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Monthly Roundup -- May 2014

Posted  June 3, 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

The UK Serious Fraud Office opened a formal criminal investigation into GlaxoSmithKline’s commercial practices.  GSK issued a statement saying that it is “committed to operating its business to the highest ethical standards and will continue to cooperate fully with the SFO.”  Neither GSK nor the SFO provided any further details about the practices being investigated…

Mandatory arbitration clauses are all the rage these days with more and more companies insisting on these provisions in their dealings with customers and employees.  While the use and reach of these mandatory provisions seem to be increasing at an exponential rate, the courts seem to be doing very little to keep them in check.  Instead, they are for the most part holding tight to the principle that “any doubts concerning the scope of arbitrable issues should be resolved in favor of arbitration.”  But when it comes to mandatory arbitration and whistleblower retaliation claims under the False Claims Act, at least one appeals court has drawn a line (albeit a thin one) in the sand….

Last night, NBC interview with Edward Snowden aired.  From a factual standpoint, there was not much disclosed that had not already come out in previous news stories.  But as NBC’s Brian Williams noted during his introductory remarks, this is the first time Snowden has given a sit-down, slog-it-out interview for U.S. television. While we know much of the facts (or at least the contested facts) of what he did, the public has had very little insight into the person– the thoughts, feelings, and motivations of the person at the center of all this. In this respect, the interview, aptly entitled “Inside the Mind of Edward Snowden,” was very revealing….  Click here for more.

The Project on Government Oversight (POGO) and the Iraq and Afghanistan Veterans of America together launched VAOversight, a secure whistleblower website to report fraud, mismanagement and abuse in the Department of Veterans Affairs following allegations that a Phoenix VA hospital suffered from treatment delays, had hidden wait lists and caused the potentially preventable deaths of up to 40 veterans….

On Monday the Supreme Court granted a petition for certiorari to decide when a government whistleblower can go public with allegations of government wrongdoing.  At issue in the case — Department of Homeland Security v. MacLean, Case No. 13-894 — is the disclosure to the press by former air marshal Robert MacLean that the Transportation Security Administration had cancelled air marshal coverage during a particular sensitive time.  Specifically, it was when there was an internal government alert for a terrorist hijacking potentially even more catastrophic than that carried out on September 11….

The recent Fourth Circuit decision in Feldman v. Law Enforcement Associates provides further guidance on the scope of the whistleblower retaliation protections provided under the Sarbanes-Oxley Act of 2002.  This is the statute enacted in the wake of the Enron scandal to prevent and root out fraud in publicly traded companies.  It protects from retaliation employees of publicly traded companies (and now, their contractors) for reporting suspected fraud to their supervisors or the government.  The question before the Fourth Circuit was how far whistleblowers must go in showing their reporting activity was a “contributing factor” to their retaliation….

And yet another survey demonstrating the importance of internal whistleblower hotlines and compliance programs.  This one by the Society of Corporate Compliance and Ethics (SCCE) and the Health Care Compliance Association (HCCA).  These two ethics and compliance groups reached out to their membership for a reality check on how their companies fared in encouraging whistleblowers to bring their complaints in-house.  What they found is that whistleblower hotlines and internal reporting programs are more popular than ever for those witnessing fraud or misconduct in the workplace….

Acting Chairman Mark Wetjen has just announced that the CFTC will issue its first award to a whistleblower under the agency’s Dodd-Frank Act whistleblower program.  The whistleblower is expected to receive approximately $240,000 for providing information about violations of the Commodity Exchange Act….

The European Court of Justice on Tuesday ruled that Google can be forced to remove private citizens’ information from search results in the name of privacy.  The court specifically held that Google and other search engines are “obliged to remove links to web pages that are published by third parties and contain information relating to a person from the list of results displayed following a search made on the basis of that person’s name.”….

Alex Grabcheski, the former director of human resources and operations for American International Group, has filed a False Claims Act complaint against the insurance giant alleging that it defrauded the government during the Fed’s $25 billion bailout of AIG in the wake of the financial crisis.  As reported here, the lawsuit commenced in 2010 but the complaint was not unsealed until this week when the government declined to intervene in the matter….

If you are in DC tomorrow and have the time, consider joining with other whistleblower supporters on Capitol Hill as they visit with members of Congress to aid whistleblower John Kiriakou.  Mr. Kiriakou, you may recall, was the first CIA official to come forward and publicly confirm that the U.S. was using waterboarding to torture detainees.  As thanks, Mr. Kiriakou received a 30-month prison sentence last October….

Next time you are sitting down to enjoy a perfectly seared, wild-caught salmon filet drizzled with extra virgin olive oil alongside organic greens and a nice glass of red, consider this: those are among the top ten foods and drinks most susceptible to fraud.  Rounding out the list are milk, honey and maple syrup, coffee and tea, spices, grains, and fruit juice….

Edward Snowden’s mantle must be getting crowded with the awards he has received for blowing the whistle on NSA surveillance. His latest is the Ridenhour Prize for Truth-Telling, which he received at a ceremony in Washington on Wednesday.  Laura Poitras, a documentary filmmaker and journalist, was, along with Snowden, the co-recipient of this year’s award.  She was the first to establish encrypted contact with Snowden and helped to initiate safe lines of communications with other journalists….

Time for a change?  At least some officials in the government think so. During a Senate hearing Tuesday, David Michaels, Assistant Secretary for the Department of Labor’s Occupational Safety and Health Administration (OSHA), said the agency dismisses more than 200 cases a year due to time limits — some of which are as short as 30 days.  According to Mr. Michaels, the “statute of limitations is a very serious problem,” leading to the dismissal of meritorious claims on a mere technicality….

Questions of the Week

  • Are we over-diagnosing and over-medicating for ADHD?  Polls still open.
  • Is the government finally abandoning its “too big to jail” approach to going after bank fraud?  60% of respondents said Yes.
  • Should college players unionize?  75% of respondents said Yes.

DOJ Catch of the Week

This month’s DOJ weekly catches included King’s Daughters Medical Center (here); Credit Suisse (here); Sallie Mae (here); Baptist Health (here).

DOJ Fraud Settlements

The DOJ settled False Claims Act and other fraud allegations with Medtronic Inc. , King’s Daughters Medical Center, Credit Suisse, Marubeni Corp., Electrolux, Sallie Mae, Baptist Health System and others for a combined recovery this month of close to $3 billion.  Many of these matters were initiated by whistleblowers under the qui tam provisions of the False Claims Act.

SEC Fraud Actions

The SEC this month settled fraud actions or brought fraud charges against numerous individuals and companies, including IST Shareholder Services, NBTY, Inc., Rafferty Capital Markets, Aphelion Fund Management and Archipelago Securities.