Wednesday, June 25, 2014

Intentional or Sustained Violations Make the Best Whistleblower Reward Claims


Several laws exist to empower the federal government to recover funds owed to it. These laws range from the well-known (the False Claims Act and the Dodd-Frank Act), to the obscure (the Financial Institutions Anti-Fraud Enforcement Act). Each law has specific requirements, but every one of them provides a reward to whistleblowers who alert the government to the wrongdoing.

Some of the laws -- the IRS whistleblower program being the foremost example -- cover violations whether they are intentional or not. A whistleblower can get a share of any qualifying underpayment regardless of whether the delinquent taxpayer intended to defraud the government or simply miscalculated.

This past fall, I had the opportunity to hear Stephen Whitlock, the director for the IRS’s whistleblower office, talk about what the government looks for in a successful whistleblower reward claim.  Mr. Whitlock clarified that, in practice, the government looks for intentional wrongdoers, not people who accidentally run afoul of the law.

Earlier this month, Assistant Attorney General Stuart Delery confirmed that point at the American Bar Association's 10th National Institute on the Civil False Claims Act and Qui Tam Enforcement. Mr. Delery touted the U.S. Department of Justice’s “renewed emphasis” on non-monetary settlements.

As explained by Mr. Delery, the Department of Justice has focused on remedies that will strengthen an offending company’s compliance and remediation in addition to recovering large monetary settlements. The agency has done this to ensure that companies do not become repeat offenders.

Mr. Delery’s statements confirm what Mr. Whitlock was saying this past year: the government will prioritize whistleblower claims that involve sustained, intentional, or reckless wrongdoing. A single violation is unlikely to get much attention.

Still, there are numerous factors that the government considers when deciding to take a whistleblower disclosure to the next level. If you know of fraudulent claims made to the government, or if you have suffered retaliation for identifying potential false claims, you should contact an experienced whistleblower attorney to understand your rights.

By Dallas Hammer

Monday, June 23, 2014

One Push-Up Short of an FBI Agent Career


After the terrorist attack of 9-11, Jay Bauer decided that he wanted to become an FBI Special Agent. He had Bachelor’s Master's, and Ph.D. degrees.  At age 35, he was accepted into the New Agent Training Program, a rigorous, 22-week course with academic, firearms, physical/defensive tactics, physical fitness, and practical applications/skills training.  Bauer excelled in the training, and was selected as “class leader” and “class spokesperson” to represent the class at graduation. 

But there was one problem: Bauer could only do 29 pushups out of the required 30.  The requirement for female trainees was 14 pushups.  Being one pushup short of the male requirement, Bauer flunked out of New Agent Training and did not become a Special Agent. Instead, he became an FBI Intelligence Analyst.

Bauer sued the FBI, alleging that the gender-based push-up criterion violated Title VII of the Civil Rights Act of 1964.  That is, he alleged that Title VII prohibits employers from using discriminatory standards on employment-related tests.  The FBI argued that the test was not discriminatory, because there are undeniable physiological differences between men and women, and the push-up standards simply reflected these differences to ensure that males and females were treated equally. 

The court acknowledged that if the FBI’s physical fitness test had used a single standard for both males and females, it would have an impermissible disparate impact on females.  But it concluded that just because men and women are different did not mean that all gender-normed fitness tests were permissible under Title VII. Rather, a fitness test must measure job-related skills and aptitudes. The push-up test measured the upper-body strength required for tasks such as lifting and pushing, but it did not focus on actual job tasks, such as carrying objects weighing a certain number of pounds for a certain period of time. In other words, it did not measure  “qualifications that affect an employee's ability to do the job.”  

In response, the FBI asserted several other arguments without success.  First, it argued that the push up test did affect an employee’s ability to do the job, in that  “those who are physically fit tend to be more productive, use less sick leave, and are better able to handle stressful situations.”  But the Court noted that once trainees graduated from the training course and became Special Agents, the FBI never again in their entire career tested their  physical fitness.  If, as the FBI asserted, physical fitness was essential to performing the tasks required of a Special Agent, then how was it that the FBI had no policy requiring that Special Agents maintain a particular level of fitness once they are actually on the job?  Thus, because the FBI maintained no minimum physical fitness requirements for incumbent Special Agents, the FBI was not able to persuasively argue that physical fitness actually related to the central mission of the FBI's business.

