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Mississippi Qui Tam Attorneys Note SEC Award of $17 Million to Whistleblower

An anonymous whistleblower has received an award of $17 million from the Securities and Exchange Commission (SEC) in what amounts to the second largest reward ever from the agency.  The whistleblower provided details that led to the recovery of a substantial sum related to securities fraud.  Details regarding the whistleblower case are limited because the SEC does not disclose specifics regarding its enforcement actions or investigations.  The agency protects the identity of the whistleblower by preventing disclosure of information that directly or indirectly could expose the whistleblower’s identity.  However, the amount recovered in the SEC enforcement action can be estimated at between almost $56 and $170 million based on the whistleblower’s award.

The chief of the SEC Office of the Whistleblower recently announced that during the one month period before the $17 million award, the agency had provided more than $26 million among five separate whistleblowers.  The SEC official indicated that he believes that these substantial rewards will motivate people who possess an awareness of federal securities violations to step forward and disclose illegal conduct to the SEC.

Most SEC whistleblower cases are initiated by company insiders such as financial advisors, investors, bookkeepers, tellers, bankers and others uniquely situated to discover conduct and schemes designed to defraud the government.  Whistleblowers who disclose SEC violations protect the government, taxpayers, and investors.  Eligibility for a reward is based on providing original information that facilitates the recovery of funds obtained by defrauding the government or securities violations.  The enforcement action must involve sanctions exceeding a million dollars.

The amount provided as a cash reward will amount to between ten and thirty percent depending on certain factors, which include the extent of the participation by the whistleblower and the nature of the information provided to the SEC.  The funds awarded to the whistleblower are paid from a fund established by Congress for the protection of investors.  Further, the reward does not involve any cost to taxpayers or investors who experience economic harm stemming from the securities violations.

A growing number of whistleblowers have come forward to report securities violations to the SEC in recent years, especially during the last five year period.  During 2015, the SEC received an all-time high 3,923 reports of illegal securities activity.  The total represented an eight percent increase over the previous year.  Approximately 37 million dollars were awarded among eight whistleblowers last year.  To put this amount of award money in perspective, the awards to whistleblowers in 2015 account for nearly seventy percent (68 percent) of the total amount paid by the SEC since the establishment of the SEC whistleblower program.

If you have information about a scheme or actions to defraud the government or securities violations that harm investors, you might be entitled to a substantial financial recovery if you blow the whistle.  At Barrett Law, we are here to help.  Contact our Mississippi Qui Tam Attorneys today at (601)790-1505 to schedule your free consultation, so we can answer any questions you may have regarding filing your claim.

 

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Federal Court Upholds Award under False Claims Act against State Farm for Manipulating Wind Claims into Appearing Like Flood Damage Claims

Many homeowners do not realize that standard homeowner’s policies do not cover flood damage.  Rather, flood insurance typically must be obtained through a separate policy under the National Flood Insurance Program (NFIP).  The federal government makes flood insurance available for discounted rates that do not correlate to actuarial risks through this program.  A key aspect of the NFIP authorizes private insurance companies to issue such policies in their own name under the Write Your Own Program (WYO).  While the private insurer issues the policy and administers claims, the government actually pays claims up to $250,000 for flood-based building damage and $100,000 for flood damage to personal property.

Private insurance companies often issue both a standard homeowner’s policy for which the carrier is liable and a WYO flood insurance policy backed by the federal treasury.  This creates an obvious conflict of interest when a hurricane causes damage because the private insurer can avoid liability by characterizing the damage as being caused by water rather than wind.  To mitigate this obvious potential for abuse, insurers under the WYO program owe a fiduciary duty to policyholders.  Unfortunately, there have been significant reports of manipulated and undisclosed expert reports and similar fraudulent tactics committed by insurers in processing Hurricane Katrina claims.  Insurers have used these tactics to shift liability for claims from private insurers to the federal government by misrepresenting the principle cause of the damage.

