Today the Fourth Circuit U.S. Court of Appeals in Richmond, Virginia, issued a long-awaited decision upholding the seal provision of the False Claims Act (FCA), 31 U.S.C. § 3730(b)(2). The decision is a victory for whistleblowers who depend on the seal provisions to protect themselves from retaliation and to preserve evidence that might be destroyed if fraudsters learn of the impending government action against them. The decision lets stand a 2009 decision to dismiss a suit brought by the American Civil Liberties Union (ACLU), OMB Watch and the Government Accountability Project (GAP). Now is the time to urge these three organizations to accept this decision and stop this misguided litigation.

The FCA is the most powerful whistleblower protection law and America’s most successful tool against fraud. It allows whistleblowers to bring claims on behalf of the government to recover damages for fraud committed by government contractors and grant recipients. Last year alone, the U.S. government recovered over $3.1 billion as a result of FCA claims filed by whistleblowers under this law. Dep’t of Justice, False Claims Act Statistics (Nov. 23, 2010). Since 1986, the government has recovered more than $27 billion. Whistleblowers have filed 63% of FCA cases since 1987. While whistleblowers filed only 8% of FCA matters in 1987, they filed 80% of FCA matters in 2010.

The “seal” is a key provision of the FCA’s success. Whistleblowers must initially file their FCA claims “under seal,” as the law has required since 1986. This provision permits employees to confidentially file their claims, without having to expose their identities to their employer or other companies that may be hostile to hiring workers who blow the whistle while the government investigates their claim during the seal period. The FCA provides that the seal will prevent public disclosure of the suit for 60 days while the federal government decides whether to intervene in the case.  The government can request an extension of the time for this seal, or move to stay the case under 31 U.S.C. § 3730(c)(4). The courts determine if the extension or stay is in the public interest. These fraud schemes are often complex and usually require more than 60 days to investigate them. However, at the end of the seal period, the court must unseal the case and the case file becomes pubic when the seal expires.

Continue Reading 4th Circuit upholds the FCA’s seal, 2-1; Urge ACLU, OMB Watch and GAP to stop here

The Fourth Circuit U.S. Court of Appeals in Richmond, Virginia, issued an opinion yesterday that denies protection to employees who file retaliation claims under the False Claims Act (FCA). The three judges ignored the friend-of-the-court brief I submitted that argued how the plain language of the FCA protects all employees who file claims, including claims of retaliation, and how it is in the public interest to protect such whistleblowers.

Jason Mann began working for Heckler & Koch Defense, Inc. (HKD), in 2007 as Manager for Law Enforcement Sales. In 2008, HKD submitted a bid to sell rifles to the Secret Service. The job order called for rifles with “ambilevers” that would allow them to by used by right-handed or left-handed agents. HKD, however, did not have ambilevers, but submitted its bid anyway. HKD rifles also lacked a two-stage trigger. HKD stood to make over 30% profit on the sales. Mann expressed concern about the defects to his supervisor, and began investigating the issue. HKD’s general counsel then announced that Mann should not expect to continue working for HKD. HKD’s CEO ordered all personnel not to cooperate with Mann’s investigation. Mann was placed on administrative leave, denied access to the building, and lost access to his email. HKD’s own investigation found that management had violated federal acquisition rules. On June 11, 2008, Mann filed a complaint in federal court alleging that HKD engaged in retaliation against him in violation of the FCA. The Secret Service rejected HKD’s bid. On July 17, 2008, HKD claimed that Mann had helped a small police department acquire machine guns. It fired Mann using the machine gun issue as its basis.

Continue Reading 4th Circuit says FCA gives no protection for filing retaliation claims

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Today the Fourth Circuit U.S. Court of Appeals partially reversed the dismissal of a whistleblower’s lawsuit under the False Claims Act.  In U.S. ex rel. Elms v. Accenture, LLP, No. 07-1361 (July 22, 2009), the court let stand the dismissal of the qui tam fraud claim, but reversed the dismissal of Elm’s retaliation claim. The key difference was in the pleading standards.
Continue Reading Fourth Circuit’s partial reversal highlights the role of pleading standards

A few federal judges have been reluctant to follow a provision in the 2002 Sarbanes-Oxley (SOX) law that allows corporate fraud whistleblowers to have a de novo trial in federal court. One judge in Maryland ordered a SOX case back to the Department of Labor’s Administrative Review Board (ARB) saying that the de novo provision was “absurd.”  Yesterday, I filed an amicus brief with the Fourth Circuit Court of Appeals explaining why this is the law, and why it is not “absurd” to follow the law.


Continue Reading Brief: It’s not “absurd” to follow SOX law.

The Fourth Circuit U.S. Court of Appeals has affirmed an administrative appeal decision that leaves corporate whistleblower Stacy Platone out in the cold.  The December 3, 2008, opinion affirms a decision of the U.S. Department of Labor’s Administrative Review Board that took away Platone’s order from an Administrative Law Judge.  The Court held that under the Sarbanes-Oxley (SOX) employee protection, whistleblowers have to be specific about their allegations of fraud to be protected from retaliation.


Continue Reading Fourth Circuit leaves SOX whistleblower out in the cold