Fraudsters take advantage of a crisis, even when lives are at stake. This type of misconduct is why America’s first two whistleblower laws were born during national emergencies. Conduct that undermined the war effort during the American Revolution sparked the passage of the first whistleblower law. Likewise, the False Claims Act, now viewed as America’s most successful whistleblower law, was signed into law by President Abraham Lincoln during the height of the U.S. Civil War.
President Lincoln signed the legislation into effect because corrupt defense contractors were selling defective products to the Union army, putting the lives of soldiers at risk. As explained by the Senate sponsor of the original 1863 law, a qui tam law designed to incentivize insiders to come forward and report wrongdoing was the “most expeditious way” to “bring rogues to justice.” Whistleblowing laws were born in crisis.
More recently, federal contractors were found liable under the False Claims Act for stealing from disaster sites, selling defective body armor to police, and providing deficient healthcare to Medicaid patients. As recently as March 3, 2020, the Justice Department announced a National Nursing Home Initiative, targeting abuses at nursing homes and advocating using the False Claims Act to police these abuses. The types nursing home of violations the government was seeking to stop by supporting whistleblower-triggered False Claims Act lawsuits is described in an article on Front Line Whistleblower News to include:
Failure to provide adequate staff for residents
Substandard hygiene and infection controls
Inadequate nutrition for residents
Improper use of physical or chemical restraints, including withholding of pain medication
Inadequate facility cleanliness
Thus, it should come as no surprise that fraudsters could undermine parts of the federal response to the Coronavirus crisis either by placing lives at risk or stealing from the taxpayers. Fraudsters have never hesitated to profit, even if their actions threatened the well-being of thousands of people. Consequently, it is essential for all healthcare workers, and others involved in protecting the public from the Coronavirus, to understand their right to expose frauds. One would hope that there would be no need for whistleblower protections during a national emergency. But history teaches the opposite. Fraudsters often prey on the weak and take advantage of a crisis.
The False Claims Act is the most potent weapon available to protect the American people from fraud during the Coronavirus crisis. But not all whistleblower disclosures are protected under that law. This article will outline protections available to front-line healthcare workers and others involved in fighting the Coronavirus.
Protections for Coronavirus Whistleblowers
There is no general federal law covering public health whistleblowers. Instead, a patchwork of federal and state laws cover federal, state, and private sector employees. Some of these laws are strong, and others weak. Some loopholes leave whistleblowers open to retaliation. Consequently, it is absolutely imperative for employees to understand their legal right to report wrongdoing in order to ensure that all such disclosures are protected. The laws covering health and safety whistleblowing are confusing, and the scope of protection is dependent whether there is government spending, on the state in which whistleblowers reside, who the whistleblower works for, and what a whistleblower is reporting.
The most powerful law covering Coronavirus whistleblowing are the qui tam provisions of the False Claims Act. This law is applicable due to the billions of dollars in federal funding that has been (and will be) allocated to fight the Coronavirus, and the massive federal spending on health programs such as Medicaid and Medicare. State and local government employees are covered under protections in the First Amendment (freedom of speech) and may also have coverage under state laws, including special state laws for healthcare workers. Private sector employees can primarily find coverage under the False Claims Act or under various state whistleblower laws or common law. Most federal employees are covered under the Whistleblower Protection Act, while employees within the Public Health Service are covered under the military whistleblower law.
The False Claims Act
The False Claims Act is the most powerful and successful whistleblower law. It has a robust anti-retaliation provision, and whistleblowers can qualify for monetary rewards. The law covers fraud in all federal government (and most state government) procurement and spending. This coverage includes the entire Medicaid and Medicare programs, which provide critical care for populations at high-risk for the deadly impact of Coronavirus. If a federally sponsored healthcare provider, contractor, nursing home, or hospital is not providing the level of care mandated under contract or by federal/state laws or regulations, they may be liable under the False Claims Act.
The qui tam provisions of the False Claims Act afford whistleblowers significant rights. First, the concept of qui tam permits whistleblowers to file lawsuits against corrupt contractors or those who are defrauding federally sponsored medical programs directly. The whistleblower can file the case “in the name of the United States,” and seek to enforce federal anti-corruption laws.
Second, the law requires that the whistleblower provide all of his or her evidence directly to the Department of Justice, the federal agency with the primary responsibility to investigate and prosecute corruption or misconduct in federal programs. Thus, the whistleblower's information is placed directly in the hands of federal agents best placed to hold anyone stealing from a Coronavirus related program, or improperly denying necessary medical treatments, fully accountable.
