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29Nov/100

Senator Grassley: Again to the Rescue

This post was written by Jack D. Howard

Once again, there is a bad taste in the mouth over FDA’s appetite for whistleblowing. In posh sections of Virginia Beach, one might not have known that the FDA’s top criminal investigator was allegedly conducting high profile criminal investigations.

For one thing, a home office might not be quite as secure as a federal office building.

Iowa’s senior senator, Chuck Grassley (R), has disclosed a whistleblower’s allegation that the number one investigator for FDA’s criminal enforcement section, Terry Vermillion, has been acting beyond the safe scope of his employment. Besides the allegation of an unauthorized telecommute, Vermillion was also charged with specific instances of “alteration of internal agency reports,” and additional misconduct.

Vermillion announced his resignation over the 2010 Thanksgiving holidays (The Wall Street Journal, November 24, 2010). Vermillion, whose branch has been investigating allegations of doping in professional bicycle racing, reportedly refused any comment on the high-profile whistle blower’s anonymous allegations.

Grassley received the anonymous letter in September, but chose to begin an initially private investigation before pushing ahead with a more formal investigation. It was unclear as to whether additional data had been received from the anonymous whistle blower. Vermillion’s branch was large, even by Washington insider standards: Vermillion’s salary was $200,000 annually, and had grown to more than 200 employees with a $41 million budget.

Interestingly, in a pattern not uncommon among qui tam cases. The CI unit had been feeling heat for two years. In 2008, Senate and House Republicans criticized the unit for over-emphasizing drug cases, instead of corporate misconduct. And early in 2010, the GAO criticized the lack of “accountability” over Vermilion’s—a former secret service agent-- activities.

When it comes to whistleblowing, a fine art has emerged in the Nation’s Capitol. Some critics, however, are concerned the process is becoming more opera than openness.

Tagged as: Chuck Grassley, FDA, whistleblower No Comments

25Oct/100

Whistleblower Actions: Citizens Motivated By Doing Right

This post was written by Jack D. Howard

In 2006, whistleblower rewards were significantly increased, and the Whistleblower Office created, when President Bush signed into law the Tax Relief and Health Care Law.

" If the Secretary proceeds with any administrative or judicial action based upon information brought to the Secretary’s attention by an individual, the individual shall receive as an award at least 15 percent but not more than 30 percent of the collected proceeds (including penalties, interest, additions to tax, and additional amounts resulting from the action), or from any settlement in response to such action... ."

There are interesting limitations, however, on this apparent government largess. The good news was the large increase in IRS whistleblower awards, from 15 to a possible 30% maximum. There were some compromises, however. For example, the whistleblower award is predicated upon a claim against someone whose annual income exceeds $200,000, AND when the total amount in taxes, penalties, and interest owed is more than $2,000,000. In fact, revisions to the whistleblower statute suggest there may be more limits than many whistleblowers anticipate.

Courts have recently weighed in on saying how low can attorney fees in whistle blowing go. The answer is...quiet a tweet: the First US Circuit Court of Appeals lowered an attorney's contingency-based recovery from $292,000 to $50,000. The court noted that government officials did the bulk of the work, and that the attorney was able to 'piggy back' on their efforts. Most importantly, the court reasoned the rationale of whistleblower laws was to protect and serve the interests of the public...and to a large extent, the whistle blower's interests in an award are indistinguishable.

"The whole purpose of the discretionary award to whistleblowers under this statute is to create incentives for the whistleblower to take risks that may disadvantage the whistleblower in his relationship to his employer....The amount of the fee that will be siphoned off by the lawyer significantly affects the size of that award and the power of the incentive. The court in administering this statute is obligated to ensure his excessive legal fees will not diminish the statutory incentive." Judge Dyk, U.S. v. Hawthorn, entered 10/18/2010.

The importance of any potential limitations, or even reductions in anticipated awards, is that whistleblowers, without adequately motivated legal counsel, frequently have no means to deal with the costly and career debilitating efforts to maintain a whistleblower case. Since first introduced in 1863, qui tam laws have routinely allowed up to 30% awards.

