he had not blown the whistle, he would not have gotten the wonderful opportunity to educate people on what the industry is really like. Similarly, Janet has participated in mentoring programs to educate and get the word out about whistleblowing. All of them agree that it was something they had to do to help others. They encourage people in their situations to speak out and use resources like the new book out to help them through these tough situations. Whistleblowers provide the missing link in exposing bad corporate practices.

We can only hope more brave souls will come forward like these three individuals and help ride corporate deviance and illegal practices.

About the Author: Jesci Drake is a current law student and intern with Workplace Fairness.

Credit: Joe Kekeris

While 25 million unemployed and underemployed U.S. workers are drowning, CEO pay skyrocketed by 23 percent, for an average salary of $11.4 million in 2010, according to the AFL-CIO Executive PayWatch. Released today, data compiled at PayWatch also show CEOs have done little to create badly-needed jobs, instead sitting on a record $1.93 trillion in cash on their balance sheets.

The 2011 Executive PayWatch features the compensation of 299 S&P 500 company CEOs and provides direct comparisons between those CEOs and the median pay of nurses, teachers, firefighters and others. For instance, while a secretary makes a median annual salary of $29,980, someone like Wells Fargo CEO John Stumpf rakes in $18,973,722 million—632 times the secretary’s salary. The pay gap between Wall Street and Main Street has widened egregiously—as recently as 1980, CEOs made 42 times that of blue-collar workers.

(Check out the 2011 Executive PayWatch to read case studies of six CEOs and find out how many firefighters it takes to make the salary of one CEO. You also can compare salaries of nurses, secretaries and others with CEOs and share the results with your friends on Facebook. Click here to share on Facebook.)

Maybe CEOs can’t focus on job creation because they have more pressing issues—like lobbying to repeal key provisions of a financial disclosure reform bill Congress passed last year. The Dodd-Frank Wall Street Reform and Consumer Protection Act requires corporations to reveal the CEO-to-worker pay gap—and the Wall Street rulers don’t want to do that. (Click here to urge your member of Congress not to weaken Wall Street reform in any way.)

AFL-CIO President Richard Trumka says the AFL-CIO will work hard to defend this historic reform. The brazen attacks by Wall Street lobbyists to undermine reform “surprise and offend me,” Trumka says, “and I think they will surprise and offend most Americans.”

Apparently Wall Street doesn’t want people to know that while working Americans paid for the economic crisis with their jobs, their homes and their retirement savings, these Teflon CEOs escaped unscathed.

CEO pay has helped fuel the rapidly escalating income inequality in this country which has worsened over the past decade to levels not seen since the years before the Great Depression. The increase of income inequality prior to the 2008 financial crisis and the recent recession is striking: Between 1993 and 2008, the top 1 percent of Americans captured 52 percent of all income growth in the United States.

About the Author: Tula Connell got her first union card while she worked her way through college as a banquet bartender for the Pfister Hotel in Milwaukee (she was represented by a hotel and restaurant local union—the names of the national unions were different then than they are now). With a background in journalism—covering bull roping in Texas and school boards in Virginia—she started working in the labor movement in 1991. Beginning as a writer for SEIU (and OPEIU member), she now blogs under the title of AFL-CIO managing editor.

This blog originally appeared in AFL-CIO on April 19, 2011. Reprinted with Permission.

Yesterday, the Senate passed the FDA Food Safety Modernization Act (FSMA), which imposes stricter food safety standards and grants the Food and Drug Administration greater authority to regulate tainted food.  The FMSA was prompted in part by numerous instances of fatal food contamination that revealed insufficient regulation and oversight of food production, including outbreaks of contaminated peanuts, eggs, and produce.  The Centers for Disease Control and Prevention estimate that there are 76 million cases of foodborne disease each year in the United States, 5,000 of which result in death.

To ensure that workers can disclose food safety concerns without fear of reprisal, Congress included in the FMSA a robust whistleblower protection provision (Section 402) that protects workers engaged in the manufacture, processing, packing, transporting, distribution, reception, holding, or importation of food.  The bill must be reconciled with a House version of the bill, H.R. 2749, which passed on July 30, 2009, and final passage is expected to occur by the end of the year.

Covered Employees

Section 402 applies to any entity “engaged in the manufacture, processing, packing, transporting, distribution, reception, holding, or importation of food.”

