Historically, IRS tax whistleblower cases have been both frustrating and unproductive. In a Bloomberg article in 2012, Michael Fitzgerald was quoted as saying a referral to the IRS of a whistleblower case is akin to being in “purgatory” since there had historically been little to no communication from the service. Well, that may all be changing now.
Continue reading
1. Shut up and get a good lawyer, fast. You can complain about the fraud internally, but we all know how that usually ends. Once you identify a fraud, immediately contact a lawyer to ask for guidance, including what documents and corroborating evidence that you can take with you. Do NOT ever take originals. You don’t want the real crooks to flex their muscle and convince authorities that your “theft” should negate their fraud. It’s also possible that as soon as you start thinking about the impropriety, people at the company know who you are. That means you could be escorted out of the building before you can grab your kids’ pictures off your desk.
2. Make sure you have a case. FCA, IRS and SEC cases are not based on rumor or hunches, but evidence. You have to prove fraud and the government is not paying awards for generalized tips, but for specific evidence. You are supposed to be doing the government’s work for it. Don’t assume that you will be able to prove your case by having your lawyer or the government subpoena documents from the defendant after the case is filed. Think about what you personally know right now. As the great philosopher Tommy Boy said, “I can get a good look at a T-bone by sticking my head up a bull’s ass, but I’d rather take a butcher’s word for it.” The government wants the butcher, but come prepared with meat in hand.
3. Welcome hard questions and difficult truths. Don’t blame a lawyer for questioning your case – convince them it has the necessary merit. If you have found a good lawyer and you can’t convince them, then maybe you don’t have a case. My first(successful) case involved a novel theory – fraud that was obvious to me but not something that the Department of Justice had pursued before. My attorneys dug deep into the facts of my case and did a lot of legal research before they felt comfortable it was viable. Initial skepticism can save years of wasted time if the facts and/or law don’t work in your favor.
4. Get an honest lawyer who’s had some success in the whistleblower arena. Before divulging any specific details to a prospective lawyer, make sure they run a conflict’s check first to ensure they don’t have an ulterior agenda. For example, they could already represent a client that has a similar case and could be trying to suck information out of you. If a lawyer purports to have recovered billions of dollars in whistleblower claims, ask them how much their relators’ shares have been. There are some great lawyers who represent whistleblowers, including some who are less well known but nonetheless very capable. Asking other whistleblowers who they recommend and then talking to the lawyers is always a good way to approach a potential attorney-client relationship. The key, however, is to find an attorney with good judgment quickly.
Also, don’t pay someone an hourly fee to represent you on a whistleblower case (unless they are only representing you in an employment case). The real whistleblower lawyers all work on a contingency fee basis — meaning you pay nothing unless you win. The only lawyers I ever heard of who charge an hourly rate are ones who don’t know what they are doing — or ones who think you don’t have a case but are happy to take your money.
5. Prepare for the long haul. Most defendants don’t settle easily, and they never fear press as much as you think they will. Many lawyers have told me that every whistleblower they talk to says “the company will settle this quickly to avoid the press.” They never do.
Continue reading
Everyone knows that Walt Disney left this earth many years ago. However, his legacy lives on in, among other things, the amusement parks in California, Florida and France. As part of the development of and continued operation of these amusement parks, the ire of local environmentalists is often raised. Now what might this have to do with sanctions against a whistleblower in the Federal Courts?
In a recent decision, a California court found a whistleblower’s lawsuit to be frivolous. The court has invited the Walt Disney Company to submit a bill for the time spent by the law firm on the defense of the matter. This case will undoubtedly be cited as the reason why whistleblowers should not come forward and report activity that they believe to be fraudulent. However, many of the facts particular to this case will not be mentioned.
The Federal False Claims Act, and similarly many state False Claims Acts, is subject to the Federal Court rule prohibiting frivolous claims. It is fairly rare for an action for a frivolous suit to be successful. The sanctions for bringing a frivolous claim require a showing that the action was “baseless” and that a reasonable inquiry would have confirmed the frivolous nature of the action. It is often the case that potential whistleblowers are afraid to move forward in making their claim or bringing their information to the attention of the government because of the fear of being sued.
The facts in the Walt Disney case were unique and even a layperson would probably agree that the action by the whistleblowers was baseless and frivolous. The whistleblower, an environmental group, sued Walt Disney for the “future” damages to the waterways surrounding Disneyland. Additionally, this was the 10th lawsuit based on essentially the same facts filed by this same group. Other courts, when considering the earlier actions by this group, had dismissed many of them with prejudice.
Continue reading
UPCODING AND OTHER HOSPITAL FRAUD
Over the past couple of weeks, the Federal Courts have passed on a spate of fraud allegations against hospitals. In the past, New Jersey hospitals have been hit with similar claims and, in fact, some New Jersey hospitals have settled with the Federal Government for these allegations of fraud. The claims allege what amounts to improper or inflated billing practices. The terms of art for inflated billing is “upcoding”. Upcoding is basically where the hospital bills for a procedure which may have been more intricate and provides for a larger reimbursement from the Federal Government. The “upcoding” refers to a different billing “code” that the Federal Government assigns to certain procedures. By submitting a claim for a more difficult or intricate procedure, the hospital is reimbursed a larger amount of money. Although there are variants on this upcoding issue, a qualified fraud attorney can explain the intricacies.
“Upcoding” can occur in hospitals as well as physician’s offices, nursing homes or, for that matter, dental offices and counselors’ offices. The upcoding can come in the form of billing for a more difficult procedure but it can also come in the form of billing for a longer procedure. For example, a false claim was brought against a counselor for billing for one-hour sessions when in fact the sessions were only lasting 45 minutes. After the fraud was reported, the investigators engaged in some simple math. The accumulation of the hours billed by the professional far exceeded that which was possible.
A telecommunications company paid $16.5 Million for improper billing practices. Avaya, a New Jersey-based company, billed governmental agencies for telephone equipment that either didn’t work or had been replaced. A concerned individual brought the improper conduct to light. Under the Federal Whistleblower Statute, the individual will be paid for providing the information. Although it has yet to be announced, the amount paid to the person disclosing the information will exceed $ 3 million. If you know of improper billing practices like this, call us.
New Jersey Whistleblower Lawyer Blog