Articles Posted in Whistleblower/Qui Tam

Over $1 billion of U.S. taxpayer money was defrauded by Public Warehousing Co. (PWC) according to recent whistleblower lawsuits now being pursued by the Department of Justice. According to one lawsuit filed under U.S. qui tam provisions, the Kuwait-based company, which has been doing business as Agility since 2006, knowingly through a series of schemes overcharged the U.S. government.

As the principal food supplier to the U.S. military in Iraq, PWC filed false invoices and failed to pass discounts along to the federal government. Monday, the Department of Defense suspended PWC’s ability to receive new government contracts, although the company’s present multibillion food contracts will continue to be honored.
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In Tennessee the answer is no; An employer may not discharge or terminate an employee for refusing to participate in or remain silent about illegal activities.

In Tennessee, the general rule is that most employees may be fired at any time-for any reason or for no reason at all-under what is known as the at-will employment doctrine. However, Tennessee recognizes a public policy exception to the at-will employment doctrine. An employer may not discharge an employee in a manner that violates a clear public policy. An employee has a cause of action-in other words, the employee may sue-for retaliatory discharge when the motivation for the discharge violates public policy.

In order to be succesfull on a claim for retaliatory discharge and employee must show the following:

(1) that an employment at will relationship existed;
(2) that the employee was discharged;
(3) that the reason for the discharge was that the employee attempted to exercise a statutory or constitutional right, or for any other reason which violates clear public policy, including refusing to participate in or remain silent about illegal activites; and
(4) that a substantial factor in the employer’s decision to discharge the employee was the employee’s exercise of protected rights or compliance with clear public policy.
If an employer is found liable for the retaliatory discharge of one of their employees, the employer may be liable for all actual damages suffered by the employee as well as punitive damages.

In addition to suing an employer for retaliatory discharge, Tennessee has enacted the Tennessee Public Protection Act. This act clearly states “No employee shall be discharged or terminated solely for refusing to participate in, or for refusing to remain silent about, illegal activities”. Note the language is different under the statute than in the retaliatory discharge claim in that to prevail under this statute; an employee must be able to prove they were discharged solely for refusing to participate in, or refusing to remain silent rather than the action playing only a substantial factor in the termination. Should an employee prevail under this statute, they would be entitled to recover their actual damages as well as attorney fees and the costs of the lawsuit.
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The Department of Justice is to receive a settlement of $8.3M thanks to qui tam whistleblowers. And to show its thanks, per the qui tam provisions of the False Claims Act, the two employees who reported the hospital’s Medicare fraud (called “relators”) will receive up to 15-25% of these recoveries, or approximately $1.4 million.

The whistleblower lawsuit alleges these hospitals based certain healthcare decisions on financial gain rather than medical reasons when treating Medicare patients. This allowed the hospitals to deliberately overcharge the government, through Medicare, for routine, minimally-invasive back surgery.

From 2000 to 2008, according to the whistleblower lawsuit, Medicare patients who went in for kyphoplasty, a kind of spinal surgery to treat certain spinal compression fractures, were unnecessarily kept at the hospital overnight and billed as inpatient to boost the hospitals’ revenues. According to whistleblowers in the government lawsuit, kyphoplasty is a minimally invasive surgery that can safely be performed as an outpatient procedure in most cases. A few hours of successful surgery, patients are capable of walking unassisted. Rather than save taxpayers money, these six hospitals, according to the qui tam lawsuit, profited by thousands of dollars, and U.S. taxpayers bilked by thousands of dollars, each time Medicare was fraudulently billed for what amounts to unnecessary inpatient surgery.

The breakdown of the $8.3 million for fraudulent Medicare billing is as follows:
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In light of the new Steven Soderbergh movie The Informant! starring Matt Damon as real-life (though no role model) corporate whistleblower Mark Whitacre, I’d like to revisit a topic I’ve blogged about on our sister Tennessee Law Blog for my contribution to this week’s Tennessee Employment Law Blog, that workplace law topic being TN qui tam (whistleblower) lawsuits.

The False Claims Act’s qui tam provision goes back to the Civil War when Abraham Lincoln saw the Union being bled to death by government contractors audaciously bilking the government. President Lincoln saw this theft of tax dollars as a national threat, understanding that these financial hemorrhages could cost them the war. What the qui tam provision allows, both under federal and Tennessee False Claims Act laws, is for the whistleblower to share in the portion of the moneys the government recovers. In federal funds fraud cases, that can be up to 30% of the total damages. In Tennessee whistleblower cases, that can be up to 33%.
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