Broad Scope of Protected Conduct

The FSMA prohibits retaliation against an employee who has:

1. Provided, caused to be provided, or is about to provide or cause to be provided to the employer, the Federal Government, or the attorney general of a State information relating to any violation of, or any act or omission the employee reasonably believes to be a violation of any provision of this Act or any order, rule, regulation, standard, or ban under this Act, or any order, rule, regulation, standard, or ban under this Act;
2. Testified or is about to testify in a proceeding concerning such violation;
3. Assisted, participated or is about to assist or participate in such a proceeding; or
4. Objected to, or refused to participate in, any activity, policy, practice, or assigned task that the employee (or other such person) reasonably believed to be in violation of any provision of this Act, or any order, rule, regulation, standard, or ban under this Act.
A Section 402 complainant need not demonstrate that she disclosed an actual violation of a food safety law or regulation.  Instead, Section 402 employs a “reasonable belief” standard that the Department of Labor (DOL) and federal courts have construed as protecting a reasonable but mistaken belief that an employer may have violated a particular law.  See Van Asdale v. Int’l Game Tech., 577 F.3d  989, 1001 (9th Cir. 2009) (“to encourage disclosure, Congress chose statutory language which ensures that an employee’s reasonable but mistaken belief that an employer engaged in conduct that constitutes a violation of one of the six enumerated categories is protected.”) (internal quotation, citation omitted);  Allen v. Admin. Review Bd., 514 F. 3d 468, 477 (5th Cir. 2008) (applying “reasonable belief” standard in a Sarbanes-Oxley whistleblower retaliation action); Kalkunte v. DVI Fin. Svcs., Inc., ARB Nos. 05-139 & 05-140, 2004-SOX-056 (ARB Feb. 27, 2009) (clarifying that a reasonable but mistaken belief is protected under SOX).  The reasonable belief standard consists of both a subjective and objective component, and objective reasonableness “is evaluated based on the knowledge available to a reasonable person in the same factual circumstances with the same training and experience as the aggrieved employee.”  Allen, 514 F.3d at 477.

The “duty speech” doctrine will not apply to FSMA retaliation claims, as the text specifically protects disclosures made “in the ordinary course of the employee’s duties.”

Some examples of protected conduct include the following:

1. Reporting that imported cheese is being stored at the wrong temperature and is therefore susceptible to spoiling or containing harmful bacteria;

2. Reporting that an additive harmful only to infants was added to infant formula;

3. Reporting that bread is being stored in a facility infested with flies and rodents;

4. Reporting that a peanut butter manufacturer did not recall peanut butter it knew might have been made using a batch of contaminated peanuts; and

5. Reporting that a chemical used to lubricate sorting machines has contaminated dietary supplements.
Broad Scope of Prohibited Retaliation

An employer is prohibited from discharging or “in any manner discriminat[ing] against any employee with respect to his or her compensation, terms, conditions, or other privileges of employment.”  The DOL’s Administrative Review Board (ARB) applies the Burlington Northern standard to analogous whistleblower protection statutes, and therefore Section 402 will prohibit not only tangible adverse actions, but also any action that may dissuade a reasonable employee from engaging in further protected activity.  See Melton v. Yellow Transp. Inc., ARB No. 06-052, 05-140, ALJ No. 2005-STA-002 (ARB Sept. 30, 2008) (holding that the Burlington Northern standard applies to whistleblower retaliation claims before the DOL).  Prohibited acts of retaliation will likely include termination, suspension, demotion, reduction in pay, demotion, failure to promote, failure to hire, diminution in job duties, and blacklisting.

Employee-Favorable Causation Standard and Burden of Proof

A complainant can prevail merely by showing by a preponderance of the evidence that her protected activity was a contributing factor in the unfavorable action.  A contributing factor is any factor which, alone or in connection with other factors, tends to affect in any way the outcome of the decision.  See Klopfenstein v. PPC Flow Techs. Holdings, Inc., ARB No. 04-149 at 18, ALJ No. 2004-SOX-11 (ARB May 31, 2006) (internal citation omitted).  Once a complainant meets her burden by a preponderance of the evidence, the employer can avoid liability only if it proves by clear and convincing evidence that it would have taken the same action in the absence of the employee’s protected conduct.  Clear and convincing evidence is “[e]vidence indicating that the thing to be proved is highly probable or reasonably certain.”  See Peck v. Safe Air Int’l, Inc., ARB No. 02-028 at 9, ALJ No. 2001-AIR-3 (ARB Jan. 30, 2004).

