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Law Offices of Elizabeth “Booka” Smith, LLC Blog


A “whistleblower” is anyone who alerts the government or their employer of improper conduct or fraudulent activity committed either inside of or outside the company by which they are employed. Whether to “blow-the-whistle” is a hard decision to make, even though it may be the morally correct thing to do. Unfortunately, whistleblowers are often...

A “whistleblower” is anyone who alerts the government or their employer of improper conduct or fraudulent activity committed either inside of or outside the company by which they are employed. Whether to “blow-the-whistle” is a hard decision to make, even though it may be the morally correct thing to do. Unfortunately, whistleblowers are often the victims of retaliation in the workplace. The upside is that recent federal legislation has created whistleblower reward programs and qui tam provisions which are designed to incent employees to do the right thing and come forward to report fraud and wrongdoing.


June 16, 2016: US Supreme Court Recognizes "Implied Certification" Theory of FCA Liability

On June 16, 2016, the United States Supreme Court handed down a major victory to False Claims Act (FCA) whistleblowers by unanimously ruling (in Universal Health Services, Inc. v. U.S. et al. ex rel. Escobar et al.) that FCA liability can be predicated on a theory of “implied certification.” The Supreme Court’s decision means that FCA whistleblowers do not have to prove that the government contractor actually billed the federal government for non-existent services or unnecessary services in order to prevail in an FCA qui tam action. Rather, FCA whistleblowers can prevail by simply proving that the government contractor failed to comply with the “material” term(s) and requirement(s) of the government contract. Specifically, the Supreme Court weighed in on the First Circuit Court of Appeals’ decision in United States ex rel. Escobar v. United Health Services, Inc. While the Supreme Court agreed with the First Circuit’s decision that “implied certification” is a viable theory of FCA liability, the Supreme Court ultimately vacated the First Circuit’s decision in Escobar citing that the “materiality” standard articulated by the First Circuit is too broad. The Supreme Court clarified that in order to prevail on an implied certification theory of FCA liability, an FCA whistleblower is behooved to allege that the government contractor’s implicit certification was false to the point where had the government known about the non-compliance, it would not have paid the claim. In Escobar, the relators alleged that a mental health center’s grossly inadequate staff supervision and patient care lead to the death of their daughter. In considering the allegations presented, the Supreme Court suggested that if the government contract with United Health Services (UHS) mental health center made clear that proper staffing was a condition of payment, and if UHS falsely implied to the government that it was complicit with the contract’s staffing requirements in order to get paid, then UHS is exposed to a viable FCA qui tam action. Counsel for the relators in the Escobar case expressed confidence that the FCA whistleblowers will ultimately prevail because the requirements UHS violated were “material” under the Supreme Court’s definition. The Supreme Court’s ruling in UHS v. Escobar confirms that the FCA is arguably the most effective whistleblower law in the US to prevent fraud against the federal government. Since 2009, US taxpayers have recovered over $29.5 billion from government contractors committing fraud. The Law Offices of Elizabeth “Booka” Smith, LLC represents FCA whistleblowers. If you have knowledge or information about a company submitting fraudulent claims for payment on a government contract, CONTACT US to schedule an appointment to discuss potential FCA liability and your best course of action.

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May 27, 2016: SOX Whistleblower Retaliation Claims Bolstered by Recent DOL Decision