The FBI’s next argument was also unsuccessful.  It contended that the push-up requirement assured that trainees who entered the training program would be sufficiently physically fit to complete the training and not miss any of the important training classes due to injury.  But the court pointed out that this argument made no sense, because the push-up test was not an entry requirement; rather, it was a graduation requirement. Trainees went through the whole 22-week program regardless of whether they could do all of the push-ups.

Many employers, including other federal agencies, the U.S. military, state-and-local governments, and private-sector employers, use physical fitness tests with different passing scores for male and female candidates.  No doubt the government will appeal this decision, but cautious employers would be well-advised to revise their fitness criteria to test actual job tasks rather than an arbitrary number of repetitions of an isolated strength test.

Finally, wouldn’t it have made sense for the FBI to have a waiver program in place so that a highly qualified candidate would not be rejected for want of one push-up?

The case is Bauer v. Holder, No. 1:13-cv-93 (E.D. Va. June 10, 2014)

                 --This blog entry was prepared by Elizabeth L. Newman.  You may reach her at enewman@kcnlaw.com.


Former Cycling Champion Could Owe Millions for False Claims



Former Tour de France champion Lance Armstrong will testify under oath about his alleged use of illicit drugs today.
The testimony is part of a lawsuit brought under the False Claims Act. The suit alleges that Armstrong defrauded the U.S. government out of more than $40 million.
Armstrong received the funds from the U.S. Postal Service, which sponsored Armstrong’s cycling team, Tailwind. However, the suit alleges that Armstrong received those payments based on false claims related to Armstrong’s alleged use of performance enhancing drugs. Because the government may seek “treble damages,” if found liable, Armstrong could have to pay back around $96 million. (The actual sum could be more if not for the statute of limitations.)
However, the federal government did not initially discover the alleged fraud. Armstrong’s ex-teammate Floyd Landis first brought the suit in 2010, on behalf of the government. As a result, Landis could recover millions for bringing the violations to light.
Armstrong’s defense argued that the claim could not proceed because the Postal Service had investigated the doping allegations years earlier, but decided to take no action. However, U.S. Judge Robert L. Wilkins rejected the argument based on Armstrong’s repeated representations that he was innocent. If the allegations are true, Armstrong will not get off just because he successfully deceived the government.
The False Claims Act permits the federal government to sue for damages if it pays money based on fraudulent claims. However, the law includes a “qui tam” provision, which allows ordinary citizens with knowledge of the fraud to sue on the government’s behalf. For the trouble, the False Claims Act awards the whistleblower (known as a “relator”) a percentage of the government’s recovery. Moreover, the False Claims Act protects employees from retaliation for pursuing violations of the law.
If you know of fraudulent claims made to the government, or if you have suffered retaliation for identifying potential false claims, you should contact an experienced whistleblower attorney to understand your rights.

By Dallas Hammer


Thursday, June 19, 2014

Supreme Court expands free speech rights of public employees

In a landmark First Amendment case, the Supreme Court today significantly expanded the free speech protections for public employees. The Court limited the application of Garcetti v. Ceballos which held that statements made in the course of official duties are not protected. The Court declared that Edward Lane was acting as a citizen, and not as part of his normal job duties, when he testified under subpoena in the corruption trial of a state legislator.


Edward Lane worked as the Director of Community Intensive Training for Youth (CITY), a program of Central Alabama Community College (CACC). Lane discovered that Suzanne Schmitz, an Alabama State Representative on CITY’s payroll, had not been reporting to her CITY office. Schmitz wanted to continue in her no-show job. Lane reported his finding to CACC’s president and attorney. They warned him that firing Schmitz could have negative repercussions for him and CACC. Lane nevertheless did fire Schmitz. Schmitz then threatened to block state funding for CITY. 


In 2006, Lane testified to a federal grand jury about why he fired Schmitz. In 2008, the grand jury indicted Schmitz on charges of mail fraud and theft of federal funds. In 2008 and 2009, Lane testified under subpoena in two trials. The second trial resulted in a guilty verdict. Meanwhile, Steven Franks became president of CACC. He and Lane agreed that layoffs were necessary due to funding cuts. In 2009, Franks laid off 29 CITY employees, including Lane. Shortly thereafter, he recalled 27 of them, but not Lane. 


