Is an employee who declines to remain employed and facilitate healthcare fraud constructively discharged? This is the question presented to the Sixth Circuit by Sue Smith v. LHC Group, which was argued yesterday to a panel of Judge Gilbert Merritt, Judge Karen Nelson Moore and Judge John Bush. Robert L. Abell represents the plaintiff and appellant, Sue Smith; take a listen:
17-5850 Sue Smith v LHC Group Inc
Here's the Brief and Reply Brief for Sue Smith.
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Bad facts made bad law. Sometimes the bad law is so bad that it, as a practical matter, will spread like waves and ripples from a boulder into a pond. So it is with the Sixth Circuit's recent decision in Gillis v. Miller.
The case arises in the Bay County, Michigan jail. It seems that an inmate was unable to receive treatment at the jail for a medical condition, and a deputy jailer decided to help him out. The deputy's wife worked as a dental assistant and obtained a prescription in her name for a periodontal mouth rinse. The deputy scratched his wife's name off the label and placed the prescription in a jail office with specific instructions about giving the medicine to the inmate. This good deed apparently provoked a firestorm of rumors in the jail regarding drugs being introduced into it and an investigation into potential prescription drug trafficking at the jail ensued.
Two deputy jailers, Gillis, who was the President of the Bay County Correction Officers Union, and Walraven, a sergeant, crafted and had posted a memorandum to their fellow deputy jailers regarding their rights under the Supreme Court's decision in NLRB v. J. Weingarten, Inc., 420 U.S. 251 (1975), commonly referred to as "Weingarten rights." Both the majority and the dissent opinions quote the memo so we will also:
Hello everyone I would like to express my gratitude in being your Union President. I feel there is a very important issue that needs to be discussed. Many deputies have been notified they need to report to a superior officer for some type of investigatory interview or investigation. When you are summoned before a superior officer, I strongly suggest you state these words before you say anything else. "If this discussion could in any way lead to me being disciplined or discharged, I request my Union representative be present at the meeting. Without representation, I choose not to answer any questions." These rights also cover yourself in the event someone else may be discipline due to your statement. I am in no way advising you not to cooperate with management, just advising you of your rights.
It is your responsibility to ask for the representation. It is not the responsibility of management to advise you of this. Attached are the actual Weingarten Rights. Please review them as they are extremely important for yourself and everyone else. Even if you don't think you need representation, it has been proven it is better to have another set of ears as sometimes words are taken out of context.
In conclusion you have the right to discuss union matters with your Union President and Vice President. Some of you may have been ordered not to discuss what was said in a meeting with your superiors. I strongly recommend you advise us of what happened for your protection and others. Again, thank you for your time and I look forward to working with everyone.
Respectfully,
Matt Gillis (POLC LOCAL)
The memo was posted on February 12, 2014. The next day Sheriff Miller, who was in charge of running the jail, threatened Gillis with criminal prosecution for interfering with an ongoing investigation. Walraven was placed on leave on February 18, 2014, based on "an investigation of allegations of misconduct[.]" Walraven's employment was terminated on April 15, 2014; it had to do with allegations that appear to be goofing off and some minor policy violations. Gillis was subjected to a separate investigation beginning on February 26, 2014, relating to an alleged sexual relationship with an inmate that began "during her time in custody and after her release but while under court supervision." Gillis eventually admitted involvement and resigned his employment; nevertheless, he claimed that he was constructively discharged on February 27, 2014.
These facts are bad enough. If Gillis began a sexual relationship with an inmate while she was in custody, he should have been fired. The allegations regarding Walraven predated posting in the memo; it would appear that he would have been subject to some discipline on the basis of the misconduct occurring well before the memorandum. In other words, these bad facts make both Gillis and Walraven poor plaintiffs to assert the free-speech protections for public employees under the First Amendment.
The District Court granted summary judgment to the defendants. The Sixth Circuit in a 2-1 decision affirmed. The most troubling aspect of the decision is the discussion regarding what is required of a public employer to substantiate that the Pickering balance applied in these type cases should tilt in its favor.