The U.S. Court of Appeals, Fifth Circuit recently upheld a relator’s qui tam claim under the False Claims Act for just such a practice.  The relators were adjusters for State Farm who brought a qui tam action alleging that their employer submitted false claims to the government for payment on flood policies.  The relator’s lawsuit alleged that the insurer unlawfully shifted responsibility for damage to the homes of Gulf Coast residents from homeowner’s insurance policies to the federal government through the WYO program.  They indicated that this shift was accomplished by characterizing damage caused by Hurricane Katrina as water damage.

Most homeowners would probably find the evidence provided by the relators as extremely disturbing.  The relators testified that shortly after the hurricane, a meeting with adjusters was organized by a State Farm trainer who provided the following instruction: “[w]hat you will see is, you will see water damage.  The wind wasn’t that strong.  You are not going to see a lot of wind damage.  If you see substantial damage, it will be from water.”

Further, the policy of the insurer prior to Katrina was to conduct line-by-line and item-by-item estimates of home damages using a program referred to as Xactimate.  Because of the high volume of claims, FEMA authorized insurers to employ an expedited procedure for two kinds of claims: (1) homes swept of their foundation by flood water; and (2) homes with standing water.  Any other claims were supposed to be adjusted using the insurer’s normal procedures.  The relators presented evidence that State Farm disregarded this directive and used an alternative software program referred to as Xactotal, which estimates value based on construction quality and square footage.  Although this alternate method did not involve a line-by-line analysis, it appeared to include such an evaluation.

The relators also disclosed that Brian Ford of Forensic Analysis Engineering produced a report indicating that the damage to the insured’s home (which was a test case) was primarily caused by wind damage.  In their qui tam action, they also indicated that State Farm refused to pay the expert and withheld his report from the insured’s NFIP claim file.  A note on the front of the report read “Put in Wind [homeowner’s policy] file – Do NOT Pay Bill DO NOT discuss.”  State Farm then obtained a subsequent expert that concluded water was the principal cause of the damage.  Evidence also was presented that a State Farm representative pressured the Forensic Analysis engineer with the loss of future business if he did not find flood damage as the primary cause of loss.

The trial court awarded the relators the maximum possible share on the test claim of thirty percent which amounted to $758,250 (treble damages on the $250,000 policy limit for damage to the home) plus a civil penalty of $227,475, and an extensive award for attorney fees and court costs.  State Farm appealed the decision, indicating that the facts were insufficient to support the verdict.  The appellate court found the evidence was sufficient to establish the fraudulent claim and ruled that the relators were entitled to additional discovery to establish other claims.

This is an example of the important role that whistleblowers serve by exposing attempts to misappropriate public funds and engage in other conduct that defrauds the public or creates threats to public safety.  At Barrett Law, we are here to help individuals who have the courage to step forward and expose such wrongdoing.  Our experienced Mississippi Qui Tam Attorneys work diligently to pursue the maximum compensation for our clients.  Contact our firm today at (601) 790-1505 to schedule your free consultation, so we can answer any questions you may have regarding your claim.

 

 

 

 

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SEC Makes Progress in Limiting Ability of Companies to Silence Whistleblowers

Many companies attempting to avoid disclosures that cause embarrassment and exposure to civil and criminal liability have used restrictive non-disclosure agreements to silence whistleblowers.  These agreements essentially constitute documents imposing corporate censorship to prevent disclosure of misconduct that harms the public.  Earlier this year, the SEC took action to protect whistleblowers from these oppressive agreements in the context of Dodd-Frank.

The Dodd-Frank Act includes language that permits people to cooperate with the government by notifying the public and courts of inappropriate financial practices.  The value of this law in safeguarding the financial system and protecting the public is evidenced by the important role of whistleblowers in exposing the misconduct of Bernie Madoff and Enron.  The devastating impact of large scale financial misconduct that contributed to the financial meltdown in the U.S. can be exposed and prevented by freeing whistleblowers from restrictive confidentiality agreements.