Third, the law incentivizes providing the federal prosecutors with strong evidence capable of securing a successful prosecution. A whistleblower can only obtain his or her reward if there is a successful case. The reward paid the whistleblower does not come from the taxpayer or a victim of the crime. Instead, the wrongdoer must pay fines and penalties. The government uses the monies paid by the wrongdoer to pay whistleblower rewards. Under the False Claims Act, if there is a successful prosecution, the whistleblower is lawfully entitled to an award of between 15% and 30% of the proceeds collected directly from the wrongdoer. These awards have provided essential compensation for whistleblowers who often face job-related retaliation, and further encourages the reporting of illegal conduct.
Finally, the False Claims Act has a strong anti-retaliation provision. If an employer retaliates against an employee for filing a qui tam action, or for attempting to enforce the provisions of the False Claims Act, the employee can file a discrimination lawsuit in federal court. If the case is successful, the employee is entitled to reinstatement, double back pay, special damages, and attorney fees and costs.
The U.S. Supreme Court held that the failure to provide required health services paid for by the government could trigger a False Claims Act qui tam lawsuit. This holding is especially relevant in the Coronavirus crisis, as many of the most at-risk citizens participate in government-sponsored healthcare programs. In Universal Health Services v. U.S. ex rel. Escobar, the Supreme Court found that a healthcare provider that did not use licensed physicians to perform medical services could be liable in a case in which a patient died. The facts in the Escobar case, outlined by the Court, are instructive as to how a claim for federal (or state) government payments can result in a False Claims Act case based on the failure to provide proper medical services:
“The alleged False Claims Act violations here arose within the Medicaid program, a joint state-federal program in which healthcare providers serve poor or disabled patients and submit claims for government reimbursement. . .. For five years, Yarushka Rivera, a teenage beneficiary of Massachusetts’ Medicaid program, received counseling services . . . Yarushka had an adverse reaction to a medication that a purported doctor at [the defendant’s facility] prescribed after diagnosing her with bipolar disorder. Her condition worsened; she suffered a seizure that required hospitalization. In October 2009, she suffered another seizure and died. She was 17 years old. . . The practitioner who diagnosed Yarushka as bipolar identified herself as a psychologist with a Ph. d., but failed to mention that her degree came from an unaccredited Internet college and that Massachusetts had rejected her application to be licensed as a psychologist. Likewise, the practitioner who prescribed medicine to Yarushka, and who was held out as a psychiatrist, was in fact a nurse who lacked authority to prescribe medications absent supervision.”
In reviewing the facts of this case, the Supreme Court explained how the False Claims Act liability could result from poor medical attention:
“Specifically, liability can attach when the defendant submits a claim for payment that makes specific representations about the goods or services provided, but knowingly fails to disclose the defendant’s noncompliance with a statutory, regulatory, or contractual requirement. In these circumstances, liability may attach if the omission renders those representations misleading.”
What is especially instructive about the Escobar case is not just how the False Claims Act can be used to empower insiders to report misconduct. It also reveals an underside of fraud, and how greed can impact health services, even when patient lives are at stake.
In a July 2018 statement about a whistleblower-triggered case concerning the sale of defective bullet-proof vests to police officers, the Department of Justice emphasized that it will aggressively use the False Claims Act to protect the safety of those whose job it is to protect the public. The statement came after ensuring that all the defective vests were off the market, and after obtaining millions in fines and sanctions. In no uncertain terms, the Department of Justice warned that selling defective products placing the health and safety of first-line responders at risk would not be tolerated:
“The Department of Justice will pursue those who attempt to fraudulently profit at the expense of the United States, particularly when the stakes are life or death,” said Acting Associate Attorney General Jesse Panuccio. “Bullet proof vests protect the brave men and women of our nation’s law enforcement community, and those who manufacture and sell these products have a solemn duty to ensure their safety and efficacy.”
"Fraudulently presenting false claims to the government regarding products intended to protect the lives of public servants is illegal and utterly unacceptable," said Carol F. Ochoa, Inspector General of the U.S. General Services Administration.”
“I again want to emphasize that marketing faulty protective gear to law enforcement officers who put themselves in the line of fire is an unconscionable act and a betrayal of trust,” said Jon Adler, Director of the Bureau of Justice Assistance. “Our unwavering priority is to protect our officers as they keep our communities safe.”
Senator Charles Grassley, the Chairman of the Senate’s Whistleblower Caucus, pointed to this case as an example of how the False Claims Act should work.