The Pickering balancing test is used "to determine if the employee's free-speech interest outweighs the efficiency interest of the government as employer." This is a process in which a court, as a matter of law, must weigh the employee's interest in commenting upon matters of public concern against the interest of the state, as an employer, and promoting the efficiency of the public services it performs through its employees. In other words, the Pickering balancing test gives a court leeway on a legal issue to tilt the balance in favor of the employing public entity and in silencing public employees.
Gillis and Walraven argued that the defendants had failed to present evidence that their memorandum had caused any actual disruption to the jail's operations. In ruling on a matter of first impression, the Sixth Circuit ruled that the defendants did not have to make such a showing. Instead, the Sixth Circuit ruled as follows:
A public employer need not show actual disruption of the public agency in all cases in order to prevail under the Pickering balancing tests. Instead, when the employer does not offer such evidence, we must assess whether the employer could reasonably predict that the employee speech would cause disruption, in light of the manner, time and place the speech was uttered, as well as the context in which the dispute arose.
To meet this standard all that a public employer is going to have to do is offer some semi-coherent expression of concern about the effects the employee's speech could have had. This is going to be even easier when the employer is a jail or law enforcement agency, since the Sixth Circuit emphasized that "we have long recognized 'the importance of deference' to law enforcement officials when speech threatens to undermine the functions of organizations charged with maintaining public safety." The practical application of this rule will be to foreclose nearly all if not all free speech protections for public employees employed in a public safety agency. It will also creep into nonpublic safety public agencies as well.
The value of First Amendment protections for public employees is that it offers protection for whistleblowers to report and announce waste, fraud, abuse and the like as well as practices that misserve the public or waste taxpayer dollars. This isn't what Gillis and Walraven were doing; a better ruling would have been that their speech did not address a matter of public concern and, therefore, was not entitled to any First Amendment protection, a ruling that would preclude the necessity of reaching the Pickering balancing test. So once again bad facts make bad law.
The Sixth Circuit's majority opinion was authored by Circuit Judge Eric Clay and joined by visiting District Judge Joseph Hood of the Eastern District of Kentucky. Circuit Judge Karen Moore dissented.
Robert L. Abell
www.RobertAbellLaw.com
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A predicate to a viable whistleblower claim under the False Claims Act (FCA) is that the fraud charged not have been the subject of a prior "public disclosure." If the fraudulent conduct has been involved in an earlier and settled government audit and investigation, discussed and disclosed by those involved has there been a "public disclosure"? "No" answered the Sixth Circuit recently in US ex rel Whipple v Erlanger Medical Center.
Robert Whipple, the whistleblower, filed suit under the FCA charging that the hospital corporation had engaged in four types of fraud: (1) billing for inpatient care for patients that should have been billed on an outpatient or observation basis; (2) surcharges for observation services added to outpatient surgeries; (3) inpatient admissions of patients in order to bill for hemodialysis procedures not reimbursable if performed on an outpatient basis; and (4) carotid artery stenting procedures performed without authorization. Unknown to Whipple, the government had previously done an audit and investigation as to fraud related to inpatient admissions, and the hospital has paid back to the government for $477,140.42. Since the grounds for a FCA whistleblower claim require that there have been no prior "public disclosure" related to the fraud charged, the question before the Sixth Circuit was whether disclosures and discussions involved in this audit and investigation constituted a "public disclosure."
The investigation had started with an anonymous tip to a fraud hotline. The federal Department of Health and Human Services (DHHS) then referred it to a private contractor, AdvanceMed, to investigate. AdvanceMed identified four areas for further inquiry, asked for and received further information from Erlanger, which it reported on to DHHS. Erlanger hired Deloitte Financial Advisory Services as a consultant for the investigation. The matter was closed following payment.
The Sixth Circuit rejected the two arguments made by Erlanger that a "public disclosure" occurred during the discussions and disclosures related to the audit and administrative investigation. First, the court joined every other circuit that has addressed the issue, except for the Seventh Circuit, and held that a "public disclosure" requires "some affirmative act of disclosure to the public outside the government. Therefore, Erlanger's disclosure of information to the government during the audit and investigation was not a "public disclosure."