Since enactment of Dodd Frank, companies have drafted elaborate and extremely restrictive non-disclosure agreements that are intended to handcuff whistleblowers.  These agreements generally only permit revealing confidential information to the legal department of the offending company.  The hammer used to enforce restrictions on disclosure of misconduct includes making such non-disclosure a condition of employment.  Further, employees have been presented with confidentiality agreements that condition severance pay or the settlement of claims related to termination on accepting such censorship.

While no two non-disclosure agreements are identical, they tend to share some common features.  A common provision within this type of restrictive confidentiality agreement only permits confidential information to be discussed with lawyers hired by the company.  Many even prohibit discussing such information regarding illegal or otherwise improper practices with government regulators like the SEC.  Some companies also impose a requirement that employees discuss information regarding the scope of inquiry under such government investigations with company representatives.  In other words, innocent employees are essentially turned into informants for the company and forced to report on representatives of government agencies.

A particularly egregious aspect of these agreements involves the requirement that the existence of such agreements not be disclosed.  Forcing employees to hide agreements that limit disclosure of illegal conduct and fraud by their employees amounts to having the wolf guard the henhouse.

Fortunately, the SEC has stepped in to put a stop to this tactic, which undercuts the purpose of qui tam claims and whistleblower statutes.  In early April 2015, the agency levied huge fines on KBR, a massive defense industry contractor, for mandating that employees sign restrictive confidentiality agreements.  The agreements were challenged by the whistleblower who exposed extensive fraud committed against the federal government by the defense contractor during the Iraq war.  The whistleblower challenged the agreements, which were used by KBR to silence other employees with knowledge of information relevant to proving his fraud claims.

It is still too early to tell how this action will impact whistleblowers under laws relevant to other agencies and fraud outside the financial sector.  The ruling marks the first time that a federal regulatory agency has fined a corporation for imposing non-disclosure agreements that impair the ability of an employee to report financial crimes.  Hopefully, other state and federal regulatory agencies will take a similar stance.

Our Mississippi Qui Tam Attorneys represent individuals who exercise the courage to disclose fraud and other criminal activity under state and federal whistleblower laws.  At Barrett Law, we are here to help.  Contact our firm today at (601) 790-1505 to schedule your free consultation, so we can answer any questions you may have regarding filing your claim.

 

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Mississippi Qui Tam Attorneys Report: VA Whistleblowers Named Public Servants of the Year by Special Counsel

Recently, the Office of Special Counsel honored three physicians for coming forward to reveal gross wrongdoing occurring at the Veterans Affairs Department.  The Office of Special Counsel recognizes that the revelations of these three physicians brought the nation’s attention to the problems currently surrounding the Veterans Affairs Department and pushed the agency towards reform.

            The three whistleblowers named by the Office of Special Counsel as Public Servants of the Year include:

  1. Dr. Katherine Mitchell:  Dr. Mitchell tried for years to alert VA officials to the mistreatment of patients occurring at the Phoenix VA Medical Center.
  2. Dr. Phyllis Hollenbeck:  Dr. Hollenbeck, along with her colleague Dr. Sherwood, reported major wrongdoing occurring in the Jackson, Mississippi VA, which included corruption, fraud, and chronic understaffing.
  3. Dr. Charles Sherwood:  Dr. Sherwood, along with Dr. Hollenbeck, was instrumental in revealing the fraud and patient mistreatment occurring in the Jackson, Mississippi VA Hospital.

The ceremony honoring these three Public Servant of the Year recipients took place in Washington, D.C.  Before receiving their awards, the three recipients shared their stories of frustration, mounted after years of attempting to alert officials to the wrongdoing they saw occurring within the VA system.

Dr. Sherwood credited the Office of Special Counsel with receiving and responding to his reports, after the VA willfully ignored such concerns for 15 years prior.  Dr. Hollenbeck, who considers Dr Sherwood a role model, did not want to become a whistleblower, but when she was asked to violate laws, she had to do something.

The VA is now encouraging whistleblowers to come forward.  It has created several new initiatives, including an “idea house,” which is designed as a forum for employees to suggest ways to improve the hospital.  The VA still has a ways to go and what it will look like once the transformation is complete is not clear.

