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Top Ten Whistleblower Developments of 2019

Posted  February 6, 2020

By any measure, 2019 was a Very Big Year for whistleblowers.  Our annual Top Ten lists identified 2019’s most significant financial recoveries by whistleblowers, as well as recoveries in enforcement actions at the federal and state level involving government procurement, healthcare, financial, tax, and other types of fraud.  But the numbers, as impressive as they are, can’t tell the full story of the impact that whistleblowers had in 2019.  Below, we highlight the year’s most significant developments in whistleblower law, government enforcement, and other areas of interest to whistleblowers.  These developments will have ongoing impacts, making this list not just a look backward, but also a look ahead.

  1. Ukraine Whistleblower.  Any discussion of the top whistleblower stories of 2019 has to begin with the anonymous government official who submitted a report under the Intelligence Community Whistleblower Protection Act, launching a Congressional investigation that lead to the impeachment of President Trump.  This unnamed individual tops the list of Whistleblowers of the Year, both for the historical impact of the impeachment, and for the attention brought to the critical role that whistleblowers play in bringing forth material evidence, the risks whistleblowers face, and the protections to which they are entitled.
  2. International expansion of whistleblower protections.  Around the globe, the European Union and a number of other jurisdictions adopted new whistleblower protection laws and regulations, rewarded whistleblowers, or otherwise legally recognized the importance of whistleblowers.  From our London office and elsewhere, Constantine Cannon attorneys regularly provide testimony and other support for such laws, and work with attorneys around the world to represent international whistleblowers.
  3. DOJ Launches Procurement Collusion Strike Force and sees Success with Other Fraud Task Forces.  In November, the Department of Justice announced the launch of an interagency partnership tasked with rooting out antitrust crimes and fraudulent conduct that undermines competition in government procurement and other government programs. As an exemplar of the work to be done by the Strike Force, DOJ cited the case, initiated by a Constantine Cannon whistleblower client, that recovered over $360 million in fines and penalties for bid-rigging and other collusive practices related to the U.S. purchase of fuel for military bases in South Korea.  Such interagency task forces have proven effective over the past year, with significant actions by task forces focused on genetic testing fraud and fraud involving durable medical equipment.  We look forward to seeing what the Procurement Collusion Strike Force will accomplish, particularly as it works closely with whistleblowers.
  4. SEC and CFTC Whistleblower Programs Make Important Awards and Act to Protect and Advance Whistleblower Programs.  Despite starting the year with a government shutdown, both the SEC and the CFTC whistleblower programs had significant recoveries – including a $50 million award to two individuals who blew the whistle on JP Morgan – and took steps to advance their programs.  The CFTC launched a program of Whistleblower Alerts highlighting trends and areas of interest ranging from the Foreign Corrupt Practices Act to spoofing, cryptocurrency, insider trading, and more.  At the SEC, following widespread opposition from whistleblowers and their advocates, the Commission delayed consideration of proposed rule changes that, among other things, authorized caps on whistleblower rewards.
  5. Fraudsters Continue to Target Managed Care, and Whistleblowers Continue to Bring Medicare Advantage Fraud to Light. Fraud in managed care programs including Medicare Advantage and Medicaid Managed Care continued to grab headlines throughout 2019, with risk adjustment fraud getting important coverage and attention.  In February, the New Yorker detailed the stories of two Constantine Cannon clients who blew the whistle on Medicare Advantage fraud.  In April, DOJ announced a $30 million settlement with Sutter Health LLC arising from allegations that the provider improperly upcoded patient diagnoses.  In August, a medical group agreed to pay $5 million to resolve allegations of diagnosis upcoding and risk adjustment fraud in a case brought by a whistleblower.  And, in December, HHS issued a report estimating risk adjustment overpayments in the billions of dollars.
