In U.S. ex rel. Williams v. McKesson Corp., No. 3:12-CV-0371-B (N.D. Tex. July 9, 2014), a Texas federal court recently dismissed a qui tam whistleblower suit by a former employee of McKesson, a Texas-based entity that provides billing-related services to the health care industry, holding that the former employee failed to establish “the existence of a false or fraudulent claim submitted to the government for payment.”
On May 12, 2014, the Fourth Circuit Court of Appeals affirmed summary judgment on a SOX whistleblower claim, concluding that the whistleblowers’ alleged protected activity was not a “contributing factor” in the challenged adverse employment action. Feldman v. Law Enforcement Assoc. Corp., No. 13-1849 (4th Cir. May 12, 2014). Armed with this decision, employers are apt to place greater emphasis on challenges to a SOX whistleblower plaintiff’s ability to establish a prima facie case.
On February 21, 2014, the District of Puerto Rico strayed from a prominent decision out of the First Circuit that employed the “definitively and specifically” standard governing protected activity under Section 806 of SOX, choosing instead to defer to the ARB’s rather expansive standard. Stewart v. Doral, No. 13-cv-1349 (D.P.R. Feb. 21, 2014). This decision underscores the conflicts in this evolving area of SOX jurisprudence and the attendant risks to employers saddled with SOX whistleblower retaliation claims.
In a January 27, 2014 article penned by Rachel Louise Ensign in the Wall Street Journal (Risk and Compliance Journal) titled “Why 2014 Could be Huge for Corporate Whistleblowers,” Steven Pearlman, partner and co-head of Proskauer’s Whistleblower Practice Group, commented on the need for employers to encourage employees to lodge complaints internally without fear of retribution. Pearlman suggested that companies give consideration to whether a bonus tied to the benefit the employee conferred upon the company, or letter of appreciation recognizing an employee’s reporting efforts, may fit the bill. Putting the value of providing such incentives in context, the article discussed an anticipated uptick in external whistleblowing reports in 2014, noting that SEC “officials have promised more big bounties soon,” and that the DOJ secured $3.8 billion in False Claim Act settlements and judgments during FY2013.
As first reported by Law 360 reporter Kat Greene on December 5, 2013, the U.S. Department of Labor’s Occupational Safety and Health Administration (OSHA) unveiled a new online complaint form to complement its telephone hotline. The nineteen-question form is not tailored in any respect to SOX whistleblowers. Rather, the form requires the complainant to describe the “hazardous condition” about which the complaint is being filed.
In a SOX whistleblower case of first impression, the U.S. District Court for the Eastern District of Virginia ruled that front pay may be ordered in lieu of reinstatement. However, the court ultimately determined that front pay was not warranted under the facts of this case.
On November 15, 2013, the Securities and Exchange Commission’s (SEC) Office of the Whistleblower (OWB) released its third Annual Report on the Dodd-Frank Whistleblower Program to Congress, which details information on OWB’s activities and bounty payouts for the fiscal year, as described in our post on the 2012 Annual Report.
On November 12, 2013, a Georgia district court ruled that Dodd-Frank whistleblowers are not entitled to a jury trial or punitive damages. Pruett v. BlueLinx Holdings, Inc., No. 13-cv-02607 (N.D. Ga., Nov. 12, 2013). This is a first-impression decision that is likely to impact the valuation of Dodd-Frank whistleblower claims.