Based on the success of the False Claims Act, a majority of states have passed local versions of the law, covering state and local funding. Thus, many states have replicated these types of new and effective remedies that are available to whistleblowers under the federal False Claims Act on the state level. This replication ensures protection for all government-sponsored medical or health and safety programs from fraudsters. The Department of Health and Human Services Office of Inspector General, has reviewed all of the state False Claims Act laws and determined that 21 states have laws that provide equal or better protection than the federal law. These include California, Colorado, Georgia, Illinois, Maryland, Montana, New York, North Carolina, Virginia, and Washington. Another eight states have laws that are not as strong as the federal False Claims Act but still provide significant protections and rights. These include Florida, Michigan, Minnesota, and Wisconsin. Some cities also have False Claims Act laws, including Chicago, the District of Columbia, and New York City.
False Claims Act cases are filed “under seal” in federal court. Filing requirements for False Claims Act cases are very specific and require full compliance. Most courts require that a licensed attorney file a False Claims Act case, due to the impact these cases have on federal spending and programs. It is essential for any whistleblower considering filing a False Claims Act lawsuit to carefully review the rules governing the False Claims Act and its whistleblower reward qui tam provisions.
State Law Protections for Public Safety Whistleblowers
Most states protect medical professionals, including nurses, who raise health and safety issues. The National Nurses Union (NNU) published on their website an excellent survey of state laws covering health and safety issues. This website is available at: https://www.nationalnursesunited.org/whistleblower-protection-laws-for-healthcare-workers.
Also, most states have recognized the “public policy exception” to the employment-at-will doctrine. This exception generally holds that employers cannot fire employees if their discharge would be counter "public policy." Blowing the whistle on public health and safety matters or patient care is generally considered protected under the public policy exception. Still, you should review these rules on a state-by-state basis.
Constitutional Protections for State and Local Government Employees
Many states that have enacted whistleblower laws, or provide protections under the “public policy’ exception, apply these rights jointly to government employees and private sector employees. In addition to these state laws, there is an overarching federal law that provides whistleblower protections to state and local government employees. The Civil Rights Act of 1871, 42 U.S.C. § 1983, applies federal constitutional First Amendment free speech rights to state and local government workers. The U.S. Supreme Court held that these constitutional protections cover whistleblower disclosures on “matters of public concern.” Employees can file cases under the Civil Rights Act of 1871 regardless of the status of any state law.
The application of First Amendment to state and local government employees, including public health officials working in the states affected by Coronavirus, is complex. On the one hand, the rights afforded to state and local government employees under the Civil Rights Act of 1871 are very broad and highly effective. On the other hand, the type of speech covered is narrower than generally found in other whistleblower laws.
The 1968 Supreme Court decision in Pickering v. Board of Education was a landmark ruling giving state and local government workers First Amendment protections. That case protected a public-school teacher who wrote a letter to the editor highly critical of the actions of his local school board. The court held that First Amendment protections would apply to government employee speech on "matters of public concern," and ordered the teacher reinstated. Although there is no clear definition of “public concern,” every court reviewing the issue has held that reporting health and safety threats are "matters of public concern." Based on these precedents, state or local government public health officials or first-responders should be fully protected under the First Amendment if they lawfully blow the whistle on health and safety violations concerning the Coronavirus response.
In Lane v. Franks, the Supreme Court explained the importance of protecting speech on matters of public concern: "Speech by citizens on matters of public concern lies at the heart of the First Amendment, . . . This remains true when speech concerns information related to or learned through public employment. . . There is considerable value, moreover, in encouraging, rather than inhibiting, speech by public employees. For '[g]overnment employees are often in the best position to know what ails the agencies for which they work.'"
Under the Civil Rights Act of 1871, state and local government employees can file "tort" lawsuits in federal court. If they prevail, they can obtain injunctive relief (reinstatement), back pay, compensatory damages, punitive damages, and attorney fees and costs. They also have the right to a trial by jury.
But even if speech is of "public concern," it can lose protection if it is disruptive. In Pickering, the Supreme Court adopted a "balancing test" to determine whether the method, manner, and content of a public employee's speech should be protected. "The problem, in any case, is to arrive at a balance between the interests of the [whistleblower], 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," the Court held. This “balancing test” is applied on a case-by-case basis.
The final issue concerns where a whistleblower can report wrongdoing. In Garcetti v. Ceballos, the Supreme Court, by a 5-4 vote, the Court significantly narrowed the scope covering the persons to whom a whistleblower could make a constitutionally protected disclosure of wrongdoing. The Court held that most internal disclosures by government workers to their supervisors would not be protected. The majority decision in Garcetti held that constitutional speech protections did not cover the whistleblower "when he went about conducting his daily professional activities, such as supervising attorneys, investigating charges, and preparing filings." Thus, writing an internal memo expressing concerns about violations of law was not protected. The Court reasoned that this internal disclosure was simply "a task” the whistleblower “was paid to perform."
