The public-private partnership envisioned by the qui tam provisions of the False Claims Act (FCA) is one of its most successful and powerful aspects, yielding billions of dollars in recoveries. The FCA permits the Government, the whistleblower, and their attorneys to cooperate—and they often do—when investigating and litigating FCA claims. But are there limits to that cooperation? Can government officials ask a whistleblower to secretly record conversations between the whistleblower and individuals who are under investigation but are represented by an attorney? The answer, according to one federal court, is “yes.”
Employer Fraud
One of the first and most frequent arguments defendants make in fighting qui tam allegations under the False Claims Act (FCA) is that the case brought by the whistleblower, or “relator,” is not viable because it is based on publicly available information, the relator is not an “original source” of that information, or both. On February 19, 2020, the First Circuit Court of Appeals issued an important decision clarifying that to qualify as an original source, a relator need not have participated in the fraud or observed it in operation. Instead, a relator may qualify as an original source if the relator sees or receives information that is suggestive of fraud, hears suspicious conversations, and discovers additional evidence of fraud through personal investigation. United States ex rel. Banigan v. PharMerica, Inc., No. 18-1487, 2020 WL 813258, at *8-9 (1st Cir. Feb. 19, 2020).
It is important that employees are able to report improper or dangerous conditions that they observe in their workplaces. When someone is aware that fraudulent or dangerous practices could negatively impact the public, they are often uniquely positioned to report the problem. Unfortunately, an employee who is aware of a violation of the law may be afraid that if they report it, they could face retaliation and be terminated or face other negative employment actions.
This is the claim made by two employees of a for-profit Minnesota college. They both claim that because they had been open about what they viewed as serious problems with the admissions and accreditation process, they were subjected to negative employment actions. Both employees brought their claims under the Minnesota Whistleblower Act.
Susan Coler participated in “False Claims Act Enforcement from a Whistleblower Perspective – A Panel Discussion,” MSBA Health Law Section, April 24, 2019. Coler and the other panel members Jeffrey Gleason, Robins Kaplan, and Jonathan Bye, Ballard Spahr, discussed trends in government enforcement priorities, the impact of the Supreme Court’s Escobar decision and the DOJ case dismissals under the Granston memo. Said Coler, “the important message from my perspective was to be clear-minded about the nature of FCA cases and not get bogged down in jargon and legal constructs that often blur the real issues.”
Learn more about Susan Coler and her work with whistleblowers and the False Claims Act.
Much of the work of the federal government is accomplished through contracts with non-governmental entities. For the fiscal year ending September 30, 2015, those contracts added up to more than $500 billion. The Legislature wants a good portion (23%) of those dollars to go to small businesses as a means of strengthening the nations’ economy. To achieve that goal, the government designates certain contracts and subcontracts as “set aside” for small businesses. The Small Businesses Administration oversees these set-asides. Contracts are further set aside for small businesses with additional distinctive characteristics including small businesses that are disadvantaged, women-owned, service-disabled, veteran-owned, and small businesses located in economically distressed communities (HUBZones). One of the goals of the set-asides is to help small businesses of various types to grow and to develop the competence and expertise to compete in the open market for government contracts.
Beginning in 2005, Allegiance entered into agreements with hospitals located in the Southeastern United States to provide Intensive Outpatient Psychotherapy services to patients who were Medicare beneficiaries on the hospitals’ behalf. The settlement resolves allegations that many patients were provided services that did not qualify for Medicare reimbursement but were billed as such.
Susan Coler, Halunen Law Partner and Chair of the False Claims Act Practice Group, recently spoke on a panel – “False Claims Act 101: What’s a Whistleblower to do? – as part of the Eighth Circuit Conference of the National Employment Lawyers Association.
In recent years, False Claims Act (FCA) lawsuits have dramatically increased in courts across the country. The FCA allows whistleblowers to share the government’s recovery of damages from entities who knowingly present a false or fraudulent claim for payment to the government, but there are many traps and unique procedures to be aware of in the pursuit of an FCA case.
Presenting an overview of the FCA that was useful to employment lawyers, the panel focused on the basics, on the potential hidden pitfalls, and most important, on how to advise employee whistleblowers about their options if they have uncovered fraud against the Government. The panel addressed who qualifies as a proper qui tam plaintiff, how qui tam cases are presented to the government, how cases are filed by private counsel and how are they are handled by the Department of Justice, what types of “false claims” give rise to FCA liability, and what damages are recoverable under the FCA.
The other panelists were David Fuller from the Minnesota office of the Department of Justice, Robert Collins, an attorney from Olathe, KS, and the moderator was Sarah Brown, an attorney from Kansas City, MO.
Said Coler, “False Claims Act cases are both challenging and satisfying. It was a pleasure to be on a panel with such knowledgeable practitioners.”
The National Employment Lawyers Association (NELA) advances employee rights and serves lawyers who advocate for equality and justice in the American workplace. Learn more about NELA and its work around the country.
A Partner at Halunen Law, Susan is Chair of the FCA/Whistleblower practice. She represents whistleblowers across the United States in many different industries who challenge illegal corporate conduct, including fraud against the government. As a Labor and Employment Law Specialist, Susan has also brought successful retaliation claims in connection with False Claims Act (FCA) /qui tam cases and as stand-alone actions.
