Overlawyered: Chronicling The High Cost Of Our Legal System

Posts Tagged ‘whistleblowers’

The state of False Claims Act litigation

The docket keeps expanding and Legal NewsLine is out with a story quoting me and others:

…“In recent years, you’ve seen some pushback from the business community, but given the record of congressional expansion, they’ll be doing pretty well if they can just keep Congress from expanding it further,” said Olson, who also founded and still runs the popular blog Overlawyered.com. …

The Department of Justice announced in December that it secured $3.8 billion in settlements and judgments from civil cases involving fraud against the government in 2013. According to the office, the amount represents the second largest annual recovery of its type in history and brings total recoveries under the False Claims Act to $17 billion since January 2009….

Olson explains that the business community’s growing discontent over the False Claims Act includes concerns over incentives for whistleblowers. In many cases, the whistleblower either participated in the misconduct, or knew about the misconduct but failed to inform their company.

He adds that in worse cases, whistleblowers intentionally ignored misconduct so damages would pile up and result in a “better bounty.”

“These are all incentives that are at odds with the wish that employees be ethical and loyal to their employers, and are also sometimes at odds with the object of minimizing fraud,” Olson said.

Much more, including more quotes from me, at the link; related Peter Hutt interview piece.

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February 3 roundup

  • “Class counsel in Facebook ‘Sponsored Stories’ case seeks to impose $32,000 appeal bond on class-action objectors” [Public Citizen, Center for Class Action Fairness]
  • The best piece on bar fight litigation I’ve ever read [Burt Likko, Ordinary Gentlemen]
  • Casino mogul Adelson campaigns to suppress online gaming; is your state attorney general among those who’ve signed on? [PPA, The Hill]
  • Foreign Corrupt Practices Act (FCPA): “Anyone who values the rule of law should be alarmed by the ADM enforcement action.” [Mike Koehler]
  • New FMCSA rules on length of workweek make life difficult for long-haul truckers [Betsy Morris, WSJ via Lee Habeeb and Mike Leven, National Review and more]
  • “It takes a remarkable amount of nerve to cobble together publicly available facts, claim you’ve uncovered a fraud on the government, and file a lawsuit from which you could earn substantial financial benefits.” [Richard Samp, WLF] Whistleblower-law lobby tries to get its business model established in West Virginia [W.V. Record]
  • Pittsburgh readers, hope to see you tomorrow at Duquesne [law school Federalist Society]

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“Whistleblowers coming from compliance departments”

Much more rewarding to act as a government informant than to help the employer address the problem: “Allegations of wrongdoing within a company often surface in the compliance department, which often is involved in internal investigations and receives employee complaints. Like other employees, compliance staff can under various statutes submit information on potential wrongdoing for whistleblower awards or claim retaliation for raising concerns about alleged wrongdoing.” [WSJ via CompliancEX]

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Fear of regulatory retaliation: ObamaCare and beyond

“According to CNN investigative reporter Drew Griffin, the White House is pressuring trade associations and insurance providers to keep quiet about the changes the Affordable Care Act is creating for some people’s health coverage plans. One industry official told CNN on the record that the White House is applying ‘massive pressure’ to combat the impression that the ACA is resulting in the cancellation of some plans.” [Mediaite]

This is not the first time, or the tenth, I’ve heard about regulated entities feeling pressure to shut up about things that might embarrass the regulators they answer to. These stories did not begin with the Obama administration and I don’t think they’ll end with it. Quite aside from whatever we think of ObamaCare itself, shouldn’t they disturb us? And can anything be done about it? Following media attention to the plight of “whistleblowers” in the workplace, lawmakers have created fairly elaborate procedures intended to identify and remedy cases of retaliation against federal employees who speak up about problems they notice, procedures that in some instances have also been extended to some private-sector employees. Should there be procedures aimed at unearthing and rectifying retaliation against regulated entities, too, when they blow the whistle? Or would that be too easily manipulated by regulated entities in search of profit, revenge, or point-making?

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Banking and finance roundup

  • Employer mandate not the only impractical reg being postponed: “IRS Delays Implementation of FATCA” [Paul Caron; earlier]
  • Foreign banks whipsawed betwen U.S. terrorism-finance liability and privacy laws in home countries [Daniel Fisher]
  • “NY Fed Official: Let’s ‘Facilitate’ The Seizure Of Underwater Loans” [Kevin Funnell]
  • “If anything, the data suggest [home] ownership … inversely correlated with political stability and rule of law.” [Michael Greve]
  • Revisiting the Randy and Karen Sowers structuring case [Kathleen Hunker, Bell Towers; earlier]
  • “Can we improve payday lending?” [Andrew Sullivan]
  • When if ever should the SEC pay bounties to attorneys to snitch on their clients? [Prof. Bainbridge]

