Any employee, contractor, or agent shall be entitled to all relief necessary to make that employee, contractor, or agent whole, if that employee, contractor, or agent is discharged, demoted, suspended, threatened, harassed, or in any other manner discriminated against in the terms and conditions of employment because of lawful acts done by the employee, contractor,
Changes to the Virginia Fraud Against Taxpayers Act as of July 1, 2012.
A new and amended version of the Virginia Fraud Against Taxpayers Act took effect on July 1, 2012. The changes were mostly cosmetic, but there are some interesting provisions.
For example, the much-discussed “public disclosure bar” has been amended to read as follows:
The court shall dismiss an action or claim under § 8.01-216.5unless opposed by the Commonwealth if substantially the same allegations or transactions as alleged in the action or claim were publicly disclosed in a criminal, civil or administrative hearing in which the Commonwealth or its agent is a party, in a Virginia legislative, administrative, or Auditor of Public Accounts’ report, hearing, audit, or investigation, or from the news media, unless the action is brought by the Attorney General or the person bringing the action is an original source of the information. For purposes of this section, “original source” means an individual (i) who either prior to a public disclosure has voluntarily disclosed to the Commonwealth the information on which the allegations or transactions in a claim are based or (ii) who has knowledge that is independent of and materially adds to the publicly disclosed allegations or transactions and who has voluntarily provided the information to the Commonwealth before filing an action under this article.
And the anti-retaliation provisions (Va. Code 8.01-216.8) have been amended to add a three-year statute of limitations provision and clean up the older language. Those provisions now read as follows:
or agent on behalf of the employee, contractor, or agent or associated others in furtherance of others’ an action under this article or other efforts to stop one or more violations of this article. Relief shall include reinstatement with the same seniority status that employee, contractor, or agent would have had but for the discrimination, two times the amount of back pay, interest on the back pay, and compensation for any special damages sustained as a result of the discrimination, including litigation costs and reasonable attorney fees. Any relief awarded to an employee under this section shall be reduced by any amount awarded to the employee through a state or local grievance process. An action under this section may be brought in a court of competent jurisdiction for the relief provided in this section, but may not be brought more than three years after the date the discrimination occurred. This paragraph shall constitute a waiver of sovereign immunity and creates a cause of action by an employee against the Commonwealth if the Commonwealth is the employer responsible for the adverse employment action that would entitle the employee to the relief set forth in this paragraph.
Hopefully there will be some good case law coming out of a Virginia Circuit Court later this month on the topic of the anti-retaliation provisions….stay tuned!
Changes to the Virginia Fraud Against Taxpayers Act as of July 1, 2012
Interesting New Virginia Legal Ethics Opinion on Lawyer Blogging, Client Secrets, and Marketing
Earlier this month a three judge panel convened by the Virginia State Bar issued an interesting opinion on the topics of lawyer blogging, client secrets, and free speech. The panel was convened to hear a disciplinary appeal by Richmond criminal defense lawyer Horace F. Hunter. Hunter, who practices in the area of criminal defense, is also a prolific blogger about his practice area. He goes well beyond that however and actually blogs about the developments of his own cases day-to-day. No one can deny that his blog is unique and makes an interesting read – you can check it out here. It is precisely those unique and interesting blog entries that were at issue in the VSB disciplinary proceedings. To some extent most lawyer bloggers cover their own cases — lawyers love to talk, and their very favorite topic in the world is their cases. Hunter’s blog is unique however in that it covers information about his own cases – and of course his own clients – that is often only conceptually in the public record. What do I mean by that? In the United States, it is a very important part of our system of laws and indeed our way of life that courts are open to the public. Indeed, most of our court proceedings – no matter how grisly or disturbing – are wide open to the public. The very limited exceptions to this general rule are specialty courts like Juvenile and Domestic