At the end of the process, however, government may always reduce a Whistleblower award the good old fashioned way: by collecting taxes on it. Happily, the IRS allows legal fees to be deducted. (Campbell v. Commissioner of Internal Revenue, January 21, 2010).

Tagged as: Bush, healthcare, tax fraud No Comments

8Oct/102

Independent Watchdogs on OSHA Whistleblowers: A Broken Reflection

This post was written by Jack D. Howard

Government auditors are blowing the whistle on the Occupational Safety and Health Administration (OSHA), the leading investigative branch for workplace safety in the Department of Labor (DOL).

The first called foul against OSHA's whistleblower program came in August, 2010, when the Government Accounting Office (GAO) concluded OSHA functioned as though its field investigators were simply overwhelmed by the scope of their job. The GAO report was sweepingly negative: “OSHA could not provide assurance that complainants were protected as intended under the various whistleblower protection statutes.”

OSHA is responsible for maintaining the Office of Whistleblower Protection Programs (OWPP). The OWPP is critical in the field: OSHA is primarily responsible for investigating 19 first-line whistleblower laws.

Critics of OSHA's investigative record argue that the concept is simple enough..if whistleblowers don't feel protected from being fired for what they know, then they are generally less willing to take a risk to share their knowledge. Even worse, OSHA's critical ability to gather safety information will be compromised, if it won't take the lead in whistleblower protection.

Less obvious in the GAO report was precisely how to remedy OSHA's glaring faults. A second and separate agency audit, this time from DOL's Office of Inspector General (OIG) ,was released in September, 2010, and used unusually blunt language against a sister agency. The GAO's stinging report alleges an array of inadequate whistleblower protections by OSHA. The GAO report, revealing the portrait of an agency with a potential bias against supporting whistleblowers, added fresh doubts to OSHA's field safety record. Among the enforcement errors, OSHA is alleged to fail to meet even its own internal whistleblower standards in a host of critical areas.

Among the leading complaints by the DOL/OIG:

Almost 80% of the agency's whistleblower investigations failed at least one element of OSHA's own Whistleblower Investigations Manual.
Critics believe OSHA's 2% merited case findings of retaliation complaints was likely too low.
Final rulings, without conducting minimal face-to-face interviews, occurred in almost half of OSHA's whistleblower investigations.

Conclusion: Faulting OSHA's Internal Culture

Worrisome to many experts in the whistleblower field is wonder if OSHA may have simply developed a culture of disconcern toward internal reforms. Ironically, months before the scathing audits, an internal OSHA memo addressed this potential tone deafness.

Subsequent testimony before Congress detailed OSHA's apparently lax attitude toward whistleblower protections. Representatives of the Public Employees for Environmental Responsibility (PEER) have alleged OSHA's handling of industry whistleblowers was not isolated to a few cases. Instead, PEER believes OSHA's inattention to internal industry reports reflects OSHA's own attitudes toward its own potential whistleblowers”

“OSHA does not effectively protect workers who report health and safety hazards or other violations and dangers. Moreover, OSHA does not protect its own specialists from retaliation for raising health and safety issues or concerns about the consequences of OSHA’s own actions – or inaction.” March 4, 2010 “OSHA Listens” Stakeholder Session OSHA Docket # OSHA-2010-0004."

PEER has also staked out its position that OSHA can no longer be trusted to watch after whistleblowers. Instead, the group now advocates removing whistleblower investigations from the department altogether.

Sources:
"Complainants DId Not Always Receive Appropriate Investigations Under the Whistleblower Protection Program." http://www.oig.dol.gov/public/reports/oa/2010/02-10-202-10-105.pdf
"OSHA Must Address Crippling Weaknesses in Whistleblower Protection" http://peer.org/docs/osha/3_4_10_PEER_OSHA_Listens_testimony.pdf
"Whistleblower Protection Program: Better Data and Improved Oversight Would Help Ensure Program Quality and Consistency" http://www.gao.gov/products/GAO-09-106

This article is brought to you by the QTT, the epicenter for whistleblowers and people interested in the False Claims Act, Qui Tam Provisions, and Medicare and Medicaid fraud. To discuss a potential case, please call Eric Young at 1 (800) 590-4116.

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