Remedies

Remedies include injunctive relief, reinstatement, back pay with interest, “special damages,” attorney’s fees, litigation costs, and expert witness fees.  Where reinstatement is unavailable or impractical, front pay may be awarded.  “Special damages” has been construed under similar whistleblower protection statutes to include damages for pain, suffering, mental anguish and an injured career or reputation.  See, e.g., Kalkunte, ARB Nos. 05-139 & 05-140 at 15 (SOX case awarding complainant emotional distress damages); Hannah v. WCI Communities, 348 F. Supp. 2d 1332, 1334 (S.D. Fla. 2004) (“a successful Sarbanes-Oxley Act plaintiff cannot be made whole without being compensated for damages for reputational injury that diminished plaintiff’s future earning capacity”).  A complainant may also be entitled to damages for loss to his reputation as part of the “make whole” remedy provided by the statute.  See Hannah, 348 F. Supp. 2d at 1334.

Procedures Governing Section 402 Claims

A complainant must file her complaint with the Occupational Safety and Health Administration (OSHA) within 180 days after the date on which the retaliatory adverse action occurred.  OSHA will investigate the claim and can order preliminary relief, including reinstatement.  Either party can appeal OSHA’s determination by requesting a de novo hearing before a DOL Administrative Law Judge (ALJ), but objecting to an order of preliminary relief will not stay the order of reinstatement.  Discovery before an ALJ typically proceeds at a faster pace than discovery in state or federal court, and the hearings are less formal than federal court trials.  For example, ALJs are not required to apply the Federal Rules of Evidence.  Either party can appeal an ALJ’s decision to the ARB and can appeal an ARB decision to the circuit court of appeals in which the adverse action took place.

If the Secretary of Labor fails to issue a final decision within 210 days of the filing of a complaint, or within 90 days after receiving a written determination from OSHA, the complainant can remove her claim to federal court for de novo review and either party may request a trial by jury.  Section 402 does not preempt or diminish any other remedy for retaliation provided by Federal or State law, and therefore a Section 402 complainant could remove the claim to federal court and add additional claims, such as a common law wrongful discharge action, which would provide an opportunity to obtain punitive damages.

This article was originally posted on The Employment Law Group.

About the Author: Jason Zuckerman, a Principal at The Employment Law Group law firm (www.employmentlawgroup.com) has litigated more than fifty whistleblower retaliation, qui tam, and wrongful discharge cases. He also litigates civil rights, discrimination, non-compete, and unpaid overtime actions in federal and state courts. Mr. Zuckerman serves as Co-Chair of the National Employment Lawyers Association’s Whistleblower Committee and Co-Chair of the Whistleblower Committee of the District of Columbia Bar’s Labor and Employment Section.

The Occupational Safety and Health Administration (OSHA) says that workers who blow the whistle on safety violations and other unlawful practices “play an important role in assuring compliance with federal laws.”

But, say workplace safety advocates, too many times workers don’t speak up about safety and health problems on the job because they fear retaliation from their employers, even though it’s illegal.

OSHA now has a new website specifically dedicated to its whistleblower protection program, www.whistleblowers.gov. The site is designed to provide workers, employers and the public with easily accessible information about the 18 federal whistleblower protection statutes that OSHA currently administers. OSHA chief David Michaels says:

OSHA doesn’t work unless workers feel secure in exercising their rights. This Web page is part of OSHA’s promise to stand by those workers who have the courage to come forward when they know their employer is cutting corners on safety and health.

The new site provides information about workers’ rights and provisions under each of the whistleblower statutes and regulations that OSHA enforces. It also has program fact sheets and information on how a worker can file a retaliation complaint with OSHA. Along with the direct URL, the site can be accessed at www.osha.gov by clicking on the “Whistleblower Protection” link.

Federal workplace safety laws allow workers to file discrimination complaints with OSHA if they believe their employer has retaliated against them for exercising a broad range of rights protected by law.  These rights include filing safety or health complaints with OSHA and seeking an OSHA inspection, participating in an OSHA inspection, participating or testifying in any proceeding related to occupational safety or health, or reporting an injury or illness to their employer.