The three whistleblowers have applauded the efforts of the VA thus far and recognize that the organization has done much to fix the wrongdoings these three identified.  Dr. Mitchell cautions that she feels there needs to be more done to protect whistleblowers and to ensure whistleblowers do not become the subject of retaliation.  She states that far too many employees do not come forward because they fear losing their jobs.  The only way to ensure the long term success of the VA and progress moving forward is to address the anti-whistleblowing culture that exists within it.

For now, Dr. Hollenbeck continues to work in her position at the VA, though she is sure some in her department would rather see her go.  The story of these three whistleblowers demonstrates the undeniable importance of whistleblowers everywhere.  Had these brave individuals not stepped forward, the wrongdoing occurring throughout the VA system may have continued on for years to come.

Barrett Law PLLC:  Mississippi Qui Tam Attorneys Assisting Brave Whistleblowers    

Without whistleblowers like the physicians honored by the Office of Special Counsel, serious fraud and wrongdoing would likely continue uninterrupted for years.  The role of the whistleblower is a vital one; protecting the U.S. government and our citizens.  The Mississippi physicians who revealed the VA’s serious wrongdoing stand to be acknowledged for their brave contribution, as the Special Counsel now has.  If you have knowledge of wrongdoing and are considering blowing the whistle, the Mississippi Whistleblower Attorneys at Barrett Law PLLC can help.  We understand the complexities involved in qui tam and other whistleblower actions and will guide you each step of the way.  For exceptional representation with your whistleblower case, call Barrett Law PLLC today at 1 (601) 790-1505 to schedule your free consultation.

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Mississippi Qui Tam Attorneys Explain the Role of the Relator in a Qui Tam Action

Any individual that brings a qui tam action is referred to as the “relator.”  There is much confusion surrounding who can bring a qui tam action and thus, become a relator.  Relators need not be personally harmed by the defendant; rather, the qui tam action is generally based on the relator’s first hand, independent knowledge of the defendant’s wrongdoing.

The following is a look at some of the most common relators:

  • Employees:  Current employees will often bring qui tam actions after they have made unsuccessful attempts to stop the fraud from occurring at their workplace through internal company channels.  However, employees can bring a qui tam action even if they were involved in the fraud or other wrongdoing and did not take action to stop it.  Any employee who files a qui tam action is protected from workplace retaliation under the False Claims Act.
  • Former Employees:  A former employee has the right to bring a qui tam action, and most do so after losing their jobs because they reported their employer’s wrongful conduct.
  • Contractors or Subcontractors: Contractors or subcontractors come in as generally independent contractors, but they work closely with the other individuals involved on the project.  Sometimes, contractors or subcontractors will come across first hand information of fraud occurring against the government, which will usually give them the right to bring the qui tam action.
  • Competitors: Competitors similarly interact frequently with rival businesses. In conversations and exchanges of information, a competitor business may come across direct evidence of false claims being submitted to the government.

This list is not all inclusive because the relator bringing the lawsuit need not have one specific type of relationship with the defendant.  The most important and necessary requirement is that the relator possess information concerning fraud or wrongdoing which the general public would not be aware of.

The Important Role of the Relator

Our qui tam laws allow private individuals to blow the whistle on fraud being committed against the U.S. government.  Our government does not have the resources to uncover and challenge every instance of fraud on its own.  Accordingly, the government and the American taxpayers rely heavily on whistleblowers to uncover instances of fraud through their first-hand knowledge.

This reliance on whistleblowers appears to be effective.  Between the years 2000 and 2006, the Department of Justice recovered over $12 billion in civil fraud actions.  Whistleblowers accounted for $7 billion or 66 percent of these recoveries.

Recognizing the important of whistleblowers, Congress continues to strengthen whistleblower laws and increase awards so that individuals like you will come forward and expose costly fraud.

Barrett Law PLLC: Decades of Experience Assisting Relators in Qui Tam Actions Across Mississippi and the Southeast.

