Class Action Law

Whistleblowers May Sue Their Employer Under False Claim Statutes When the Employer Commits Government Fraud

Government contracting is a huge business that spans numerous industries and trades. Contracts between private contractors and State and Federal government agencies account for hundreds of billions of dollars in government spending. Many reports have noted that oversight by government auditors can be lax at times. (See, e.g., Nick Cahil, Audit Finds California Agencies Didn’t Follow Bid Rules, Courthouse News Service, (June 20, 2017).) Government agencies simply do not have the resources to supervise the performance of every contract, and this lack of oversight opens the door to waste, mismanagement, and outright fraud. (See Patrick McGreevy, Caltrans investigations find waste and wrongdoing in state transportation programs, Los Angeles Times, (Dec. 6, 2019).)

Unfortunately, the temptation to treat government contracts as a source of free money proves too much for some contractors. In an effort to curtail fraudulent government contracting, State and Federal governments have placed the power to root out and prosecute fraud in the hands of the people most likely to discover that fraud: employees working on the front lines. State and Federal False Claims Acts create a mechanism called a “qui tam lawsuit,” by which employees of government contractors can blow the whistle on their employers’ frauds by filing a civil lawsuit on behalf of the government.

What Counts as a False Claim?

In some sectors, such as defense, the government cares so deeply about proper contract management that whistleblower laws can apply in cases of “gross mismanagement” or “gross waste” of a government contract. For a normal qui tam case, however, the contractor must usually know it is somehow defrauding the government.

The classic example of a false claim is billing the government for services not actually performed or goods not actually delivered. For example, if a company has a contract to excavate an embankment on government property, and the company falsely bills the government for ten laborers, when in reality the job only required five laborers. Or perhaps a company has a contract to sell medical supplies to a Medicare provider, and it ultimately charges the government for double the supplies that it actually delivers. Either of these situations would be a “false claim.”

More likely the contractor’s fraud will be more sophisticated. A company might take advantage of complicated billing and accounting cycles to falsify records to the government in a way that benefits the contractor. A company might also structure transactions in a way that falsely amplifies overhead costs in order to justify a higher bill that appears normal on its face. Right from the beginning, a company might falsely certify to the government that its costs will be $X, when in fact the company knows the costs will be much higher than $X, in order to win a bid on a contract.

These cases can be very tenuous because government contractors should be held to the highest degree of transparency, considering they are ultimately paid with money that comes from taxpayers. Even something as seemingly minor as an undisclosed conflict of interest during the bidding process can create a false claim. These contracts need to be squeaky clean, and, as they say, if there is a question, there is no question. Anyone who thinks there might be a false claim situation should ask one question: does something about this situation not quite add up? If the answer is “yes,” the situation may warrant investigation.

What About Fraud by the Employees of Government Contractors?

In some cases, employees may submit false claims through their employers. The employer may be totally unaware the government is being defrauded by a “bad apple” within the organization, but that can still count as a false claim for which the employer may be liable to the government. For example, if an office manager for a healthcare provider has found a way to embezzle from his employer by creating fake invoices, the employer may still be held accountable if the embezzled money is ultimately paid out under a government contract for Medicare or Medicaid services.

What Counts as the “Government”?

False claims can be those submitted to any part of a State or Federal government. Usually, a contract will be negotiated with a government agency, or a subdivision of that agency. The scope of the “government” for qui tam purposes is, therefore, fairly broad. In California, for example, the arms of the government that can receive false claims include cities, counties, and the University of California system.

Who Can Be a Whistleblower?

Anyone privy to a fraud could be a potential whistleblower, but the most common qui tam plaintiffs are employees of the contractor where the false claim originated. Employees are right there in the thick of things every day, so they see what’s going on. More importantly, many frauds can be complicated, and employees often have enough expertise in their industry to spot when something isn’t right.

What’s In It For the Whistleblower?

Although many whistleblowers are motivated first and foremost from the desire to thwart corruption, the fear of retaliation, and the inconvenience of being involved in a large lawsuit, gives otherwise motivated whistleblowers a strong incentive to stay silent. In order to balance that incentive, State and Federal laws permit successful whistleblowers to share in any recovery, which can be substantial.

What Happens if the Employer Finds Out About the Whistleblower?

Many employees justifiably fear retaliation by their employers if they reveal fraudulent conduct. Fortunately, qui tam laws also include strong whistleblower protections. If an employer decides to double down on its unlawful conduct by retaliating against the employee who blew the whistle, the employee can recover money damages independent of any recovery in the underlying qui tam case.