The Miner Safety and Health Act (H.R. 5663) now before Congress would strengthen whistleblower protections for miners covered by the Mine Safety and Health Administration and workers covered by OSHA.

About The Author: Mike Hall is a former West Virginia newspaper reporter, staff writer for the United Mine Workers Journal and managing editor of the Seafarers Log. He came to the AFL- CIO in 1989 and have written for several federation publications, focusing on legislation and politics, especially grassroots mobilization and workplace safety.

Recognizing that robust whistleblower protection is critical to preventing another financial crisis, Congress included in the Dodd-Frank financial services reform bill (H.R. 4173) numerous provisions designed to encourage whistleblowing and to provide robust protection from retaliation.  These provisions create monetary awards for whistleblowers who provide original information to the SEC or CFTC, strengthen the whistleblower protection provisions of the Sarbanes-Oxley Act and the False Claims Act, and create additional whistleblower retaliation causes of action.

Reward for Whistleblowing to the SEC and Prohibition Against Retaliation (Section 922). Under Section 922, the SEC will be required to pay a reward to individuals who provide original information to the SEC which results in monetary sanctions exceeding $1 million.  The award will range from 10 to 30 percent of the amount recouped and the amount of the award shall be at the discretion of the SEC.   Factors to be considered in determining the amount of the award include the significance of the information provided by the whistleblower, the degree of assistance provided by the whistleblower, the programmatic interest of the SEC in deterring violations of the securities laws by making awards to whistleblowers, and other factors that the SEC may establish by rule or regulation.  If the amount awarded is less than 10 percent or more than 30 percent of the amount recouped, a whistleblower may appeal the SEC’s determination by filing an appeal in the appropriate federal court of appeals within 30 days of the determination.

Section 922 prohibits the SEC from providing an award to a whistleblower who is convicted of a criminal violation related to the judicial or administrative action for which the whistleblower provided information; who gains the information by auditing financial statements as required under the securities laws; who fails to submit information to the SEC as required by an SEC rule; or who is an employee of the DOJ or an appropriate regulatory agency, an SRO, the PCAOB or a law enforcement organization.

Section 922 creates a new private right of action for employees who have suffered retaliation “because of any lawful act done by the whistleblower– ‘(i) in providing information to the Commission in accordance with [the whistleblower incentive section]; (ii) in initiating, testifying in, or assisting in any investigation or judicial or administrative action of the Commission based upon or related to such information; or (iii) in making disclosures that are required or protected under the Sarbanes-Oxley Act of 2002,’” the Securities Exchange Act of 1934, and “‘any other law, rule, or regulation subject to the jurisdiction of the [SEC].’”  The action may be brought in federal court and remedies include reinstatement, double back pay with interest, as well as litigation costs, expert witness fees, and reasonable attorney’s fees.

New Whistleblower Protection for Financial Services Employees (Section 1057). Section 1057 creates a robust private right of action for employees in the financial services industry who suffer retaliation for disclosing information about fraudulent or unlawful conduct related to the offering or provision of a consumer financial product or service.  The scope of coverage is quite broad in that Section 1057 applies to organizations that extend credit or service or broker loans; provide real estate settlement services or perform property appraisals; provide financial advisory services to consumers relating to proprietary financial products, including credit counseling; or collect, analyze, maintain, or provide consumer report information or other account information in connection with any decision regarding the offering or provision of a consumer financial product or service.

Section 1057 prohibits retaliation against an employee who has engaged in any of the following protected acts:

• Provided, caused to be provided, or is about to provide or cause to be provided, to an employer, the newly created Bureau of Consumer Financial Protection (Bureau), or any other government authority or law enforcement agency, information that the employee reasonably believes relates to any violation of any provision of Title X of the bill, which establishes new consumer financial protections, or any rule, order, standard or prohibition prescribed or enforced by the Bureau;

• Testified or will testify in a proceeding resulting from the administration or enforcement of any provision of Title X;

• Filed, instituted, or caused to be filed or instituted any proceeding under any federal consumer financial law; or

• Objected to, or refused to participate in any activity, practice, or assigned task that the employee reasonably believes to be a violation of any law, rule, standard, or prohibition subject to the jurisdiction of, or enforceable, by the Bureau.