Relations Courts and certain special proceedings like qui tam complaints, which are filed under seal and are temporarily under seal. So, because our courts are generally open to the public, information is “in the public record” when it is spoken out loud in a court of law, even if no one is there to hear it but the judge and the lawyers conducting the argument. If a reporter from a newspaper is present and overhears what is going on they are free to write about it – in that situation, the information is no doubt literally in the public record. And of course any person is free to wander down to their local courthouse any given day and sit through as many hours of court proceedings as they like. It is a fact however that most of us have jobs and other things to occupy our time; and it is a further fact that newspaper reporters and others are only rarely present at criminal proceedings. So the result is that the vast majority of criminal trial and motion hearings never get read by anyone outside the court system. And that is where Hunter’s blog comes in. He is in effect is his own reporter covering his own cases. It is an interesting concept and an interesting approach to lawyer blogging – not one I would take, but that’s just me. Virginia State Bar disciplinary officials said Hunter violated his duty of loyalty to his clients, and a Virginia Disciplinary panel imposed mild discipline for Hunter’s blogging work. Hunter appealed to a three judge panel, which is the next step in the disciplinary process. At issue in the original bar disciplinary proceedings were Rules 1.6, 7.1 and 7.2 of the Virginia State Bar Rules of Professional Conduct. Rule 1.6 provides in part as follows: “A lawyer shall not reveal information protected by the attorney-client privilege under applicable law or other information gained in the professional relationship that the client has requested be held inviolate or the disclosure of which would be embarrassing or would be likely to be detrimental to the client unless the client consents after consultation … “ Rules 7.1 and 7.2 concern truthful lawyer advertising and requires that certain marketing materials be clearly marked as such. The three-judge panel dismissed the VSB committee finding on Rule 1.6, holding that the interpretation adopted by the Committee would violate Hunter’s First Amendment rights. It upheld the district committee decision that Hunter’s failure to include a disclaimer warning case results were unique to each situation and could vary widely did violate Rules 7.1 and 7.2, which cover communications about a lawyer’s services and lawyer advertising. The panel upheld a public admonition for these violations and ordered Hunter to post a disclaimer within 30 days. Both decisions were unanimous. Hunter may appeal further.
As some readers may have noticed, I included the sort of disclaimer required by the three judge panel in a recent post about the results of one of my cases.
Delaware Attorney General Joe Biden Jr. Intervenes in Delaware False Claims Act Case Case Concerning Unclaimed Property
Delaware Attorney General Joe Biden Jr. Intervenes in Delaware False Claims Act Case Case Concerning Unclaimed Property
As regular readers know, I am a proponent of using state false claims acts to pursue unclaimed property suits against Holders of Unclaimed Property. I am also a proponent of aggressive enforcement of state false claims acts, regardless of the size of the case.
So I was quite happy to hear that Joe Biden Jr., the elected Attorney General of Delaware, recently intervened in a DFCA case alleging a failure to deliver unclaimed property to the state of Delaware.
I was even more happy to hear that the amount of the claim (in single damages that is) was $500,000.00.
Mind you, after you tack on interest at the rate of 12% and treble the damages and add in civil penalties (all of which is required under the law) you are not talking about a $500,000.00 case anymore.
But here is the real point of General Biden’s intervention decision — and it shows a great deal is wisdom and forethought.
He knows that aggressive enforcement of the Delaware Unclaimed Property Law, just like aggressive enforcement of the Delaware False Claims Act, will pay off in untold dividends in the future.
K&G Law Group Announces $18.1 Million Settlement in federal False Claims Act case unsealed in the U.S. District Court for the Eastern District of Virginia
VIRGINIA STATE BAR DISCLOSURE: EVERY CASE IS DIFFERENT AND THE OUTCOME OF THIS OR ANY OTHER CASE DEPENDS ON A VARIETY OF FACTORS UNIQUE TO THAT CASE. THE OUTCOME OF ANY CASE IS NEVER CERTAIN OR GUARANTEED.
Late yesterday afternoon the Department of Justice announced a settlement in one of my cases, United States ex rel. Chao v. Calnet, Inc., et al. The news was quickly picked up by Marjorie Censer at the Washington Post.