Lane sued Franks and CACC claiming that he was fired because of his testimony against Schmitz. The district court dismissed the case, saying in part that Lane’s testimony was part of his official duties. As such, it is not protected under the Garcetti v. Ceballos, 547 U.S. 410 (2006). The Eleventh Circuit affirmed, again relying on Garcetti.


The Garcetti decision was controversial when it was issued. Richard Ceballos was a deputy district attorney for the Los Angeles County District Attorney’s Office. Gil Garcetti was then the district attorney. Ceballos issued a memo recommending dismissal of a criminal case because a deputy sheriff made a false affidavit to get a search warrant. Ceballos was called by the defense to challenge that affidavit. Ceballos then claimed that he was reassigned, transferred and denied promotion on account of his disclosures. The Ninth Circuit held that Ceballos was protected by the First Amendment and Garcetti appealed. While Sandra Day O’Connor was a Supreme Court Justice, the Supreme Court could not issue a final decision on Garcetti’s appeal. In 2006 however, O’Connor retired. Justice Alito took her place. The Supreme Court decided to reargue the case so that Alito could participate. The final decision was 5-4 in favor of Garcetti and against Ceballos. Justice Kennedy, writing for the majority, said that Ceballos’ internal disclosures were part of his duties as an assistant district attorney and therefore should not be protected.


I have long criticized the Garcetti decision, but I also noted how its impact should not be as significant as others feared. How many workers really have blowing the whistle on misconduct as part of their job duties? 


In Lane’s case, the unanimous Supreme Court held that testifying under subpoena invokes the employee’s status as a citizen and the testimony is protected if it touches on matters of public concern. The majority opinion makes a number of sweeping statements that should be obvious from the text of the First Amendment, but are nevertheless helpful and refreshing:


  • Speech by citizens on matters of public concern lies at the heart of the First Amendment[.]
  • The First Amendment “assure[s] unfettered interchange of ideas for the bringing about of political and social changes desired by the people[.]”
  • Public employees do not renounce their citizenship when they accept employment, and this Court has cautioned time and again that public employers may not condition employment on the relinquishment of constitutional rights.
  • There is considerable value, moreover, in encouraging, rather than inhibiting, speech by public employees.
  • Government employees are often in the best position to know what ails the agencies for which they work.
  • The interest at stake is as much the public’s interest in receiving informed opinion as it is the employee’s own right to disseminate it.
  • [S]peech by public employees on subject matter related to their employment holds special value precisely because those employees gain knowledge of matters of public concern through their employment.
  • The importance of public employee speech is especially evident in the context of this case: a public corruption scandal.
  • Truthful testimony under oath by a public employee outside the scope of his ordinary job duties is speech as a citizen for First Amendment purposes. That is so even when the testimony relates to his public employment or concerns information learned during that employment.
  • Sworn testimony in judicial proceedings is a quintessential example of speech as a citizen for a simple reason: Anyone who testifies in court bears an obligation, to the court and society at large, to tell the truth.
  • When the person testifying is a public employee, he may bear separate obligations to his employer—for example, an obligation not to show up to court dressed in an unprofessional manner.But any such obligations as an employee are distinct and independent from the obligation, as a citizen, to speak the truth. That independent obligation renders sworn testimony speech as a citizen and sets it apart from speech made purely in the capacity of an employee.
  • The law requires “balanc[ing] . . . the interests of the [public employee], as a citizen, in commenting upon matters of public concern and the interest of the State, as an employer, in promoting the efficiency of the public services it performs through its employees.”
Applying these principles to Lane’s case, the majority opinion notes that “Lane’s ordinary job responsibilities did not include testifying in court proceedings.” In footnote 4, the majority also states, “We accordingly need not address in this case whether truthful sworn testimony would constitute citizen speech under Garcetti when given as part of a public employee’s ordinary job duties, and express no opinion on the matter today.” This is an issue that was before the Court in Garcetti, and one must wonder how much remains of the holding in Garcetti.


The majority also noted how the Unites States Solicitor General urged the Court to protect witnesses because the government needs them to testify in over a thousand public corruption cases each year. A denial of protection “would place public employees whowitness corruption in an impossible position, torn between the obligation to testify truthfully and the desire to avoid retaliation and keep their jobs.”


The majority also recapped the rule on what is a “matter of public concern.” Speech involves matters of public concern “when it can ‘be fairly considered as relating to any matter of political, social, or other concern to the community,’ or when it ‘is a subject of legitimate news interest; that is, a subject of general interest and of value and concern to the public.” The inquiry turns on the “content, form, and context” of the speech. Also, “a stronger showing [of government interests] may be necessary if the employee’s speech more substantially involve[s] matters of public concern.”


