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Whistleblowers Responsible for
Half Billion Dollar Fraud Recovery Against Bristol Myers
Washington, DC. – October 1, 2007. Several whistleblowers provided confidential information to the United States Department of Justice which resulted in a $515 million taxpayer recovery against the drug company Bristol Myers to settle health care fraud allegations. The settlement was announced by the Department of Justice and Acting Attorney General Peter Keisler on Friday, September 28, 2007. The drug company paid the federal government over $328 million in civil fraud damages and penalties, and paid various state governments over $187 million, plus interest, to settle seven whistleblower lawsuits.
The settlement arose from allegations concerning the illegal marketing of more than 45 drugs made or marketed by Bristol Myers, including Tequin, Pravachol, Glucovance, Avapro, Plavix Abilify, Monopril, Metaglip, Taxol and Coumadin. These wide-spread practices by Bristol Myers were alleged to have increased Medicare and Medicaid costs, all of which is paid by the taxpayers.
Employee whistleblowers now account for the majority of all civil fraud recoveries obtained by the United States. For example, between 2000-2006, the Department of Justice recovered $12 billion in civil fraud recoveries ($12,093,022,897). Whistleblowers were responsible for $7 billion ($7,972,051,660) worth of these recoveries, or 65.9%.
Attorney David K. Colapinto, who represented one of the Bristol Myers whistleblowers, said:
"The employee whistleblowers who reported massive health care fraud by Bristol Myers risked everything to help the government uncover the details of the complex web of fraudulent schemes that were allegedly used to rip-off patients and the taxpayers. These acts of courage led to the recovery of more than half a billion dollars of taxpayer money under the settlement.”
“This settlement demonstrates the effectiveness of the whistleblower (or qui tam) provisions of the False Claims Act.”
“Without the assistance of these whistleblowers it is unlikely that the government would have discovered the entire fraud or obtained as large a recovery for the American people.”
National Whistleblower Center President, Stephen M. Kohn, added the following:
“Whistleblowers save the taxpayers billions of dollars every year. They are the true heroes in fraud recovery cases. Laws which encourage and reward whistleblowers must be expanded, so every crooked contractor is held to the same standard as Bristol Myers.”
MAJOR WHISTLEBLOWER LEGISLATION I
NTRODUCED IN SENATE
False Claims Act Correction Act of 2007 Introduced by Senators Grassley, Durbin, Leahy, and Specter
Washington, D.C. September 12, 2007. Important legislation designed to protect taxpayers from fraudulent government contractors was introduced in the Senate today by Senate Judiciary Chairman Patrick Leahy (D-VT), Ranking member Arlen Specter (R-PA), longtime whistleblower champion Charles Grassley (R-IA), and Judiciary Committee member Dick Durbin (D-IL). The bill is intended to correct loopholes in the False Claims Act, a law which permits private citizens to file suit against contractors who defraud the federal government.
The False Claims Act has been the most effective anti–fraud law in American history, having recovered over $20 billion dollars in ill-gained taxpayer dollars over the past 20 years.
National Whistleblower Center President Stephen M. Kohn hailed the introduction of the bill:
“The majority of all civil fraud recoveries in the US are based on whistleblower disclosures. Because of the effectiveness of the False Claims Act, powerful corporate interests have aggressively attacked the law in court, creating loopholes which have undermined the law and cost the taxpayers billions of dollars. The False Claims Act Correction Act is badly needed legislation to stop the hemorrhaging of the public treasury by unscrupulous beltway bandits.”
The Legislation corrects the following defects in the current law:
- Corrects FCA by removing the requirement that false claims be presented to a government employee. This section corrects longstanding problems which prevented taxpayer recoveries on false claims regarding government money or property. This correction ensures that any government money lost to fraud, waste, or abuse can be recovered using the FCA regardless of whether the individual making the false claim directly represents such a claim to a government employee.
- Congressionally reverses the Supreme Court decision in Rockwell Int’l Corp. et al. v. United States, which dramatically limited the FCA by restricting legitimate qui tam relators who often bring fraud to the attention of DOJ with information DOJ expands and ultimately settles on other grounds.
- Clarifies that false or fraudulent claims against non-U.S. Government funds under the trust and control of the U.S. Government are subject to recovery under the FCA. This clarification would ensure funds administered by the U.S. Government on behalf of third party nations or other entities are protected from fraud, waste, or abuse by extending FCA liability to those funds.