I would like to thank the Department of Justice’s Civil Division (Commercial Litigation Branch); the Defense Criminal Investigative Service; the Defense Contract Audit Agency, and last but definitely not least the U.S. Attorney’s Office for the Eastern District of Virginia.
And, I am happy to report, the case settled on the strength of the allegations in the relator’s First Amended and Supplemental Complaint filed in August of 2010. The case was originally filed in 2009–as a result of the complexity of the allegations it took a little longer than most qui tam cases filed in the U.S. District Court for the Eastern District of Virginia.
As an aside, the March 2009 amendments to the federal False Claims Act were important to this case, as it dealt with overpayments, long a favorite topic of mine.
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Alexandria, Virginia, June 1, 2012—Calnet Inc. will pay $18.1 million dollars to settle allegations that it systematically overbilled the U.S. Army Intelligence and Security Command (“INSCOM”) for translation and other support services on three different contracts, according to a federal False Claims Act case unsealed today in the U.S. District Court for the Eastern District of Virginia.
The settlement resolves a lawsuit filed in August of 2009 under the qui tam provisions of the federal False Claims Act by former Calnet employee Kimthy Chao. Mr. Chao was represented by Virginia lawyer Zachary Kitts and K&G Law Group, PLLC.
The qui tam provisions of the False Claims Act allow any individual with non-public knowledge of fraud on the Government to file suit on their own behalf, as well as on behalf of the Government.
“This case demonstrates that the U.S. Attorney’s Office for the Eastern District of Virginia and the Department of Justice will not shy away from complex procurement fraud cases,” Kitts said.
This settlement was the result of a coordinated effort by the Department of Justice, Civil Division, Commercial Litigation Branch; the U.S. Attorney’s Office for the Eastern District of Virginia; the Defense Criminal Investigative Service and the Defense Contract Audit Agency.
“Contractors are expected to comply with their statutory obligations and act in good faith when dealing with the United States government,” said Stuart F. Delery, Acting Assistant Attorney General for the Department of Justice’s Civil Division. “We will not tolerate false statements and failure to disclose information that is important to the government’s contracting processes.”
K&G Law Group, PLLC Announces the Launch of www.VirginiaQuiTamLawyers.com
Announcing the Launch of VirginiaQuiTamLawyers.com
On behalf of K&G Law Group PLLC I am happy to announce the launch of a new webpage dedicated to the Virginia Fraud Against Taxpayers Act and to qui tam litigation in Virginia — www.VirginiaQuiTamLawyers.com
As with any webpage, it is very much a work in progress, so check back frequently for new articles and helpful information. Needless to say, all important news will be cross-indexed.
Loyal readers should also be on the lookout for a revamped version of my firm’s main webpage — www.kglawpllc.com soon.
New First Circuit Opinion Holds Important Lessons for Lawyers Interested in Bringing Qui Tam Cases…
The allegations focused on fraud and false claims in a grant application submitted by a team of scientists from Harvard. These academics were alleged to have falsified research data in order to receive a $15 million grant from NIH so that they could further their scientific research — and if that sounds familiar to any of my Virginia readers I think you’ll know why. Although the opinion concerns false claims made as part of an academic grant request, it should be read by every lawyer thinking of bringing any kind of qui tam case. Why do I say that? As regular readers are aware, one of the on-going themes here at vaquitamlaw.com is the complexity of false claims act practice — these cases are nearly always factually complicated and the body of case law is correspondingly complex. The factual allegations in Brighan and Women’s Hospital involved fraud in a grant proposal to conduct research on Alzheimer’s Disease using NIH funds. Relator Kenneth Jones was the lead statistician on a team of scientists at Harvard University that had conducted alzheimer’s research for more than 20 years. A few choice words from the First Circuit Court of Appeals says it better than I could: So yes,Virginia, a difference of scientific opinion cannot be made into a false claims act case. In fact I’ll go one step further and say that a difference of scientific opinion isn’t even relevant to a Virginia Fraud Against Taxpayers Act case, with just one exception — if it negates scienter on the part of the defendant. 