The majority recognized that its holding today represents a significant change in the law. For this reason, it held that Franks himself would not be personally liable. He is entitled to “qualified immunity” because before today’s decision, he could not have known for sure how the courts would rule. The Eleventh Circuit, in particular, had not found public officials liable in circumstances such as Franks’.


Three justices wrote a short concurring opinion to emphasize that the decision in Lane’s case does not apply to all public employees, yet. “For some public employees—such as police officers, crime scene technicians, and laboratory analysts—testifying is a routine and critical part of their employment duties. Others may be called to testify in the context of particular litigation as the designated representatives of their employers. See Fed. Rule Civ. Proc. 30(b)(6). The Court properly leaves the constitutional questions raised by these scenarios for another day.” Even the three concurring justices do not see Garcetti as having answered this question. We can look forward to the day when another case will address the free speech rights of a law enforcement official who testifies as part of his or her duties. That case could set a new watermark for the scope of our First Amendment protections. The justices selected by a future president will make that decision. Elections matter.


All nine justices focused on how Ceballos submitted an internal memo about the deputy sheriff’s falsified affidavit. “The sworn testimony in this case is far removed from the speech at issue in Garcetti—an internal memorandum prepared by a deputy district attorney for his supervisors recommending dismissal of a particular prosecution[,]” the majority explained. They ignored how Ceballos also testified in court about that falsification. I must wonder how the justices would rule today on the actual facts of Ceballos’ case.


As before, First Amendment advocates must weigh a variety of factors in assessing the likely outcome of a public employee retaliation case. How important is the disclosure the employee is making? In Lane, the prosecution of a corrupt public official was important enough. In Garcetti, testifying for the defense about a dishonest deputy sheriff was not. How close is the disclosure to the employee’s official job duties? An assistant prosecuting attorney’s duties are too close to the disclosures of falsification. A college director’s duties are far enough away from the courtroom to justify protection. Employees who face retaliation for their disclosures still face a risk of losing, but today’s decision has pushed the balance closer to the side of protection.


The case is Lane v. Franks, No. 13–483. Congratulations to Lane’s attorneys, including Tejinder Singh of Goldstein & Russell here in Washington, and John Saxon of Birmingham, Alabama.

By Richard Renner

Friday, June 13, 2014

D.C. Bolsters Its Employee-Friendly Approach to Direct Evidence

Victims of employment discrimination in D.C. have a better chance of getting their day in court thanks to a decision issued recently by the U.S. Court of Appeals for the D.C. Circuit, Wilson v. Cox, 2014 WL 2457632 (D.C. Cir. June 3, 2014), in which the court reinforced its permissive interpretation of direct evidence. Designating evidence as “direct” is important, because introducing direct evidence generally entitles a plaintiff to a jury trial and requires the defendant to do more than “articulate a legitimate non-discriminatory reason” for its actions. Id. at 5 (citing Ayissi-Etoh v. Fannie Mae, 712 F.3d 572, 576 (D.C. Cir. 2013) (per curiam)).

In Wilson, the D.C. Circuit reversed a trial court’s summary judgment in favor of the employer. The Court reasoned that the employee had presented “direct evidence” of discrimination, which entitled the employee to a jury trial.

The plaintiff had obtained a job as a security guard at a retirement home when he was 69. Later, the plaintiff moved into the home, in part because he could continue working as a guard while enjoying the benefits of residency. Soon after, the home’s new CEO eliminated the resident work program; as a result, the plaintiff’s position was eliminated.

During a meeting with residents (including the plaintiff), the CEO allegedly said, “You didn’t come here to work, you came here to retire.” Further, the CEO was concerned that the older workers were falling asleep on the job. According to a witness, the CEO further believed that the older security guards were underperforming. The CEO allegedly said the issue “was that they were not doing their jobs properly, as from time to time they would be found asleep, which was not safe for a government agency in DC, what with all the threats since 9/11.”

The trial court determined that no reasonable factfinder could reach a judgment for the employee and ruled in the employer’s favor.

