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Monthly Roundup – April 2014

Posted  May 1, 2014

By the C|C Whistleblower Lawyer Team

Here is our look-back at the key whistleblower and fraud developments we have written about over the past month:

Featured Posts and Commentary

Under the so-called first-to-file rule, “[w]hen a person brings an action under the False Claims Act, no person other than the Government may intervene or bring a related action based on the facts underlying the pending action.”  Following the explicit statutory language, the courts have been uniform in their view that the first-to-file rule only bars lawsuits related to underlying actions still “pending.”  There may be other proscriptions to bringing related cases such as the public disclosure bar, but the courts have been clear that the first-to-file bar ends when the original action ends.  That is, until now.  Click here for more. 

Most of us are well familiar with the multi-billion dollar business big-time college sports have become and their questionable impact on the so-called “student-athletes” who fuel them.  Questions of amateurism, exploitation and academic failure and fraud associated with these major sports have been swirling about for years.  And they may soon be coming to a head with the recent antitrust challenge to the NCAA’s player compensation ban and the recent NLRB decision finding Northwestern University football players are employees entitled to unionize.  But what has largely flown under the radar is the much broader question of whether colleges in general are devoting a disproportionate amount of resources to their sports programs.  Click here for more.

Senator Chuck Grassley (R-IA), noted architect and champion of several whistleblower protection laws, has announced he will create the first-ever Senate whistleblower protection caucus consisting of a group of senators dedicated to protecting whistleblowers and ensuring that whistleblower laws are enforced.  Grassley will be making the rounds in Congress over the next six months rallying support, with the hopes of having a fully operational group by the beginning of Congress’ next session in January 2015.  Click here for more.

Under the qui tam provisions of the False Claims Act, a whistleblower who files an action that ultimately leads to a government recovery is entitled to a generous portion of the proceeds.  There is no discretion in making an award.  It is mandated by statute.  The question remains, however, just how far this mainstay of the American whistleblower system extends.  Specifically, whether whistleblowers are still entitled to the statutory award if the complaint they file lacks enough factual specificity or relies on facts or legal theories the government does not ultimately adopt.  According to a decision last week by the Eighth Circuit, these whistleblowers should still be paid their fair share of the pie.  Click here for more.

Senator Chuck Grassley (R-IA), noted whistleblower champion, reviewed all 15 executive branch departments for their compliance with an important whistleblower law, releasing his findings last week.  The results were not good.  Only the Treasury Department received a passing grade.  Click here for more.

The IRS recently released its Annual Report to Congress on its whistleblower program and the results are discouraging even for an agency that has a questionable track record when it comes to dealing with whistleblowers.  Despite having received more tips than ever — over nine thousand of them — the IRS paid only $53 million to whistleblowers in 2013.  This is a sharp drop from the $125 million paid out in 2012, though they are far better than meager payouts before that ($8 million in 2011; and $18.7 million in 2010).  Unfortunately, this year’s tally shows that, despite all the criticism directed towards the IRS whistleblower program, the agency remains sluggish in its whistleblower enforcement with no signs of picking up anytime soon.  Click here for more.

The debate has gone on for years.  The athletes in big-time college sports bring in billions of dollars for their universities and the NCAA, but get nothing in return — other than a scholarship that does not even cover the full cost of attending school.  Until now, it has been largely a philosophical discussion among academics and sports enthusiasts.  Are college athletes amateurs?  Are they being exploited?  Should college sports be kept “pure”?  But thanks to a decision by the National Labor Relations Board last week and a class action lawsuit filed against the NCAA, the questions have moved out of the theoretical and into the courtroom.  Click here for more.

Questions of the Week

  • Should college players unionize?  Polls still open.
  • Do you think the NCAA should drop its ban on paying college athletes?  58% of respondents said No.

DOJ Fraud Settlements

The DOJ settled False Claims Act and other fraud allegations with Amedisys, Showa Corp, CRC Health Corp., Astellas Pharma, Hewlett-Packard, and Kerr-McGee Corp. for a combined recovery this month of roughly $5.45 billion.  Many of these matters were initiated by whistleblowers under the qui tam provisions of the False Claims Act.  Click here for more.

SEC Fraud Actions

The SEC this month settled fraud actions or brought fraud charges against numerous individuals and companies, including GSI Commerce, TelexFree, Total Wealth Management,  Hewlett-Packard, JCS Enterprises Inc., T.B.T.I. Inc., CVS Caremark Corp., and Transamerica Financial Advisors.  Click here for more.