New First Circuit Opinion Holds Important Lessons for Lawyers Interested in Bringing Qui Tam Cases…
An important new opinion was published this week by the U.S. Court of Appeals for the First Circuit — the caption is US ex rel. Jones v. Brigham and Women’s Hospital, et al., 2012 WL 1571232 (2nd. Cir. May 7, 2012).
This theme has been discussed for example in my post on FCA violations arising out of unclaimed property law, as well as posts discussing the factual allegations that a complaint needs to survive a motion to dismiss under Fed. R. Civ. P. 9(b).
Now that SCOVA dismissed Cuccinelli’s civil investigative demand to UVa, I have already heard people saying “You can’t bring a VFATA case if the false claims are predicated on a difference of scientific opinion.”
That argument is false and this week’s opinion from the First Circuit proves it.
At some point along the way Jones discovered that another scientist on the team had falsified his data — and had then used that false data to apply for a five year grant totalling nearly $15 million.
“We agree with the district court that “[e]xpressions of opinion, scientific judgments, or statements as to conclusions about which reasonable minds may differ cannot be false. … The dispute at the heart of this case is not about resolving which scientific protocol produces results that fall within an acceptable range of ‘accuracy.’ Nor is it about whether … the basis for the preliminary scientific conclusions reported in the Application, are “accurate” … Rather, the essential dispute is about whether Killiany falsified scientific data by intentionally exaggerating the re-measurements of the EC to cause proof of a particular scientific hypothesis to emerge from the data, and whether statements made in the Application about having used blinded, reliable methods to produce those results were true.
Like the federal FCA the VFATA focuses on the knowledge of the defendant and on the defendant’s efforts to deceive. So it is no defense to say that there is a difference of scientific opinion about whether part of a grant application is false if a defendant can be shown to have made a “knowingly false” claim or have made a claim with “reckless indifference” to the truth or falsity of the claim.
Abbot Laboratories Agrees to Pay $1.5 Billion to Settle Civil and Criminal Claims in the U.S. District Court for the Western District of Virginia
Yesterday Attorney General Ken Cuccinelli announced a whopping $1.7 billion settlement in what he called “the largest Medicaid fraud case investigated by a state Medicaid Fraud Control Unit ever.”
My regular readers know that the Virginia Medicaid Fraud Control Unit (which is shortened to MFCU in the parlance of the false claims act and pronounced as M Foo-Coo) is an elite unit, to say the least. For at least the last 8 years or so, the Virginia MFCU has led the way nationwide on some of the toughest cases ever brought.
MFCUs are state-based criminal and civil law enforcement agencies that are funded 75% by the federal government and are responsible for investigating and prosecuting providers that defraud the Medicaid program. In addition, the MFCUs can investigate complaints of abuse or neglect against residents in long-term care and board and care facilities.
When Congress created the MFCUs in 1977, it did so not only because of substantial evidence of fraud in the Medicaid program, but also because of horrendous evidence of nursing home abuse and victimization. The MFCUs are the only law enforcement agencies in the country that are specifically charged with investigating and prosecuting abuse and neglect of residents in nursing homes, other Medicaid funded health care institutions and board and care facilities.
It is important to note that none of the qui tam relators were from Virginia, and Abbott isn’t headquartered here — no, this case was brought in Virginia for two reasons. First, because the Virginia MFCU is top notch, and second, Virginia Courts are *the* place to prosecute any complex case, as a general rule.
This case was under seal for quite a long time by Virginia standards — it was first filed in 2007 — but that could be because it was so large.
My hat is off to the Virginia MFCU people, as well as to Attorney General Ken Cuccinelli, who really needed some good news this week after all of the bad news he’s had lately….
The Question the American Legislative Exchange Counsel Cannot Answer: Why Do All of the Business-Friendly States Have State False Claims Acts?