What Should I Do if I Think My Employer Defrauded the Government or Otherwise Submitted a False Claim?

Qui tam laws are extremely complex. If you think your employer has committed fraud or falsity in connection with a government contract, you should contact an experienced attorney for a free case evaluation.

FMLA Protects Employees Who Take Their Loved Ones on End-Of-Life Trips

The federal Family and Medical Leave Act (FMLA) traditionally gives covered employees the right to take up to 12 weeks of unpaid leave to care for a family member such as a spouse, child, or parent, if the family member has a serious health condition. 29 U.S.C. § 2612(a)(1)(C). What qualifies as “caring for” a family member is not always clear, however. As we reported in 2014, in a win for employees, the Seventh Circuit Court of Appeals in Ballard v. Chicago Park Dist., 741 F.3d 838, 843 (7th Cir. 2014), ruled that taking a terminally ill loved one on an end-of-life trip qualifies as “caring for” a family member, and accordingly, is protected leave under the FMLA.

Beverly Ballard was fired from her job with the Chicago Park District after she took her terminally ill mother on an end-of-life trip to Las Vegas. Ballard v. Chicago Park Dist., 900 F. Supp. 2d 804 (N.D. Ill. 2012). It was undisputed that Ballard cared for her mother at their home in Chicago. Ballard was her mother’s primary caregiver, and was responsible for feeding and bathing her mother, as well as administering her medication.

In the district court proceedings, Defendant Chicago Park District argued that the FMLA did not protect Ballard’s trip to Las Vegas because the trip was not related to an ongoing course of medical treatment. The district court disagreed, denying defendant’s motion for summary judgment, and finding that “[s]o long as the employee provides ‘care’ to the family member, where the care takes place has no bearing on whether the employee receives FMLA protections.”

The Seventh Circuit affirmed the district court’s decision. The Seventh Circuit noted that on its face, the FMLA provision at issue refers to “care” of a family member, and not “treatment.” Furthermore, the Seventh Circuit held that the FMLA does not restrict care of a family member to care given at home. The Court found that Ballard continued to provide her mother with her basic medical, hygienic, and nutritional needs while visiting Las Vegas, and noted that due to an emergency at the hotel,

Ballard was required to find her mother another source of insulin and pain medication. Accordingly, the FMLA protected Ballard’s trip to Las Vegas.

Ballard remains one of the most useful decisions to support the proposition that “care” leave pursuant to the FMLA is not limited to care provided while seeking medical treatment so long as the employee is providing some form of active physical care (i.e. medical, hygienic, nutritional) related to a family member’s serious health condition. It also remains strong authority for the proposition that such care, to qualify under the FMLA, need not be geographically limited to one’s home or doctor’s office. In other words, taking FMLA leave to “care” for a loved one does not mean you both go into lockdown in your home, and only see the light of day when you need to go to the doctor’s office.

A recent decision (from a district court within the Fourth Circuit) again highlights the fact that the FMLA has no geographic limits. In Meyer v. Town of Wake Forest, Case No. 5:16-CV-348-FL, 2018 U.S. Dist. LEXIS 167130 (E.D.N.C. Sept. 28, 2018), the plaintiff had FMLA leave approved both to care for his spouse’s serious health condition, and also to care for their newborn baby. During his FMLA leave, among other things, Plaintiff took his wife and child on trips to the beach and the state fair. The employer argued FMLA leave does not cover these trips, i.e. that there is a geographical limitation to FMLA protected activities. Id. at *20. The Court also noted the absence of any geographical limitation in the text of the FMLA on activities when caring for a spouse with a serious health condition. The Meyer court, however, declined to resolve the issue formally, noting that Plaintiff had also been approved to care for his newborn (who was also on the trips), and that such leave is clearly not geographically restricted.

Even after Ballard and Meyer, however, employees should still give careful thought before attempting to combine FMLA leave to care for a relative with travel. For example, in a recent case in the Northern District of California, an employee was not even able to take FMLA for the time in which the employee traveled from work to the location of the ill relative. The rationale for the court’s decision was that, during the drive, the employee was not “caring” for the relative. See Aguirre v. California,

Case No. 16-cv-05564-HSG, 2019 U.S. Dist. LEXIS 129752, at *10-*11 (N.D. Cal. Aug. 2, 2019).

So, hearkening back to Ballard, employees should be aware that if you take your ill relative to Las Vegas, you may still face a challenge by your employer if you are found spending large portions of the day alone on the casino floor, or driving solo up and down the Strip.

To schedule your free initial consultation, contact us online or call (619) 342-8000 today!