When individuals first set out exploring the whistleblower process, few are aware of what the term relator means and the sheer importance of their role in the qui tam action to follow.  We hope the brief overview above gives you some preliminary information as to who can be a relator, what a relator does, and why the relator is so important.  If you believe that fraud is occurring in your workplace, former workplace, or at a rival company, the Mississippi Qui Tam Attorneys at Barrett Law PLLC can help.  Since 1936, we have assisted qui tam relators in a wide variety of qui tam actions.  We have the knowledge, experience, and dedication to strongly bring this highly complex action.  For an individualized assessment of your potential qui tam action, call Barrett Law PLLC today at 1 (601) 790-1505 to schedule your free consultation.

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Mississippi Qui Tam Attorneys Discuss Student Aid Fraud

Whistleblower actions filed under the False Claims Act assist the government in stopping fraud in connection with federal student loans and grant, referred to collectively as “student aid,” received by for-profit schools, such as vocational, trade, or technical colleges.  Student aid whistleblowers are usually current or former employees of the schools who come forward to assist the federal government in uncovering and putting a stop to fraudulent activity through the filing of qui tam lawsuits under the False Claims Act.

Whistleblowers, referred to as “relators,” who file under the False Claims Act can recover an award of between 15% and 30% of the government’s total recovery for claims that expose fraud occurring in connection with the receipt of federal monies, including student aid.

In the last decade, enrollment and tuition prices at for-profit educational institutions have increased dramatically.  Between 2009 and 2010, for-profit schools received $32 billion in federal student aid funding.  This comprises 25 percent of all federal student aid disbursed by the Department of Education through the Higher Education Act.  The majority of student aid comes in the form of Stafford loans, Pell Grants, and GradPlus loans.  Along with this influx of federal monies has come an increase in scrutiny by both federal and Mississippi state officials who question whether the tax dollars being pumped into these schools are justified by the education provided to students.

In 2011, a monumental whistleblower action was filed against one of the largest for-profit colleges.  The suit resulted in the recovery of $78.5 million on behalf of the government, and a substantial award to the brave whistleblower.  Some violations that have recently gained government support include:

  • Enrolling ineligible students;
  • Tying employee compensation to student enrollment figures;
  • Receiving more than 90 percent of the school’s funding from federal student aid;
  • Misrepresenting job placement rates of graduates;
  • Continuing to enroll students who should have been dismissed due to poor grades or attendance.

New federal and state regulations have recently been enacted and the number of claims filed by whistleblowers against for-profit schools and colleges will likely increase in the future.  Some potential claims may include:

  • Inaccurate reporting of attendance, graduation, and student employment data;
  • Deceptive recruitment or marketing practices;
  • Falsifying student information to qualify for student aid;
  • Inaccurate reporting of private loans, discounts, or rebates provided to students.

Anyone considering filling a qui tam action under the False Claims Act will need an experienced attorney to represent them.  Your attorney will guide you through the often complex qui tam procedure and assist you in filing your action.  Your attorney will ensure you do not experience illegal retaliation for your actions, and see that you receive the whistleblower award you deserve for bringing the fraudulent activity to light.

Barrett Law PLLC: Protecting Schools, Colleges, Universities, and the Public Through Student Aid Fraud Actions

Whistleblower actions filed under the False Claims Act can prove instrumental in helping the government stop fraud in connection with federal student loans and grants.  Whistleblowers who file Qui Tam lawsuits under this act can also receive considerable compensation.  The renowned Mississippi Qui Tam Attorneys at Barrett Law PLLC have over 75 years of experience guiding brave whistleblowers through the filing of educational fraud based qui tam actions.  Our experienced attorneys have the drive, knowledge, and exceptional skill to successfully bring any qui tam action.  At Barrett Law PLLC, we offer a free consultation to all new clients and operate on a contingency fee basis.  For representation by a team of celebrated whistleblower attorneys, call Barrett Law PLLC today at 1 (601) 790-1505 to schedule your free consultation.

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