Developing Law Affects Whistleblowers

Fourth Circuit Ruling on Whistleblowers May be Considered by the U.S. Supreme Court

The United States Court of Appeals for the Fourth Circuit, in a June 9, 2008 decision allowed a whistleblower to bring fraud claims. These claims were raised on behalf of the federal government, using the False Claims Act (FCA). The Fourth Circuit allowed the claims to go forward (by remanding the case to the lower court), despite any possible limits that the FCA could place on the claims. The FCA specifically prohibits whistleblower lawsuits based on allegations that have been publicized by federal government documents, such as in administrative audits, reports, hearings or investigations. The Fourth Circuit determined that the public disclosure jurisdictional bar that the FCA places on claims only applies to federal government documents. The Fourth Circuit chose not to apply the same bar to comparable state public documents.

In this case, two North Carolina Counties, Graham and Cherokee County, are alleged to have fraudulently sought federal money for storm cleanup. The counties were alleged to have sought bids improperly. Allegations were also raised that the work performed for the counties did not meet county contract regulations. The whistleblower in this case was a secretary for Graham County, Karen Wilson, who had concerns with the conduct of some officials in the counties.

The United States Supreme Court, as reported by the Boston Globe, has shown interest considering the appeal of this decision. The Supreme Court has requested Department of Justice advice on the case. A decision by the Supreme Court could set new limits on whistleblower lawsuits against drug makers, biotechnology companies, and other businesses who engage in business with the government. For example, if the Supreme Court decided not to allow an FCA claim based on information only contained in state public documents, there could be a reduction in FCA claims.

For a broader view of the prevalence of FCA claims, the United States Department of Justice, Civil Division in the Commercial Litigation Branch - that focuses on Civil Fraud - maintains statistics on FCA claims. In 2008, fraud cases resulted in more than $1 billion in settlements and judgments, with a majority arising from claims in the area of health and human services. From those settlements and judgments, individual parties bringing claims on behalf of the government received more than $190 million under the FCA. A ruling by the Supreme Court on this case could change the number of claims and the amount awarded under the FCA.

Fourth Circuit Issues Another Ruling That Affects Whistleblowers

In a December 3, 2008 decision, the Fourth Circuit determined that whistleblowers need to be specific in their allegations of fraud, to be protected from retaliation. This decision affirmed an administrative law appeal decision affecting a corporate whistleblower. The Fourth Circuit based this ruling on Sarbanes-Oxley (SOX). The United States Department of Labor, Occupational Safety and Health Administration, under the Whistle Blower Program, provides the SOX section, Sarbanes-Oxley Act, 18 U.S.C. § 1514A that the Fourth Circuit used to render its decision.

In the case, a labor relations manager for the Airline Pilots Association (union), Stacey Platone, observed that Atlantic Coast Airlines (ACA) was not billing the union for flight-loss time. ACA was effectively paying its pilots during times in which the pilots were attending union meetings, not flying. After raising the issue with her supervisor, Platone was fired.

An administrative law judge, prior to the Fourth Circuit’s review of the case, determined that the Platone had a reasonable basis for believing the company was engaging in fraud. The judge also determined that the company knew of this concern prior to firing Platone. The Department of Labor's Administrative Review Board (ARB), however, overturned the decision. The ARB found that Platone had not specifically informed the company that she had a belief that ACA had a scheme to provide improper payments to union officials. With its decision, the Fourth Circuit has now approved the ARB’s decision.

This ruling could make the process of raising an allegation of fraud more difficult for a whistleblower. An individual may not always have enough information to specifically raise a fraud claim, before an employer acts to end the whistleblower’s employment or take any other action against the employee. It is unclear how far reaching this Fourth Circuit decision could be. The U.S. Supreme Court has not ruled on this case.

Thanks for reading our blog. The National Justice Coalition is made up of Plaintiffs Attorneys in the United States who have been recognized by Best Lawyers in America, Super Lawyers and who have received the top rating of Martindale Hubbell, the leading directory of lawyers in America.

If have a comment or question, please feel free to reply to this posting, or send us an e-mail. Keep in mind that your comments will not be confidential. If you are considering or have already alleged misconduct on the part of an employer or company, and fear or have already experienced punishment as a whistleblower, please feel free to contact the whistleblower attorneys at the National Justice Coalition regarding your legal matter.