On October 18, 2017, a federal district judge in Alaska ordered a former employee to pay nearly $170,000 of his ex-employer’s legal fees as sanction for removing nine attorney-client privileged documents prior to his termination. The ruling was based on a decision this summer that the former employee willfully and
N.D. Indiana: Employer Bears Burden of Proving Whistleblower Exhausted Administrative Remedies
On February 1, 2016, the Northern District of Indiana ruled in a case brought under the Federal Railroad Safety Act (FRSA) that whether a whistleblower has fulfilled relevant administrative requirements prior to filing suit is a “condition precedent” rather than a “jurisdictional requirement.” King v. Ind. Harbor Belt R.R., 2017 U.S. Dist. LEXIS 43263 (N.D. Ind. Feb. 1, 2017).
Plaintiff, who was employed by the Indiana Harbor Belt Railroad (Company), filed a whistleblower retaliation claim under FRSA, a whistleblower protection statute that is similar in many respects to Section 806 of SOX. Like many other whistleblower protection statutes, the FRSA requires a whistleblower to file a complaint with OSHA within 180 days after the alleged retaliation occurred.
SEC Reduces Whistleblower Bounty Based On Culpability And Delayed Reporting
On February 28, 2017, in an Order almost entirely devoid of detail, the SEC announced that a whistleblower will receive 20% of any monetary sanctions collected in an enforcement action commenced as a result of the whistleblower’s tip. The SEC is giving this “reduced” award while acknowledging that the whistleblower (1) was “culpable” in the securities violation at issue, and (2) unreasonably delayed reporting the company’s wrongdoing to the agency.
Federal Court Ruling Raises Questions About Privileged Nature Of Certain Internal Investigations
On March 6, 2014, the United States District Court for the District of Columbia ruled that Kellogg Brown & Root Services, Inc. (“KBR”) must produce to a qui tam relator 89 documents relating to internal investigations conducted by the Company. The court held that neither the attorney-client privilege nor the attorney work-product doctrine barred production or disclosure of the documents. United States ex rel. Barko v. Halliburton Co. et al., Case No. 05-01276 (D.D.C. Mar. 6, 2014). The decision could have widespread implications for companies that conduct internal investigations of whistleblower complaints.
OSHA Issues New Whistleblower Rule Under Food Safety Modernization Act
The Occupational Safety and Health Administration (OSHA) has published an interim final rule implementing the whistleblower provision of the Food Safety Modernization Act (FSMA or the “Act”). The interim final rule became effective Thursday, February 13, 2014. Comments on the rule are due by April 14, 2014.
Supreme Court Considers Review of Two False Claims Act Whistleblower Suits
The Supreme Court is considering whether to hear two whistleblower cases under the False Claims Act (“FCA”), both on appeal from the Fourth Circuit. The Supreme Court has asked the U.S. Solicitor General to weigh in before the Court decides whether to hear either case. The two cases are Kellogg Brown & Root Services Inc. et al v. U.S. ex rel Carter, case no. 12-1497, and U.S. ex rel. Nathan v. Takeda Pharmaceuticals North America Inc. et al., case number 12-1349.
Federal Government’s FCA Claims Against Iraq Security Contractor Dismissed
The Eastern District of Virginia dismissed a False Claims Act complaint brought by the government and a whistleblower, finding that the government failed to adequately plead that it relied on allegedly false marksmanship tests when it paid a government contractor. U.S. ex rel. Badr v. Triple Canopy, Inc., Case No. 1:11-cv-288 (E.D. Va. June 19, 2013).
Kinetic Moves To Disqualify Counsel In False Claims Act Qui Tam Action For Improper Use Of Contractor’s Privileged Documents
Arguing that relators’ counsel has retained and used, without authority, more than 800 of its attorney-client privileged and work product documents, Kinetic Concepts, Inc. (“KCI”) has asked the District Court for the Central District of California to disqualify opposing counsel in United States ex rel., Steven J. Hartpence v. Kinetic Concepts, Inc., Case No. 08-01885 (C.D. Cal. Apr. 8, 2013).
Two relators, Geraldine Godecke and Steven Hartpence, have brought qui tam actions against KCI alleging that it submitted false claims to Medicare for KCI’s wound care treatment devices in violation of the federal False Claims Act (“FCA”). Both relators, who held senior-level positions with KCI, routinely interacted with in-house and outside counsel concerning the company’s legal advice, strategy and tactics. Before she was terminated, Relator Godecke spent the better part of a week downloading hundreds of communications with in-house and outside counsel with the intention of removing them before she was terminated.
The Fourth Circuit Suspends Statutes Of Limitations On False Claims Act Claims During Times Of War And Holds That The “First To File” Rule Does Not Apply Once Initial Action Has Been Dismissed
In United States ex rel. Carter v. Halliburton Co., No. 12-1011 (4th Cir. Mar. 18, 2013), the Fourth Circuit held that the statute of limitations for False Claims Act claims is suspended during times of war. The court also held that the rule barring a False Claims Act plaintiff (a “relator”) from bringing a claim if substantially similar claims have already been filed by another party (the “first-to- file” rule) does not apply after the first claim is dismissed.
Eastern District Of Virginia Rules That Employer Cannot Arbitrate False Claims Act Retaliation Claims
On Wednesday, the Eastern District of Virginia in Winston v. Academi Training Center, Inc., No. 1:12-cv-767 (July 12, 2012), declared an arbitration provision in an independent contractor agreement unconscionable, clearing the way for two plaintiffs to bring their False Claims Act (FCA) retaliation claims in Federal court.