by Nolan and Auerbach on September 21, 2012
Last week, Nolan Auerbach Partners Marcella Auerbach and Jeb White presented at the Twelfth Annual Taxpayers Against Fraud Education Fund (TAFEF) Conference in Washington, D.C. Mr. White, presenting during the opening session of the conference, provided an overview of the False Claims Act, including an in-depth discussion of the recent legislative amendments. Mr. White was joined by U.S. Department of Justice’s Commercial Litigation Branch Director Daniel Anderson and qui tam attorney Shelley Slade.
Managing Partner Marcella Auerbach moderated a plenary panel discussion on multi-relator issues. Panelists included Assistant United States Attorney Zachary Cuhna, qui tam attorney David Chizewer, and former U.S. Department of Justice Assistant Director Stephen Altman.
This year’s TAFEF Conference was the largest event solely devoted to the False Claims Act. In addition to more than 300 qui tam attorneys, the audience included several attorneys from federal and state governments. Speakers included United States Attorneys, high-ranking Justice Department officials, and leading qui tam practitioners.
More information for whistleblowers is located at the Nolan Auerbach website.
by Nolan and Auerbach on September 11, 2012
For years, the United States Justice Department has argued that government employees cannot bring qui tam actions under the federal False Claims Act. For support, the Justice Department has maintained that the Act’s public disclosure bar is trigger when the government employees disclose the fraud allegations to themselves, private citizens. Furthermore, because the government employee is required to report fraud as a condition of employment, the employees do not “voluntarily” supply the information to the government, as required by the public disclosure bar’s original source exception.
Courts have almost uniformly rejected this argument. In addition to spotlighting the disconnect with the False Claims Act’s statutory language, the courts have stressed the important role government employee-relators play in ferreting out fraud, particularly when a governmental agency is captured by a corrupt industry.
Recently, the Third Circuit joined the chorus, when it held that government employees can file qui tam actions. Even more noteworthy, the court held that government investigators can file actions based on information they uncover during the course of their employment.
More information for whistleblowers is located at the Nolan & Auerbach, P.A. website.
by Nolan and Auerbach on September 4, 2012
The False Claims Act qui tam provisions encourage and incentivize individuals to report fraudulent business practices that drain funds from the federal government. Oftentimes, current and former employees of dishonest companies are in the best position to expose such corporate behavior. However, companies regularly seek to silence would-be whistleblowers by requiring departing employees to sign nondisclosure agreements and restrictive severance agreements that ostensibly derail potential qui tam actions. Fortunately, many courts are now invalidating these agreements when they are used to gag qui tam relators.
For example, in an ongoing qui tam case in California, the district court refused to strike evidence, which the relators had copied and moved from their hard drives after quitting their employment with the defendant. While recognizing that such behavior arguably violated their signed non-disclosure agreements, the court stressed that the relators took this action only for the purpose of providing the exhibits to the government and corroborating their claims of alleged fraud on the part of their former employer. The court stressed that there is a “strong public policy in favor of protecting whistleblowers who report fraud against the government. . . . Obviously, the strong public policy would be thwarted if [Defendants] could silence whistleblowers and compel them to be complicit in potentially fraudulent conduct.”
This issue has even percolated up to a federal court of appeals, where the Ninth Circuit stated that public policy merits finding such individuals to be exempt from liability for violation of their nondisclosure agreements. Similarly, an Illinois district court held that a relator was exempt from liability for breach of a confidentiality agreement when he disclosed documents to the government that showed that his employer had engaged in fraudulent healthcare billing practices.
This recent trend in the False Claims Act case law signals that non-disclosure agreements and restrictive severance agreements may not preclude qui tam actions. However, with that being said, other courts have not yet joined this growing chorus. Therefore, potential whistleblowers should seek experienced counsel before throwing caution into the wind by downloading documents from their current or former employers’ servers.
More information for whistleblowers is located at the Nolan & Auerbach, P.A. website.