- Clarifies a split between Circuit Courts of Appeal as to when a government employee may act as a qui tam relator under the FCA. This clarification would explicitly state in statute the original legislative intent of the 1986 amendments to the FCA allowing government employees to act as qui tam relators in limited circumstances when they have reported activities up the chain of command, to the Inspector General, to the Attorney General, and only if no action was taken after 12 months.
LEADING PRESIDENTIAL CANDIDATES ENDORSE NATIONAL
CIVIL RIGHTS LAW FOR WHISTLEBLOWERS
Senators Obama, Clinton, and Governor Huckabee Among Supporters
Washington, D.C. September 3, 2007. Presidential candidates Sen. Hillary Clinton, Sen. Chris Dodd, former Senator John Edwards, former Senator Mike Gravel, Governor Mike Huckabee, Representative Dennis Kucinich, Sen. Barak Obama, Congressman Ron Paul, and Governor Bill Richardson, have agreed in writing to specifically endorse a national whistleblower protection law modeled on the Civil Rights Act.
Today, the National Whistleblower Center announced that, in response to a detailed survey, these nine candidates pledged “to advocate for the passage of a law which would give employees who are illegally terminated for blowing the whistle the same procedural and substantive protections as other wrongfully discharged employees under laws such as Title VII of the Civil Rights Act of 1964 (i.e. the law that prohibits discrimination on the basis of race or sex).”
Title VII protections apply to nearly every employee in the country, including those employed by private businesses as well as federal, state and local governments.
Two candidates (Senator Sam Brownback and Representative Tom Tancredo) responded to the survey with statements in support of whistleblower protection, but declined to specifically support the civil rights proposal. Four candidates, Senator Biden, Former Mayor Rudy Guliani, Senator John McCain and former Governor Mitt Romney, declined to respond to the survey.
In releasing the results of the survey, National Whistleblower Center President Stephen Kohn stated: “We are encouraged that nine presidential candidates have publicly demonstrated their commitment to supporting whistleblower protection. It is shocking that on Labor Day, 2007 the majority of American workers still have no adequate federal protection when they risk their jobs and disclose illegal or unsafe conduct. We sincerely hope that all candidates for President will publicly endorse civil rights for whistleblowers and use their positions to ensure that by next Labor Day all whistleblowers are finally protected under a federal law.”
National Whistleblower Center Joins Coalition in Calling
For An End To "State Secrets" Abuses
Washington, D.C. - August 23, 2007. The National Whistleblower Center, along with a broad coalition of liberal, libertarian and conservative groups including the American Civil Liberties Union, the National Security Whistleblowers Coalition, and the Liberty Coalition, condemns the Government's abuse of the State Secrets Privilege in the case of Federal Bureau of Investigation (FBI) Whistleblower Sibel Edmonds, and calls for swift action by Congress and the courts to stop this abuse.
Ms. Edmonds, a former FBI Language Specialist, brought charges of wrongdoing, criminal activity, cover-ups, and national security threats, inside the agency following the terrorist attacks of 9/11. Edmonds was promptly fired. The United States Department of Justice Office of Inspector General (OIG) investigated her allegations, and confirmed most of her claims. The OIG concluded that her firing was illegal and that the FBI failed to investigate Ms. Edmonds' credible allegations of security breaches and possible espionage inside the FBI language services division. However, the Attorney General invoked the "State Secrets Privilege," which covered up the FBI's wrongdoing and malfeasance and resulted in the dismissal of Ms. Edmonds' retaliation case. The OIG report is publicly available.
On August 23, 2007, it was revealed that the Justice Department recently publicly revealed information that it had claimed was "privileged" and "secret" in Ms. Edmonds' case. The DOJ's recent actions show that it abused the State Secrets Privilege in Ms. Edmonds' whistleblower case in order to convince the court to dismiss her case.
NWC President, Stephen M. Kohn, issued the following statement in support of Ms. Edmonds:
"The 'State Secrets' privilege undermines whistleblower protections. Despite the fact that the Department of Justice's own watchdog, the Inspector General, confirmed that Sibel Edmonds had been illegally fired, the government used that alleged 'privilege' to have her case thrown out of court and to cover up FBI wrongdoing. The government abused a 'privilege' to undermine constitutionally protected free speech and ignore an Inspector General's findings of retaliation. Every national security whistleblower was threatened by this improper assertion of a privilege. The NationalWhistleblowerCenter joins in asking Congress and the courts to place limits on this privilege so that national security whistleblowers, such as Ms. Edmonds, can expose serious wrongdoing, free from retaliation."