On March 30, 2016, the U.S. Department of Labor’s Administration Review Board (ARB) entered its decision in the case of Dietz v. Cypress Semiconductor Corp. (ARB No. 15-017), ruling in favor of Timothy Dietz, a Sarbanes-Oxley (SOX) Act whistleblower who alleged that he was given unfavorable performance reviews and was ultimately forced to resign his employment because he internally protested that the company’s bonus plan was bogus. Mr. Dietz complained about the company’s bonus plan because the plan failed to disclose in offer letters to its employees that the “bonus” plan actually required compulsory salary reductions. The Dietz decision is favorable to SOX whistleblowers in at least two respects. First, the ARB’s decision in Dietz bolsters prior court and agency decisions holding that SOX whistleblowers are not required to explicitly use the words “fraud” or “fraudulent” or to specifically connect the fraudulent scheme to the use of mails or wires, in order to be protected by SOX. Second, the ARB’s decision in Dietz states that a SOX whistleblower who resigns because it is clear to him or her that firing is imminent may be considered to have been constructively discharged and thus protected by SOX. The ARB explained that in cases where the employer has communicated to the whistleblower employee that he or she is about to be terminated, i.e. “the writing is on the wall and the axe is about to fall,” the employee is free to resign and file a SOX retaliation claim – the employee does not have to be fired. The Law Offices of Elizabeth “Booka” Smith, LLC represents executive employees of publicly held companies that are privy to SOX violations by the company and either wish to expose the violations, or have already done so. If you are a current or former employee of a publicly held company and have been retaliated against by your company for complaining about or reporting potential SOX violations, or if you are simply privy to information suggesting that your company is in violation of SOX and are wondering what you should do with that information, CONTACT US to schedule an initial consultation to evaluate potential representation.

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March 16, 2016: OHSA Issues Final Procedural Rules for Dodd-Frank Whistleblowers

On March 16, 2016, the Occupational Safety and Health
Administration (OSHA) issued final procedural rules for Dodd-Frank
Whistleblowers. OSHA is the agency responsible for processing Dodd-Frank whistleblower retaliation claims filed under the Consumer Financial Protection Act (CFPA). The OSHA’s final regulations provide that a
complaining employee is protected under the CFPA whistleblower provisions as
long as the employee has both a subjective, good faith belief and an objectively
reasonable belief that he or she has been fired or otherwise retaliated against
in violation of the CFPA. The final regulations state that the complainant must
file their complaint within 180 days after the retaliatory decision has been
both made and communicated to the employee. The OSHA’s final regulations
provide specific time-frames within which the complaint must be investigated,
decided, reported and reviewed. The final regulations also note that in the
event 210 days pass and there is still no final administrative decision, then
the complainant may file his or her claim in federal district court. The
regulations also note that the complainant may file his or her claim in federal
district court within 90 days of receiving an initial agency written decision
on their complaint, as long as no final decision has been issued. The Law
Offices of Elizabeth “Booka” Smith, LLC handles Dodd-Frank whistleblower
retaliation complaints before the OSHA and USDOL and also in federal district
court. If you are an employee who has been retaliated against by your employer
for blowing the whistle on what you reasonably believe are violations of the
CFPA, CONTACT US to schedule an initial consultation to evaluate your case and
to discuss potential legal representation.

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November 16, 2015: SEC Annual Report Reveals $37M in Bounty Awarded to SEC Whistleblowers in FY Ending 9/30/2015

On November 16, 2015, the U.S. Securities and Exchange
Commission released its Annual Report revealing that in the last fiscal year
(ending 9/30/2015) SEC Dodd-Frank Whistleblowers were paid out roughly $37M in
bounty awards. The SEC bounty program, which was created by the Dodd-Frank Act
of 2010, requires the SEC to pay bounties to eligible whistleblowers who provide
the SEC with information that leads to an enforcement action resulting in over
$1M in combined sanctions. Under Dodd-Frank, the SEC is required to award
successful whistleblowers a minimum bounty of 10% of the total sanctions collected.
The SEC is allowed to exercise its discretion to award up to 30% in bounty in
cases where the whistleblower more substantially enhanced the enforcement
action. The SEC Annual Report notes that 3,900 reports were filed this past
fiscal year, and 120 whistleblowers requested bounty awards. The SEC confirmed
that not all bounty seekers received awards and added that “[i]n general, the
more specific, credible and timely a whistleblower tip, the more likely it is
that the tip will be forwarded to the [SEC] enforcement staff.” The number of
reports is up 8% from the prior fiscal year. The SEC attributes the increase in
tips to an upswing in complaints about corporate disclosures and financials, as
well as trading and pricing issues on unregistered securities. If you believe
your employer may be violating the SEC rules and regulations, and/or the
Foreign Corrupt Practices Act, CONTACT US to schedule an initial consultation
to evaluate the likelihood of receipt of a bounty award and to discuss legal
representation designed to maximize the amount of any bounty award.