More Time For Adult Survivors of Child Sexual Assault To Sue

California has passed a new law extending the statute of limitations for cases of alleged childhood sexual abuse. This is incredibly important both for survivors of child sexual assault and for the protection of California’s children. Authored by Assemblywoman Lorena Gonzalez of San Diego and signed by Governor Gavin Newsom, as of Jan. 1, 2020, adults have until at least their 40th birthday to file claims against people and institutions they seek to hold responsible for sexual molestation or sexual assault they experienced as children. See Code of Civil Procedure §340.1. Before this new law, survivors had until their 26th birthday to file suit.

The law also opens up a three-year window for the revival of any claims that would have been barred by the statute of limitations. In addition, the law provides for added penalties (treble damages) against employers or organizations that covered up childhood sexual abuse. As has been well documented with the Catholic Church and Boy Scouts of America, institutions have been criticized for moving predators around from one place to another to avoid accountability.

Data suggests that survivors of childhood sexual abuse often do not tell anyone about the abuse until they are well into their adulthood. Survivors can help protect today’s children by ensuring that what happened to them doesn’t happen to another child.

If the sexual assault happened after the victim’s 18th birthday, the time to file a lawsuit for sexual assault was extended last year to up to ten years after the assault or three years after the injury was discovered, whichever is later. See Code of Civil Procedure §340.16.

Haeggquist & Eck, LLP represents brave survivors of sexual assault and sexual harassment. Contact us online or call us at (619) 342-8000 to speak with one of our attorneys.

Supreme Court Holds Corporations Cannot Strategically Skirt Class Action Liability

Like many other strategic maneuvers by corporations that can only be characterized as one-sided and unfair, such as burying arbitration clauses in paperwork which deny consumers the right to a fair and impartial jury trial and immunize corporations from sweeping class-wide liability no matter how egregious their conduct, corporations have been attempting to suppress class-wide liability by offering individual plaintiffs the relief necessary to make them whole at the outset of the litigation in order to shut down multi-million dollar class actions.  In other words, the corporation’s argument is that by offering the named plaintiffs their full relief (which is often only a few hundred or few thousand dollars), the plaintiff has been made whole and, thus, the case is moot. By making such an offer, the corporation’s hope is to shut down its potential liability for multiple millions of dollars it would owe to all of the remaining class members.

Rightly so, named plaintiffs, who have promised to uphold their duties to protect and pursue rights not only on behalf of themselves but all of the absent class members, generally reject such strategic offers by corporations meant to shut down the absent class members’ rights to pursue justice. Instead, they choose to reject such strategic offers to pursue justice in court on behalf of all those similarly harmed.  Recognizing that the corporation’s offers is nothing more than a strategic move to moot the lawsuit, the consumer’s position, correctly, is that they have every right to reject such offers and that such a rejection does not moot their class-wide claims, particularly in the face of the corporation’s continuing denial of liability.

Today the U.S. Supreme Court ruled in favor of the consumer.  The high court held corporations cannot cut off class action claims by making an offer of full relief to individual plaintiffs where the plaintiff refuses to accept the offer.  Justice Ruth Bader Ginsburg held that an unaccepted settlement offer has no force.”  Just like other “unaccepted contract offers, it creates no lasting right or obligation. With the offer off the table and the defendant’s continuing denial of liability, adversity between the parties persists.”  Today is a victory for consumers in holding corporations accountable for their conduct that may have harmed hundreds if not millions of consumers. The case is Campbell-Ewald Co. v. Gomez, No. 14-857, in the Supreme Court of the United States.

To schedule your free initial evaluation, contact us online or call (619) 342-8000 today!

Boost Mobile: Lose Your Prepaid Phone Minutes?

Haeggquist & Eck, LLP is investigating a potential class action lawsuit against Boost Mobile, one of Sprint’s pre-paid brands. Boost Mobile sells wireless phones and services without long-term contracts. To pay for Boost Mobile’s prepaid services, customers periodically add money to their Boost Mobile accounts. However, consumers claim Boost Mobile withdraws any money a customer doesn’t use within 90 days.

If you’ve loaded money into your Boost Mobile account and Boost has withdrawn the money after 90 days, you may have been a victim of consumer fraud. If you wish to discuss or participate in this potential class action, or if you have any questions concerning your rights or interests, please contact Helen Zeldes of Haeggquist & Eck, LLP at (619) 342-8000 or via e-mail at investigations@zhlaw.com. There is no cost to you.

To schedule your free initial consultation, contact us online or call (619) 342-8000 today!

Translate »