Halunen Law False Claims Act attorneys Susan Coler, Nathaniel Smith, and Gerald Robinson brought a lawsuit on behalf of their client Brian Gravely alleging that National American University (NAU) has engaged in fraudulent conduct against the government. The lawsuit alleges that NAU’s misrepresentations allowed it receive millions in federal dollars that it would not have otherwise been entitled.
“This type of conduct not only harms taxpayers, but the students who attend these universities. Our client observed the negative impact he believed the school’s conduct was having, and was compelled to take a stand,” said Susan Coler, Partner and Chair of Halunen Law’s Qui Tam/Whistleblower practice group.
SAINT PAUL, Minn. (December 1, 2017) — A dermatologist’s whistleblower lawsuit recovered $850,000 for his fellow taxpayers, as the U.S. government settled fraud claims against a Minnesota skin-care practice and its owner, whom it had accused of false billing and unnecessary surgical procedures.
The Employment Law Group® law firm represented the whistleblower, Dr. Jeff Samuelson, with the assistance of local attorney Susan Coler of Halunen Law.
In his lawsuit, Dr. Samuelson alleged that Michael J. Ebertz, a dermatologist and owner of Skin Care Doctors, P.A. (SCD), based in Burnsville, Minn., profited by knowingly treating many patients’ benign skin lesions as if they were pre-cancerous — and then billing Medicare, the government insurance program, for procedures that weren’t medically necessary and shouldn’t have been reimbursed by taxpayers.
According to Dr. Samuelson’s complaint, Dr. Ebertz also used other methods to profit illegally from his patients’ visits — and urged other doctors in the practice to follow his lead, which they refused to do. Dr. Ebertz’s patients were unaware of the manipulation, according to Dr. Samuelson, who was a partowner of SCD at the time but was forced out after uncovering the scheme.
Dr. Samuelson now practices dermatology in California.
After investigating Dr. Samuelson’s claims, the U.S. government largely echoed his accusations and negotiated a settlement in which Dr. Ebertz denied wrongdoing yet agreed to pay $850,000 on his own behalf and for SCD. He also agreed to pay Dr. Samuelson’s attorney fees, and to stop billing Medicare for the disputed practices.
“This settlement is an important statement about the proper conduct of medicine,” said David L. Scher of The Employment Law Group, who was Dr. Samuelson’s lead attorney in the case. “When people visit a clinic such as SCD, they must be treated based on sound medical judgment — not based on how much money they can generate for a doctor’s bank account.”
The United States was represented in the case by Assistant U.S. Attorney Ann M. Bildtsen and members of the Office for the U.S. Attorney for the District of Minnesota. Dr. Samuelson brought the lawsuit under the federal False Claims Act (FCA) and will receive a reward of $153,000 for his whistleblowing.
The FCA, originally signed into law by President Abraham Lincoln in 1863, makes it illegal to deceive the federal government for financial gain. In addition to steep penalties for violators, it includes a “qui tam” provision that allows whistleblowers to file a legal complaint on behalf of taxpayers and — if they prevail — to receive a share of the proceeds.
“Jeff took a tough stand against his boss, and was pushed out of the SCD practice as a result,” said R. Scott Oswald, managing principal of The Employment Law Group. “He could have kept quiet and moved on, but instead he stood up for taxpayers and future SCD patients, achieving a measure of justice with the strongest whistleblower tool available for Medicare fraud — the False Claims Act. He’s a model of medical ethics and a beacon for doctors and other medical professionals who witness wrongdoing by their colleagues.”
“Along with Jeff and local counsel Susan Coler, we’re grateful to AUSA Bildtsen and her aggressive team in Minneapolis, and to Acting U.S. Attorney Gregory G. Brooker,” noted Mr. Scher. “They recognized the harm to Minnesota citizens, as well as to federal coffers, and they moved smartly to hold Dr. Ebertz to account.”
David Scher, a principal of The Employment Law Group, and Susan Coler, a partner in Halunen Law, are available for interviews about this case. Dr. Samuelson’s original complaint in the case, filed in 2015, is available here.
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About The Employment Law Group
The Employment Law Group® law firm represents employees who stand up to wrongdoing in the workplace. Based in Washington, D.C., the firm takes cases nationwide. More information about The Employment Law Group and its attorneys is available at https://www.EmploymentLawGroup.com.
About Halunen Law
Based in Minneapolis, Minn., Halunen Law represents employees, consumers, and whistleblowers in actions against corporations that have committed wrongdoing. More information about Halunen Law and its attorneys is available at https://staging.halunenlaw.com.
A Partner at Halunen Law, Susan Coler represents whistleblowers across the United States in many different industries who challenge illegal corporate conduct, including fraud against the government. As a Labor and Employment Law Specialist, Susan has also brought successful retaliation claims in connection with False Claims Act (FCA) /qui tam cases and as stand-alone actions.
Learn more about Susan Coler
FOR IMMEDIATE RELEASE
Rochester Police Officer Who Opposed Racial Bias and Excessive Force
Obtains $1 Million Settlement, Halunen Law Reports.
MINNEAPOLIS – (Sept. 19, 2017) A Rochester, Minn. police officer has obtained a $1 million settlement from the city of Rochester to resolve her employment discrimination and retaliation claims against the Rochester Police Department, according to Minneapolis-based Halunen Law, the firm representing the officer.
In 2016, Rochester Police Lt. Elisa Umpierre reported suspected racial bias in a decision to deny a favorable assignment to another police officer. Later that year, Rochester Police Chief Roger Peterson filed an internal complaint against Umpierre, allegedly based on Facebook posts Umpierre had published.
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