Remedies include reinstatement, backpay, compensatory damages, and attorney’s fees and litigation costs, including expert witness fees.  Where reinstatement is unavailable or impractical, front pay may be awarded.

Section 1057 employs a burden-shifting framework that is favorable to employees.  A complainant can prevail merely by showing by a preponderance of the evidence that her protected activity was a contributing factor in the unfavorable action. A contributing factor is any factor which, alone or in connection with other factors, tends to affect in any way the outcome of the decision.  Once a complainant meets her burden by a preponderance of the evidence, the employer can avoid liability only if it proves by clear and convincing evidence that it would have taken the same action in the absence of the employee’s protected conduct.

The procedures governing Section 1057 claims are substantially similar to those governing retaliation claims brought under the Consumer Product Safety Improvement Act of 2008, 15 U.S.C. § 2087.  The statute of limitations is 180 days and the claim must be filed initially with the Occupational Safety Health Administration (OSHA), which will investigate the complaint and can order preliminary reinstatement.  Once OSHA issues its findings, either party can request a hearing before a Department of Labor (DOL) administrative law judge.  If the DOL has not issued a final order within 210 days of the filing of the complaint, the complainant has the option to remove the claim to federal court and either party can request a trial by jury.  Section 1057 claims are exempt from mandatory arbitration agreements.

Reward for Whistleblowing to the CFTC (Section 748). Section 748 amends the Commodity Exchange Act, 7 U.S.C. § 1 et seq., to create a whistleblower incentive program and whistleblower protections similar to those in section 922, including a new private right of action.  One notable difference between sections 748 and 922 is the ability of a commodity whistleblower to appeal any determination regarding an award made by the Commodity Futures Trading Commission (CFTC) within 30 days.  Protected conduct under section 748 includes providing information to the CFTC in accordance with the whistleblower incentive provision and “assisting in any investigation or judicial or administrative action of the [CFTC] based upon or related to such information.”

Strengthening Sarbanes-Oxley’s Whistleblower Protection Provision (Sections 922 and 922A). Sections 922 and 929A contain important amendments to the Sarbanes-Oxley act (SOX) that broaden the scope of coverage, increase the statute of limitations, exempt SOX whistleblower claims from mandatory arbitration, and clarify that SOX claims removed to federal court can be tried before a jury.

Section 929A clarifies that the whistleblower protection provision of the Sarbanes-Oxley Act (SOX), 18 U.S.C. § 1514A, applies to employees of subsidiaries of publicly-traded companies “whose financial information is included in the consolidated financial statements of [a publicly] traded company.”  This amendment eliminates a significant loophole that some courts have read into SOX that has substantially narrowed the scope of SOX coverage.  Elevating form over substance, some judges have permitted publicly-traded companies to avoid liability under SOX merely because the parent company that files reports with the SEC has few, if any, direct employees, and instead employs most of its workforce through non-publicly traded subsidiaries.

As Judge Levin pointed in Morefield v. Exelon Servs., Inc., ALJ No. 2004-SOX-002 (ALJ Jan. 28, 2004), this loophole is contrary to the purpose of SOX in that “[a] publicly traded corporation is, for Sarbanes-Oxley purposes, the sum of its constituent units; and Congress insisted upon accuracy and integrity in financial reporting at all levels of the corporate structure, including the non-publicly traded subsidiaries . . . [Congress] imposed reforms upon the publicly traded company, and through it, to its entire corporate organization.”  Section 922(b) further expands the coverage of section 806 of SOX to include employees of nationally recognized statistical ratings organizations (NRSROs), including A.M. Best Company, Inc., Moody’s Investors Service, Inc., and Standard & Poor’s Ratings Service.

Section 922(c) increases the statute of limitations for SOX whistleblower claims from 90 to 180 days and clarifies that SOX retaliation plaintiffs can elect to try their cases in federal court before a jury.  In addition, section 922(c) declares void any “agreement, policy form, or condition of employment, including a predispute arbitration agreement” which waives the rights and remedies afforded to SOX whistleblowers.