  6. Whistleblowers in the Media. 2019 was truly the Year of the Whistleblower on the big screen, small screens, and in bookstores, demonstrating that, for whistleblowers, we are on the verge of a cultural paradigm shift. Onscreen, 2019 brought us Official Secrets; The Laundromat; The Report; Dark Waters; Bombshell; and numerous documentaries, including Netflix’s The Great Hack, and HBO’s Theranos documentary, The Inventor: Out for Blood in Silicon Valley, featuring Tyler Shultz and Erika Chung. In print, 2019 welcomed Tom Mueller’s Crisis of Conscience: Whistleblowing in an Age of Fraud; Edward Snowden’s Permanent Record, and books about the Cambridge Analytica scandal from whistleblowers Christopher Wylie and Brittany Kaiser.
  7. High Tech Whistleblowing Comes of Age. In 2019, we were proud to represent the whistleblower who secured the first-ever False Claims Act recovery alleging a tech company’s breaches of federal cybersecurity standards in products sold to government purchasers. Widely recognized as precedent-setting, the recovery illustrates the important role that whistleblowers can play in blowing the whistle on data breaches and cybersecurity flaws, in government contracting and elsewhere. With our increasing dependence on technology, and the potentially devastating effects of data breaches and other cybersecurity incidents, we anticipate seeing many more actions by tech whistleblowers in the years ahead.
  8. Public Safety Whistleblowers: Opioids, Boeing and More. Where public health and safety are at stake, whistleblower reward programs offer protections and incentives to knowledgeable insiders, including those reporting dangerous drug-prescribing practices driven by unlawful pharma financial incentives, defective medical products, defective products sold to the U.S. government and military, motor vehicle safety issues, and other dangers. DOJ has made the opioid epidemic an enforcement priority, and 2019 saw significant settlements by opioid manufacturers in cases brought by whistleblowers, including $225 million from Insys Therapeutics, and $1.4 billion from Reckitt Benckiser Group. In airline safety, following crashes involving Boeing’s 737 Max, whistleblowers provided information that advanced government investigations. Ed Pierson, a former Boeing manager, testified before Congress in December, following which the FAA vowed to investigate the company.
  9. Supreme Court Clarifies False Claims Act Statute of Limitations.  It is always news when the Supreme Court issues a decision involving the False Claims Act, and in U.S. ex rel. Hunt v. Cochise Consultancy, the Supreme Court gave whistleblowers an important victory, holding that the ten year statute of limitations applies to all whistleblower-initiated actions, regardless of whether the U.S. has intervened or not.
  10. The Granston Memo and DOJ Dismissals of FCA Cases. In 2018, DOJ’s “Granston Memo” set forth standards by which the U.S. would seek dismissals of non-intervened FCA actions being pursued by whistleblowers, and throughout 2019 numerous courts addressed DOJ’s dismissal authority.  In September, Senator Charles Grassley wrote to Attorney General Barr requesting information on DOJ’s dismissal requests and expressing concern that DOJ was moving to dismiss cases “for reasons that appear primarily unrelated to the merits of individual cases,” which could “undermine the purpose of the False Claims Act.” In response, Barr detailed that DOJ had moved to dismiss only 45 cases, ten of which were related actions, and 12 of which involved pro se relators.  Twenty-six courts have ruled on dismissal motions by DOJ, granting those motions in 25 cases.  Barr also affirmed the importance of the FCA, describing it as “the government’s single most important tool in combating fraud,” and recognizing “the important contributions made by whistleblowers.”  There are potentially troubling issues in any DOJ pre-settlement dismissal, especially where dismissal is premised on an alleged waste of government resources in discovery and litigation.  And, there is a brewing circuit split involving the standard that DOJ must meet in support of dismissal.  However, as courts this year began to grapple with the impact of the Granston Memo, its impact on whistleblower cases appears, so far, to be minimal.

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Tagged in: CFTC Whistleblower Reward Program, Cybersecurity and Data Breaches, FCA Federal, Government Procurement Fraud, Healthcare Fraud, Importance of Whistleblowers, International Whistleblowers, Risk Adjustment Fraud, SEC Whistleblower Reward Program, Top 10,