NWC General Counsel, David K. Colapinto, commented on the recent developments in Ms. Edmonds' case:
"This latest revelation proves that throwing Ms. Edmonds' case out of court was a travesty because no state secrets would have been revealed. The dismissal rewarded the FBI wrongdoers and, as the Inspector General found, Ms. Edmonds' whistleblowing was the "most significant factor" in her firing by the FBI. If the courts won't prevent the government from using the State Secrets privilege as a trump card to cover up agency wrongdoing and to defeat meritorious claims, like Ms. Edmonds' whistleblower case, then Congress must act to stop this odious practice."
Stephen Kohn and David Colapinto represented Ms. Edmonds during the OIG investigation, and witnessed first hand the improper use of the State Secrets Privilege in her case.
Related Item:
Full Court Review Requested In Key Tax Case
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Murphy's Attorney David Colapinto |
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Reversal of setback for whistleblowers and civil rights victims urged.
Washington D.C. – August 17, 2007. The full U.S. Court of Appeals for the District of Columbia Circuit has been asked to reconsider last month’s decision by a three-judge panel that reversed itself on a key civil rights tax case. On July 3, 2007, the panel held that the IRS can tax damage awards based solely on compensating victims who suffer personal injuries. However, on August 22, 2006, the same panel in the same case held that such taxes were unconstitutional, as compensation for a documented "loss" was not "income" subject to the tax code.
In a major reversal, the three-judge panel, (Chief Judge Douglas H. Ginsburg, and Judges Judith W. Rogers and Janice Rogers Brown), held that make whole compensation to restore personal injuries losses are taxable.
The case arose as a result of the Department of Labor ruling in the whistleblower case of Marrita Murphy. In that case, the Labor Department held that Ms. Murphy suffered substantial damages to her health and reputation, and awarded her $70,000 in compensatory damages strictly related to her losses.
The IRS taxed Ms. Murphy's damages and she asked for a refund of the tax on the grounds that her damages were not income.
In an August 22, 2006 decision, Judge Ginsburg, writing for the 3-judge panel, agreed with Ms. Murphy, and found that compensation for actual documented personal injury losses were not subject to an income tax. The IRS forcibly argued that decision was wrong and the panel agreed to vacate its original decision and rehear the case to consider issues that were never timely raised on appeal by the IRS.
Rather than overrule its prior decision (Murphy v. IRS, Aug. 22, 2006) holding that taxing Murphy’s damages was unconstitutional, the panel simply held that Congress intended to amend the tax code “by implication” to tax personal injury damages under its authority to create an excise tax on people who use the courts to vindicate their rights. No court in the history of the United States has ever upheld such an implied tax.
In a remarkable ruling, the Court held that compensation for damages for emotional distress suffered by a whistleblower were not paid to make the employee “whole,” but were instead paid as part of a “forced sale” which Congress could tax under its excise tax authority. The Court reasoned:
Murphy's situation seems akin to an involuntary conversion of assets; she was forced to surrender some part of her mental health and reputation in return for monetary damages.
Murphy v. IRS (July 3, 2007).
Attorneys for Marrita Murphy have asked the full U.S. Court of Appeals for the D.C. Circuit to reconsider the panel’s holding because it conflicts with Supreme Court and other legal precedent, and it raises questions of exceptional importance.
"The Court's reversal stands reality on its head," said David K. Colapinto, who argued on behalf of Ms. Murphy. “This case marks the first time that a court has interpreted the gross ‘income’ statute, 26 U.S.C. § 61(a), to be amended ‘by implication’ to create a tax not expressly enacted by Congress. Additionally, this is the first time that any court has construed the tax code to imply an “excise tax” on the ‘privilege’ of utilizing the ‘legal system’ to vindicate a federal statutory right,” Colapinto added.
"When whistleblowers suffer retaliation, they do not 'sell' their mental health. If people are injured in a car accident, they do not 'sell' their arms and legs. These are real human losses, and compensation to restore that human loss was never intended to be 'income' under our Constitution or the tax code," Colapinto said.
Stephen M. Kohn, the President of the National Whistleblower Center and co-counsel for Ms. Murphy, stated: "This decision is a terrible setback for all victims of civil rights abuses. Congress did not pass a special tax demanding payment from people who use the legal system to prevent retaliation against whistleblowers. It was error for the Court to imply such a tax. This decision threatens fundamental human rights, including access to the courts."
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