Strengthening the False Claims Act’s Whistleblower Protection Provision (Section 1079B). Section 1079B amends the anti-retaliation provision of the False Claims Act, 31 U.S.C. § 3730(h), by expanding the definition of protected conduct to include “lawful acts done by the employee, contractor, or agent or associated others in furtherance of an action under this section or other efforts to stop 1 or more violations of [the False Claims Act],” thereby protecting against associational discrimination and covering a broad range of activities that could further a potential qui tam action or could stop a violation of the FCA.  Section 1079B clarifies that the statute of limitations for actions brought under section 3730(h) is three years, which brings much-needed clarity in the wake of the Supreme Court’s decision in Graham County Soil & Water Conservation Dist. v. U.S. ex rel. Wilson, 545 U.S. 409 (2005) holding that the most closely analogous state statute of limitations applies to FCA retaliation claims.

About the Author: Jason Zuckerman, a Principal at The Employment Law Group law firm (www.employmentlawgroup.com) has litigated more than fifty whistleblower retaliation, qui tam, and wrongful discharge cases. He also litigates civil rights, discrimination, non-compete, and unpaid overtime actions in federal and state courts. Mr. Zuckerman serves as Co-Chair of the National Employment Lawyers Association’s Whistleblower Committee and Co-Chair of the Whistleblower Committee of the District of Columbia Bar’s Labor and Employment Section.

(The following post is part of our Taking Back Labor Day blog series. Many people view Labor Day as just another day off from work, the end of summer, or a fine day for a barbecue. We think that it’s a holiday with a rich history, and an excellent occasion to examine what workers, and workers rights activism, means to this country. Our Taking Back Labor Day posts in September will do that, from a variety of perspectives, and we hope you’ll tune in and join the discussion!)

*****

It’s an amazing story and one worth talking about.  Gulf War veteran and former Pfizer sales representative John Kopchinski is getting $51 million dollars as a result of his whistleblowing lawsuit against Pfizer – the world’s biggest drug maker — and that’s big news.

Pfizer to Pay $2.3 Billion for Fraudulent Marketing 

According to a statement from the Justice Department,   Pfizer’s illegal practices in connection with its promotion of an anti-inflammatory drug called  Bextra is what got it into big trouble.

Under the Food, Drug and Cosmetic Act, a company must specify the intended uses of a product in its new drug application to FDA. Once approved, the drug may not be marketed or promoted for so-called “off-label” uses.

It turns out that Pfizer promoted the sale of Bextra for several uses and dosages that the FDA specifically declined to approve because of its safety concerns.

As a result of that conduct, (as well as violations involving other drugs) the company will pay a criminal fine of $1.195 billion, the largest criminal fine ever imposed in the United States for any matter.

Pharmacia & Upjohn (Pfizer subsidiaries) will also forfeit $105 million, for a total criminal resolution of $1.3 billion.

All in all, Pfizer settled the case( which included civil and criminal penalties) for a whopping $2.3 billion dollars.

False Claims Act Liability

Pfizer also agreed to pay $1 billion to resolve allegations under the civil False Claims Act (also know as Qui Tam).

Under the Act, it is illegal to knowingly present a false or fraudulent claim for payment to the federal government or use a false or fraudulent record to get paid. The way it works is:

• individuals and entities with evidence of fraud involving the United States or its programs or contracts can sue the wrongdoer on behalf of the government

• the government has the right to intervene and join the action

• if the government declines, the private plaintiff may proceed on his or her own behalf

Those who violate the Act are liable for three times the dollar amount of the fraud and additional civil penalties. As far as the whistleblower goes, the Whistelblowers Protection Blog explains it this way:

A qui tam plaintiff can receive between 15 and 30 percent of the total recovery from the defendant, whether through a favorable judgment or settlement. 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.

 In this case, Kopchinski (and others) claimed that Pfizer:

• illegally promoted four drugs  (Bextra an anti-inflammatory; Geodon, an anti-psychotic drug; Zyvox, an antibiotic; and Lyrica, an anti-epileptic drug),

• for uses that were not medically accepted, and

• caused false claims to be submitted to government health care programs.

As a part of the resolution of the case,  six whistleblowers will receive payments totaling more than $102 million from the federal share of the civil recovery.

Kopchinski, whose reporting instigated the government investigation, will get $51.5 million.

Great Result For This Whistleblower

It’s a fantastic result for Kopchinski and the end of a long road. Most whistleblowers go through an enormous ordeal and so did Kopchinski,

First they struggle with the difficulty of reporting the illegal and/or dangerous practices to the corporate hierarchy and the pressure that goes with it.