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October 19, 2015: Texas Court Denies Fluor's Motion to Dismiss FCA Whistleblower Retaliation Lawsuit

On October 19, 2015, the U.S. District Court for the
Southern District of Texas denied government defense contractor Fluor
Intercontinental Inc.’s motion to dismiss a Section H False Claims Act (FCA) whistleblower
retaliation lawsuit filed by three former Fluor employees. The three
plaintiffs, who worked for Fluor in Afghanistan, allege that they were
wrongfully terminated after internally reporting a fraudulent scheme designed
to conceal and cover up lost or stolen government property in
order to avoid liability under a property services contract with the U.S. Army.
In the written court decision denying dismissal of the lawsuit, Judge Kenneth
Hoyt cited a 2011 Fifth Circuit decision (U.S.
ex. rel. Patton v. Shaw Servs., L.L.C.) for the proposition that an FCA
Section H retaliation plaintiff must show that: (1) he or she engaged in
“protected activity” under the FCA; (2) the employer knew the employee engaged
in protected activity; and (3) the employer took adverse action because of it. Judge
Hoyt concluded that the former Fluor employees sufficiently pleaded all three
elements in their legal complaint against Fluor. Specifically, Judge Hoyt ruled
that: (1) by internally reporting their concerns that Fluor was lying to the
government in order to escape liability on a government contract the plaintiffs
did engage in protected activity; (2) by threatening Fluor that they would
report any losses “as required by the Government,” the plaintiffs put Fluor on
notice that they were engaging in protected activity; and (3) the plaintiff’s
allegations that Fluor threatened to sue them for slander, subjected to them to
a hostile work environment, denied them the proper resources to do their jobs, denied
them promotions and instead demoted them, and ultimately terminated them, met
the final causation element of the three part Section H test. If these former
employees prevail in their Section H case, they will be entitled to
reinstatement to their jobs. They will also recover double back pay with
interest plus special damages including recovery of litigation costs and attorneys’
fees. The Law Offices of Elizabeth “Booka” Smith, LLC represents plaintiffs in
Section H FCA lawsuits. If you believe your employer may be violating the FCA
and are wondering how best to report your concerns and also secure your legal
rights, or if you have already reported your concerns and as a result are
experiencing retaliation in the workplace, CONTACT US to schedule an initial
consultation to evaluate potential representation.

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July 2015: Security Exchange Commission Clarifies Scope of Employee Job Protection under the Dodd-Frank Act

In Section 922 of the Dodd-Frank Wall Street Reform and Consumer Protection Act of 2010, Congress amended the Securities Exchange Act to add Section 21F, entitled “Securities Whistleblower Incentives and Protection.” Section 21F established a series of new incentives and protections for individuals to report violations of federal securities laws. The incentives and protections take essentially three forms: (1) monetary awards for providing information; (2) heightened confidentiality assurances; and (3) enhanced employment retaliation protections. In the wake of the addition of Section 21F there was debate about whether an employee had to externally report an alleged securities law infraction to the SEC in order to receive enhanced retaliation protections under Dodd-Frank. In July, 2015, the SEC published a formal interpretation of Section 21F which makes clear that an employee who reports internally to their employer (e.g., to a supervisor, compliance official, or other person working for the company that has authority to investigate, discover, or terminate misconduct) an alleged infraction of securities laws is entitled to retaliation protection under Dodd-Frank. See 17 C.F.R. Part 241 (“Under our interpretation, an individual who reports internally and suffers employment retaliation will be no less protected than an individual who comes immediately to the Commission.”). The SEC reasoned that providing equivalent retaliation protection to internal and external reporters removes a potentially serious disincentive for employees to first alert the company to the alleged securities law infraction before going to the SEC. The Law Offices of Elizabeth “Booka” Smith, LLC routinely represents executives in the financial sector who harbor concerns that their company may be playing “fast-and-loose” with SEC rules and regulations. If you harbor such concerns and are debating whether and how to report your concerns, or, if you previously reported your concerns and as a result experienced retaliation in the workplace, CONTACT US to schedule an initial consultation to evaluate potential representation.

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