Second, neither the disclosures to AdvanceMed by DHHS nor the disclosures by Erlanger to its consultant, Deloitte, constituted a "public disclosure." All of these disclosures, of course, remained confidential and unknown until disclosed in this litigation. Accordingly, none of them constituted a "public disclosure" either.
The Sixth Circuit's opinion was authored by Circuit Judge Ralph Guy and joined by Circuit Judges Eric Clay and Helene White.
Robert L. Abell
www.RobertAbellLaw.com
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Employees of federal government contractors stand to gain much increased whistleblower protection from the National Defense Authorization Act of 2013, which has passed Congress and President Obama is expected to sign.
A complaint must first be filed with the relevant Office of Inspector General (OIG) and if relief is not timely provided within 210 days, the employee may file suit in federal district court with the following provisions applicable:
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The Federal Credit Union Act, 12 U.S.C. sec. 1790b, makes it unlawful to retaliate against a whistleblower who engages in certain protected activity. The statute states as follows:
No insured credit union may discharge or otherwise discriminate against any employee with respect to compensation, terms, conditions, or privileges of employment because the employee (or any person acting pursuant to the request of the employee) provided information to the [National Credit Union Administration] Board or the Attorney General regarding any possible violation of any law or regulation by the credit union or any director, officer, or employee of the credit union.
The Fifth Circuit recently identified in Schroeder v. Greater New Orleans Federal Credit Union, No. 10-31169 (December 19, 2011), the elements of a cause of action for violation of this statute as follows: (1) that the plaintiff-employee engaged in a protected activity; (2) that the employer credit union took adverse employment action against him or her; and, (3) that a causal link exists between the protected activity and the adverse employment action.
The Fifth Circuit followed earlier decisions by the First Circuit, Simas v. First Citizens Federal Credit Union, 170 F.3d 37 (1st Cir. 1999), and the Sixth Circuit, McNett v Hardin Community Federal Credit Union, 118 Fed.Appx. 960 (6th Cir. 2004), for this holding.
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A tax employee, who claimed that he was fired in retaliation for his whistleblowing reports of tax fraud, may pursue claims and remedies under the Racketeering and Corrupt Organizations Act (RICO), 18 U.S.C. secs. 1962(c), (d), the Seventh Circuit ruled recently in DeGuelle v. Camilli, No. 10-2172 (7th Cir., December 15, 2011). The ruling reversed a district court's dismissal of the case.
Michael DeGuelle was employed in the tax department of S.C. Johnson & Son, Inc., a company with over 120,000 employees world-wide. He learned that the company had received $5 million plus in improper foreign tax credits due to an IRS auditing error. He reported the discovery to his supervisor, Wenzel, who told him to destroy records to keep the IRS from finding out the truth and to alter some relevant returns. This was the first instance, according to the court's opinion, where records were altered or destroyed and falsified returns mailed to the IRS. The court's opinion recites a number of disturbing instances and transactions that followed in the next few years.
DeGuelle, according to the court's opinion, met with much grief for bringing to light the company's wrongdoing. His supervisor, Wenzel, became highly antagonistic toward him and, at times, physically aggressive. DeGuelle received a procedurally irregular and highly negative mid-year performance review that followed only a few months his receipt of an award for outstanding job performance, had the company's human resources department acknowledge that his negative review was in retaliation for his whistleblowing activities, and received an offer to have his attorney's fees paid in exchange for signing a release of claims and confidentiality agreement the same day that he said that he would file a Sarbanes-Oxley whistleblower complaint with the Department of Labor. DeGuelle did file a complaint with the DOL and attached financial statements, tax documents and internal emails to his complaint. Subsequently, he was offered one year salary in exchange for his resignation, release of all claims and signing of a confidentiality agreement. Subsequently and after DeGuelle declined the resignation etc. offer, he was fired for wrongfully taking and disclosing company documents and for being untruthful during the company's investigation of his reports.