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Public employment roundup

  • Report: California state psychiatrist paid $822,000, highway cop $484K in pay/benefits [Bloomberg News via Dan Mitchell]
  • “Florida Prison Guard Charged with $2.7 Million Workers’ Comp Fraud” [Insurance Journal]
  • Agitprop video from California Federation of Teachers is educational, if only in unintended ways [Katherine Mangu-Ward]
  • “California government employee unions spent nearly $100 million in the lead up to the November election” [Jon Coupal, Fox and Hounds] How San Bernardino went broke: a cautionary tale [Reuters]
  • “Taxpayers funding 35 six-figure union chiefs at Transportation Department” [Examiner]
  • Congress again strengthens legal hand of federal employees claiming whistleblower status [Paul Secunda] Mistrial in case of whistleblower group’s payment to government worker [WaPo]
  • “Binding Arbitration’s Threat To State And Local Governments” [Ivan Osorio, CEI]

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Chicago law firm benefits from tax whistleblowing

According to the retailers group [Illinois Retail Merchants Association], Mr. [Stephen] Diamond’s Chicago law firm, Schad Diamond & Shedden P.C., has filed no fewer than 238 lawsuits in recent years against retailers small and large, which in its view failed to collect said shipping-and-handling sales taxes. Since the suits have been filed under a “whistle-blower” section of law, the firm is entitled to as much as 30 percent of any recovered taxes as well as attorneys’ fees for its trouble. And because it’s often easier and cheaper for defendants to settle rather than continue to fight, Schad Diamond reportedly has pocketed millions of dollars.

The office of Illinois Attorney General Lisa Madigan says the whistleblower provisions were intended for use by insiders disclosing misconduct rather than by outsiders, while “Illinois Revenue Director Brian Hamer says [the wave of suits] ‘has given Illinois a black eye’ and victimizes those who have made only an ‘inadvertent’ mistake.” [Greg Hinz, Crain’s Chicago Business]

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Labor and employment law roundup

  • Maryland: “Montgomery County Police ‘Effects’ Bargaining Bludgeons Public Safety” [Trey Kovacs, CEI, earlier] Time to revisit “effects” bargaining for other employee groups too [Gazette]
  • “A New Whistleblower Retaliation Statute Grows Up: Dodd-Frank is the new Sarbanes-Oxley” [Daniel Schwartz]
  • Proposal for disclosure of “persuaders” would threaten many employers [Michael Lotito/The Hill, earlier]
  • Judge greenlights union suit challenging new Indiana right to work law [RedState]
  • “Discovery of Immigration-Status Denied in FLSA Case” [Workplace Prof]
  • “Same Song, Umpteenth Verse – No Discrimination, Retaliation Worth $2 Million” [Fox/Employer’s Lawyer; Ithaca, N.Y.]
  • NLRB on collision course with Indian tribal sovereignty [Fred Wszolek, Indian Country Today]

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Prosecution and police roundup

  • Forfeiture: “Defend the Right to Carry Cash and Travel Unmolested” [Eapen Thampy, Agitator]
  • Recent Japanese racketeering law, unlike our RICO, actually focuses on organized crime [Adelstein]
  • Sheriff’s flack to Fiona Apple: shut up and sing [Ken at Popehat]
  • Jimenez case: 99-year sentence, “substantial likelihood defendant was not guilty of this offense” [Jacob Sullum]
  • Conrad Black continues to speak out on barbarities of “prosecutocracy” [NY Sun]
  • “Are whistle-blowers the new IRS business model?” [Victor Fleischer, NYT DealBook]
  • “Minnesota Farmer Found ‘Not Guilty’ in Raw Milk Case” [Katherine Mangu-Ward, Reason]
  • Utah man shoots neighbor he thinks “telepathically raped” his wife, is ruled mentally fit for trial [CBS]

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Politics roundup

  • Visual representation of debate result (courtesy Chris Fountain) “Obama should have spent more time in court” [David Frum] “Can you imagine the rewards points we earned by paying for wars with the national credit card?” [@BCAppelbaum via @TPCarney]
  • Correcting the tax side of the debate: factory relocation, oil deductions, corporate jets [Daniel Mitchell, Cato-at-Liberty]
  • Race heats up for three Florida justices [Insurance Journal, earlier] Unions campaign for incumbent justices even as court deliberates on pension lawsuit [Sunshine State News]
  • Maybe Rep. Todd Akin isn’t the most unscientific member of the House Science Committee after all [TPM]
  • Yes, the HHS welfare work waiver is a real issue [WSJ editorial]
  • “Whistle-Blower Lawyers Throw Support Behind Obama” [NYT via FedSoc]
  • Michael Greve doesn’t hold back, tells us what he really thinks of Mme. Warren [Law and Liberty]

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