What happens next –  when they are ignored as they often are — is that they are labeled as troublemakers and then fired because of trumped up charges of misconduct.

Once they report the wrongdoing to a government agency, they are blackballed in their industry and can’t get work. The stress, anxiety, guilt, and financial distress is overwhelming for most.

Kopchinski had this to say in a statement he released:

In the Army I was expected to protect people at all costs, 

At Pfizer I was expected to increase profits at all costs, even when sales meant endangering lives. 

I couldn’t do that.

That’s why Kopchinski got fired. At the time (2003) he had a baby and his wife was pregnant with twins. He went from earning $125,000 a year, to depleting his 401(k), to finally getting a $40,000 a year insurance job.

We appreciate Mr. Kopchinski’s courage and conviction and congratulate him (as well as his legal team and the Justice Department ) for a superb result.

It doesn’t often turn out this way — and it’s sure great to see it when it does. It’s a wonderful Labor Day story.

Image: images.huffingtonpost.com

About the Author: Ellen Simon is recognized as one of the foremost employment and civil rights lawyers in the United States. She has been listed in the National Law Journal as one of the nation’s leading litigators. Ms. Simon has been quoted often in local and national news media and is a regular guest on television and radio, including appearances on Court TV. Ellen has been listed as one of The Best Lawyers in America for her landmark work representing individuals in precedent-setting cases. She also received regional and national attention for winning a record $30.7 million verdict in an age-discrimination case; the largest of its kind in U.S. history. Ellen has served as an adjunct professor of employment law and is an experienced and popular orator. Ellen is Past-Chair of the Employment Rights Section of the Association of Trial Lawyers of America and is honored to be a fellow of the International Society of Barristers and American Board of Trial Advocates. In additional to work as a legal analyst, she currently acts as co-counsel on individual employment cases, is available as an expert witness on employment matters and offers consulting services on sound employment practices, discrimination awareness and prevention, complaint investigation and resolution, and litigation management. Ms. Simon is the owner of the Simon Law Firm, L.P.A., and Of Counsel to McCarthy, Lebit, Crystal & Liffman, a Cleveland, Ohio based law firm. She is also the author of the legal blog, the Employee Rights Post, and her website is www.ellensimon.net. Ellen has two children and lives with her husband in Sedona, Arizona.

The economic stimulus bill passed by Congress on February 12, 2009 includes robust whistleblower protections to ensure that employees of private contractors and state and local governments can disclose waste, fraud, gross mismanagement or a violation of law related to stimulus funds.  This article summarizes the key provisions of Senator McCaskill’s (D-Mo.) whistleblower protection amendment to the stimulus bill (“McCaskill Amendment”).

Covered Employers

The McCaskill Amendment applies to private contractors, state and local governments, and other non-Federal employers that receive a contract, grant or other payment appropriated or made available by the stimulus bill.

Broad Scope of Protected Conduct

Protected conduct includes a disclosure to a person with supervisory authority over the employee, a State or Federal regulatory or law enforcement agency, a member of Congress, a court or grant jury, the head of a Federal agency, or an inspector general information that the employee reasonably believes evidences:

• Gross mismanagement of an agency contract or grant relating to stimulus funds;
• A gross waste of stimulus funds;
• A substantial and specific danger to public health or safety related to the implementation or use of stimulus funds;
• An abuse of authority related to the implementation or use of stimulus funds; or
• A violation of a law, rule, or regulation that governs an agency contract or grant related to stimulus funds.

Significantly, internal disclosures are protected, which is a substantial expansion of two current analogous whistleblower protection laws protecting contractors, both of which do not expressly cover internal disclosures.  See 10 U.S.C. § 2409; 41 U.S.C. § 265.  The McCaskill Amendment specifically protects so-called “duty speech” whistleblowing, i.e., disclosures made by employees in the ordinary course of performing their job duties. Courts will likely apply a standard of objective reasonableness from analogous whistleblower protection laws, such as Section 806 of the Sarbanes-Oxley Act, 18 U.S.C. § 1514A, which evaluates the reasonableness of a belief based on the knowledge available to a reasonable person in the same factual circumstances with the same training and experience as the aggrieved employee.