DeGuelle filed suit following his termination and pleaded various claims including two under RICO, 18 U.S.C. 1962(c) and (d). The district court dismissed his claims on the grounds that the retaliation against DeGuelle was unrelated to his reports of alleged tax fraud by his employer. This remarkably erroneous ruling was met with strong criticism by the Seventh Circuit:
When an employer retaliates against an employee, there is always an underlying motivation. In this case, for example, the motivation was to retaliate against DeGuelle for disclosing the tax scheme. Retaliatory acts are inherently connected to the underlying wrongdoing exposed by the whistleblower. Although there may not be the same victims or results, in most cases retaliatory acts and the underlying scheme "are interrelated by distinguishing characteristics and are not isolated events."
Accordingly, the Seventh Circuit reinstated DeGuelle's RICO claims and rejected decisions by other courts that have not permitted RICO claims in similar circumstances.
Although the court's opinion is not clear exactly what company documents the employer claimed that DeGuelle wrongfully possessed and/or disclosed, if those documents are the ones that DeGuelle tendered with his whistleblower complaint to the Department of Labor, the company's reliance on that disclosure may raise some of the issues discussed in an earlier post on this blog, Can A Policy Violation Also Be Protected Activity?
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A whistleblower, who claimed in a suit under the False Claims Act that TRW knowingly sold defective electronic parts to the government for use in spy satellites, will receive $48.7 million as part of a settlement between the Northrup Grumman Corporation, which acquired TRW, and the government according to a report in the Los Angeles Times, "Northrup Grumman - TRW Whistleblower Case Settled." Tthe False Claims Act allows private suits by persons not affiliated with the government to sue government contractors on behalf of the government. Successful claimants may receive 15 - 25% of the total settlement or recovery.
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A whistleblower, an employee, Buster Roderigas, of an L-3 Communications subsidiary, L-3 Vertex Aerospace, will receive $720,00 of the company's $4 million settlement with the Department of Defense, the Atlanta Journal-Constitution reports, "Whistle-blower Shares Settlement." Roderigas protected the public by blowing the whistle on fraudulent bills the company submitted for helicopter maintenance services on a contract in Iraq. Roderigas will also receive $318,000 to cover his attorney's fees in the case.
When an private company employee blows the whistle on fraudulent billing submitted to the federal government and, as a result, the government recovers some of the money, the employee is entitled under the law to a percentage. The law serves to protect the public by giving employees, who are positioned to blow the whistle, incentive to do so. It is unlawful for a company to retaliate against an employee who has blown the whistle in this way.
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The Kentucky Whistleblower's Act protects employees that threaten to report wrongdoing within a government agency, department or cabinet, the Kentucky Supreme Court has ruled in Consolidated Infrastructure Management Authority, Inc. v. Allen, No. 2006-SC-000188-DG (November 26, 2008).
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When an employee becomes aware of actual or possible wrongdoing in their agency or department, their initial and most logical inclination is to report the matter to those persons in the agency or department with power to investigate and remedy the matter. The Kentucky Supreme Court has ruled in Workforce Dev. Cabinet v. Gaines, No. 2005-SC-000965-DG (November 26, 2008) that such an internal report with the employee's own agency, department or cabinet is protected by the Kentucky Whistleblower's Act.
The Act has a remedial purpose in protecting public employees who disclose wrongdoing. It serves to discourage wrongdoing in government, and to protect those who made it public. The purpose of the Whistleblower Act is clear, and it must be liberally construed to serve that purpose.
After considering the persons and entitles specifically listed to whom a protected report may be made, the Court decided whether language protecting a report to "any other appropriate body or authority" could include an employee's own agency, department or cabinet. The Court asserted that to conclude otherwise would be "absurd," since an "internal report is often the most logical first step, and in many cases may be the only step necessary to remedy the situation." Therefore, the Court advised and ruled as follows:
We believe that "any other appropriate body or authority" should be read to include any public body or authority with the power to remedy or report the perceived misconduct. This interpretation serves the goals or liberally construing the Whistleblower Act in favor of its remedial purpose, and of giving words their plain meaning. Generally, the most obvious public body with the power to remedy perceived misconduct is the employee's own agency (or the larger department or cabinet).
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