The court drew a sharp distinction between speech by a public employee made as part of their official duties (generally not protected) and speech that a government employee made as a "citizen," generally made outside of work, such as a statement to the press, testimony, or a complaint about the operations of government made outside of any chain of command.
The Garcetti decision created confusion as to where employees should go to report wrongdoing. Under Garcetti, state and local government employee whistleblowers have more rights when they report violations to the press, a state or local elected official, or even the federal government; then, they do if they disclose to their chain of command. It is critical to discuss precisely how to blow the whistle, and to whom, with an attorney before making a disclosure, as employee rights under the First Amendment are very strong, and should not be forfeited simply because an employee decided to tell his or her boss about the violation.
Protections for Federal Employees
The Whistleblower Protection Act (“WPA”) is the primary law covering most federal employees. It has a specific provision protecting disclosures of “a substantial and specific danger to public health or safety.” This provision does not apply to speculative dangers but covers credible threats to the public's safety.
The web pages of the Office of Special Counsel and the Merit Systems Protection Board (MSPB) explain the rules governing cases under the WPA. The Office of Special Counsel has published FAQs covering federal employee whistleblowing.
The WPA permits most federal employees who allege whistleblower retaliation to file a retaliation case either directly to the Office of Special Counsel, or for significant cases, straight to the Merit Systems Protection Board. The law permits hearings before an Administrative Judge and for review of cases by the MSPB. The U.S. Courts of Appeals hears the appeals of these cases. If a whistleblower prevails in a retaliation case, they are entitled to reinstatement, back pay, compensatory damages, and attorney fees and costs.
Federal employees who work as Public Health Service Commissioned Corps ("PHS") Officers play a vital role as key employees within federal public health programs. Thousands of employees within the Centers for Disease Control are Commissioned Officers. The Public Health Service's Commissioned Corps employees are covered under the whistleblower law that applies to the military. The Defense Department's Office of Inspector General published an explanation of these protections, which are significantly less than those afforded to other federal employees or state and local employees.
The persons or offices to which PHS Commissioned Officers may make a protected disclosure are limited to the following:
A Member of Congress;
An Inspector General;
A member of a Department of Defense audit, inspection, investigation, or law enforcement organization;
Any person or organization in the chain of command; or
Any other person or organization designated pursuant to regulations or other established administrative procedures for such communications.
To be protected the whistleblower must “reasonably” believe that his or her disclosure “constitutes evidence of any of the following: (A) A violation of law or regulation . . . Gross mismanagement, a gross waste of funds, an abuse of authority, or a substantial and specific danger to public health or safety.”
Whistleblowers must file retaliation complaints with the Inspector General within 1-year of the alleged discriminatory action.
The PHS whistleblower law is extremely weak. Unlike the WPA, it does not guarantee a right to a hearing and has no provision for federal court appeals. Damages are not defined, and attorney fees are not included in the law. The PHS regulations implementing the military whistleblower law within the Public Health Service are outlined in Commissioned Corps Directive 121.06.
The failure of Congress to enact a comprehensive whistleblower law covering issues related to public health and safety is a major loophole in federal protections. Consequently, any employee wishing to report violations of patient safety, major public health issues, or misconduct in the response to the Coronavirus crisis must rely on a patchwork of laws, some weak and some strong. Some employees will fall through the cracks.
When possible, whistleblowers should use the False Claims Act to report allegations of fraud. The False Claims Act qui tam law permits employees to file their whistleblower lawsuits under “seal,” i.e., confidentially in federal court. The Department of Justice (often in conjunction with other responsible agencies of the federal government) investigates the allegations filed under seal. Thereafter the federal government must make a decision whether or not to pursue the fraud case. But even if the government refuses to pursue the fraudster, the whistleblower has the right to try to hold the fraudster accountable. Whistleblowers are entitled to monetary rewards of between 15-30% of the monies recovered from the wrongdoer that is based the original information they provided to the government. The remaining monies recovered from the fraudsters goes back to the United States and the taxpayers. There is also a strong anti-retaliation provision that entitles a wrongfully discharged whistleblower to double back pay.
Most significantly, the False Claims Act requires that the whistleblower allegations be provided to the federal law enforcement officials who have the responsibility to investigate and prosecute the underlying misconduct. Receiving insider-evidence of fraud has proven to be the most effective method for law enforcement officials to learn of the misconduct, stop it, and hold the wrongdoers accountable. It is imperative to prosecute any company or individual who seeks to illegally profit from the Coronavirus crisis to the fullest extent of the law. Whistleblowers are needed to detect these fraudsters and provide the government with the evidence necessary to put them in jail and strip them of their ill-gotten gains.
Ben Kostyack also contributed to this article.