The court of appeals reversed and held that the CEO’s statements were direct evidence of discrimination that could sufficiently support a finding for the employee. The court reasoned that “[a] reasonable factfinder could conclude from those statements that a discriminatory intent motivated the decision to abolish the resident employee program and terminate [the plaintiff’s] employment.” (emphasis supplied). Critical to its analysis, the court found that the statements constituted direct evidence because, when viewed in the light most favorable to the plaintiff (the standard on summary judgment), it could be “interpreted” as “indicative of an inaccurate and discriminatory assumption . . . .”

The defendants argued that the statement did not directly exhibit age-based discrimination because it focused on retirement not age. Id. But the court responded that while the defendants could raise that argument at trial, “at the summary judgment stage, an alternative interpretation of that kind cannot overcome the need to draw inferences in the non-moving party’s favor.”

The court’s emphasis on inference and interpretation is important because other circuits have held that evidence is “direct” only if it would prove a material fact without resort to inference. See, e.g., Brown v. East Mississippi Elec. Power Ass'n, 989 F.2d 858, 861 (5th Cir. 1993). But this is a myth: reaching a conclusion about the “truth” always – without exception – relies on inference and assumption to some extent. See Richard K. Greenstein, Determining Facts: The Myth of Direct Evidence, 45 House. L. Rev. 1801 (2009).

In summary, Wilson has clarified and reaffirmed the law in the D.C. Circuit as it pertains to direct evidence in employment discrimination cases. To qualify as direct evidence, the evidence must meet only two criteria: 1) it must permit an inference of discriminatory bias, and 2) it must pertain specifically to the challenged employment action. At some point, the U.S. Supreme Court may have to decide which interpretation is correct.

Written by Dallas Hammer

Thursday, June 12, 2014

Becoming the Model Employer: EEOC Asks for Ideas to Eliminate Barriers Against Disabled Individuals


The 1992 amendments to the Rehabilitation Act of 1973 (“Act”) expanded the rights of federal employees with disabilities. As a result, the federal government is now subject to many of the requirements already established by the Americans with Disabilities Act of 1990 for the private sector.  Congress intended the Rehabilitation Act, as amended, to sweep away the judicial confusion regarding the federal government’s obligations to disabled individuals.  Broadly, the Act prohibits the federal government from employment discrimination based on disability and states loftily that the federal government “shall be a model employer of individuals with disabilities.”  Section 501 of the Rehabilitation Act; see also 29 C.F.R §1614.203(a).  Regrettably, the Act neglects to explain what federal agencies must do to comply with this obligation.

Hence, the U.S. Equal Employment Opportunity Commission (EEOC) recently began soliciting comments from the public on what precisely it means to be a model employer under Section 501 of the Rehabilitation Act.  The Advance Notice of Proposed Rulemaking is available at https://www.federalregister.gov/a/2014-11233, and the deadline to submit a response is 5:00 p.m. EDT on Monday, July 14, 2014.

The Oxford English Dictionary defines “model” as a “system or thing used as an example to follow or imitate[.]”  This is a high standard, and it follows that the revised regulations should tell us something about what society’s best expectations ought to be for the employer.  

Different states have begun work on accomplishing this task.  Ideas include instituting education and awareness training for supervisors, managers, and other decision makers; targeted recruitment and proactive outreach efforts to better inform the disability community of federal government opportunities; establishing internship programs; partnering with community-based organizations that serve disabled individuals to expand its recruitment pool; improving the accessibility of the employment application and hiring process for job seekers with a wide range of learning styles; and enhancing access to reasonable accommodations.  For more information, go to http://www.dol.gov/odep/categories/workforce/NTAR_Issue_Brief_5_States_Model_Employers.pdf

Reasonable accommodation is a frequent issue in legal disputes.  Many claims against employers consist of inefficiency, ineffectiveness, and lack of clarity during the interactive process that should follow a request for accommodation.  If the Agency sets up an oversight system that provides feedback to deciding officials (e.g., supervisors and managers), then there is room to grow.  A yearly reporting of management’s reasonable accommodation decisions, along with an explanation for each decision, and a chronicle of what was accomplished could provide valuable data regarding what measures are effective. 
The EEOC already has received 17 comments. 

Whatever direction it takes, clearing up the ambiguity surrounding the government’s “model employer” obligations under Section 501 of the Rehabilitation Act is critical.  Currently, federal agencies are not leaders on employment rights for disabled individuals.  You can help by submitting your ideas to the EEOC.  More information is available at http://www.eeoc.gov/eeoc/newsroom/release/5-15-14.cfm.

Written by Nina Ren