Prohibited Acts of Retaliation

The McCaskill Amendment prohibits a broad range of retaliatory employment actions, including termination, demotion, or any other discriminatory act, which includes any act that would dissuade a reasonable person from engaging in protected conduct.   See Burlington N. & Santa Fe R.R. Co. v. White, 548 U.S. 53 (2006).

Employee-Favorable Burden of Proof

To prevail in a whistleblower action under the McCaskill Amendment, an employee need not show that the protected conduct was a significant or motivating factor in the reprisal, but instead must merely prove that the protected conduct was a “contributing factor” to the reprisal.  The Amendment specifically clarifies that an employee can meet the “contributing factor” standard through temporal proximity or by demonstrating that the decision-maker knew of the protected disclosure.  An employer can avoid liability by demonstrating by “clear and convincing evidence,” a high evidentiary burden, that it would have taken the same action in the absence of the employee engaging in protected conduct.

Remedies

A prevailing employee is entitled to “make whole” relief, which includes: (1) reinstatement; (2) back pay; (3) compensatory damages; and (4) attorneys’ fees and litigation costs.  Where an agency files an action in federal court to enforce an order of relief for a prevailing employee, the court may also award exemplary damages.

Administrative Exhaustion Requirement and Right to a Jury Trial

Actions brought under the whistleblower provisions of the McCaskill amendment must be filed with the appropriate inspector general.  Unless the inspector general determines that the action is frivolous, does not relate to covered funds, or has been resolved in another Federal or State administrative proceeding, the inspector general must conduct an investigation and make a determination on the merits of the whistleblower retaliation claim no later than 180 days after receipt of the complaint. Within 30 days of receiving an inspector general’s investigative findings, the head of the agency shall determine whether there has been a violation, in which event the agency head can award a complainant reinstatement, back pay, compensatory damages, and attorney fees.  If an agency head has denied relief in whole or in part or has failed to issue a decision within 210 days of the filing of a complaint, the complainant can bring a de novo action in federal court, which shall be tried by a jury at the request of either party.  The McCaskill Amendment expressly clarifies that predispute arbitration agreements do not apply to claims brought under the Amendment.

Alternative Remedies

In addition to the relief available under the McCaskill Amendment, employees of government contractors have other options to remedy whistleblower retaliation.  The retaliation provision of the False Claims Act, 31 U.S.C. § 3730 (h), prohibits retaliation against an employee who has taken actions “in furtherance of” an FCA enforcement action, including initiating an FCA action, investigating a potential FCA action and testifying in an FCA action.  At least twenty-four states have adopted laws similar to the FCA, nearly all of which include an analogous retaliation provision.  Unlike the McCaskill Amendment, the retaliation provision of the FCA does not require administrative exhaustion.  Employees of contractors and of state governments may also have claims under state whistleblower protection statutes, but some of those statutes do not protect internal whistleblowing.  In addition, employees of private contractors may have a claim of common law wrongful discharge in violation of public policy, a tort remedy that provides access to a jury trial and punitive damages.  When evaluating a whistleblower retaliation claim arising from an employee’s disclosure about fraud on the government, it is critical to consider whether the employee also has a qui tam action and to preserve the employee’s ability to pursue a qui tam action, which may entail avoiding public disclosure of the fraud.

In sum, the McCaskill Amendment provides a critical safeguard against fraudulent spending of stimulus funds.

About the Authors:  Jason Zuckerman, a Principal at The Employment Law Group law firm (www.employmentlawgroup.com) has litigated more than fifty whistleblower retaliation, qui tam, and wrongful discharge cases. He also litigates civil rights, discrimination, non-compete, and unpaid overtime actions in federal and state courts. Mr. Zuckerman serves as Co-Chair of the National Employment Lawyers Association’s Whistleblower Committee and Co-Chair of the Whistleblower Committee of the District of Columbia Bar’s Labor and Employment Section.

R. Scott Oswald, a Principal at The Employment Law Group law firm (www.employmentlawgroup.com) litigates whistleblower complaints nationally.  Notably, Mr. Oswald was the lead trial counsel in the ground-breaking Sarbanes-Oxley (SOX) whistleblower case of Kalkunte v. DVI, which remains one of the few SOX whistleblower cases in which the SOX whistleblower prevailed at the trial level.  Mr. Oswald is the President-Elect of the Metropolitan Washington Employment Lawyers Association.

Cross-posted from The Employment Law Group’s Whistleblower Law Blog.