The Question the American Legislative Exchange Counsel Cannot Answer: Why Do All of the Business-Friendly States Have State False Claims Acts?
As my regular readers know, this blog is about qui tam litigation under the federal False Claims Act as well as under the Virginia Fraud Against Taxpayers Act and other state false claims acts. A regular theme throughout the last four years has been the battle from state to state to pass state false claims legislation.
In Virginia, of course, we didn’t have much trouble getting our Virginia Fraud Against Taxpayers Act passed in 2002 — and we experienced only one minor bump on the road to passing one set of major revisions and one set of technical revisions.
The Virginia legislators I have spoken during our legislative attempts have almost universally said the same thing: how could anyone who wants to get re-elected be against a law that increases prosecution of fraud and false claims against the government?
Unfortunately some legislators in other states do not feel the same way — and nor do the lobbyists that seem to hold so much sway in those states. Interestingly, the more power lobbyists hold in a given state, the less likely that state is to have a state false claims act….
One such state is Ohio, ranked by many commentators as possibly the most corrupt state in the Union according to a recent report assembled by the Center for Public Integrity.
The report breaks down the score using 15 different criteria, with Ohio failing in the categories of — and this is a shock — Lobbying Disclosures and Legislative Accountability among many others.
During the recent battle in Ohio, one such non-accountable legislator, Bill Seitz, a prominent Ohio Republican state senator, wrote to a fellow senior lawmaker to relay concerns about “the recent upsurge” in false-claims legislation nationwide.
And his concerns, believe it or not, were not that Ohio did NOT have a false claims act.
Rather, his concerns were that “our friend at ALEC” did not like the Ohio False Claims Act.
So who is ALEC and why does it have such power in Ohio? ALEC is short for “American Legislative Exchange Counsel — a business-backed group that views false claims laws as encouraging “frivolous” lawsuits. (That old pet monstrosity).
ALEC’s membership includes not only corporations, but nearly 2,000 state legislators across the country — including dozens who would vote on the Ohio bill.
“The considered advice from our friends at ALEC was that such legislation is not well taken and should not be approved,” he said in a private memorandum.
As part of the same memo, he discounted the recent upsurge in False Claims Act legislation as “understandable, considering most states are broke.”
ALEC also used the old ruse that state false claims act legislation is “liberal” and a “bonanza for trial lawyers.”
Huh?
Lets get a few things straight — Virginia, which is one of the most vigorous prosecutors of wrongdoing using our false claims act, isn’t broke. In fact, we have a surplus in our budget.
Moreover, Virginia isn’t liberal, thank you very much…(not that there is anything wrong with that, as Jerry Seinfeld would say).
I will leave it ALEC to explain why states like Virginia, which are both conservative and business friendly by any measure, are such die-hard proponents of state false claims acts. In fact, as I have blogged before, the more “business-friendly” and conservative a state is, the more likely that state is to have a false claims act.
I also think that a correlation exists between vigorous criminal prosecutions and vigorous false claims act prosecutions — with Texas being Exhibit A and Virginia being Exhibit B.
I also think there is a correlation between corruption in state government and the power of lobbyists in the state legislative process.
I am waiting for someone — anyone — from ALEC to explain how liberal trial lawyers hijacked the legislative process to create a “bonanza” for themselves in Virginia and Texas (among many others) and passed state false claims acts……and then went back to being ignored.
Abraham Lincoln and the federal False Claims Act — Did Lincoln Really Say Everything He Said?
It is well known to most of my regular readers that Abraham Lincoln was one of the main forces behind the enactment of the federal False Claims Act during the American Civil War (also known as the War Between the States).
Most regular readers also know that the FCA was passed during the bleakest period for the Union, in late 1862 and early 1863. In previous posts I have discussed the problems the United States government faced with procuring goods and services during the War as told in some of the Civil War literature.
For a variety of very sound reasons, the personage of Abraham Lincoln is inextricably interwoven with the federal False Claims Act. And, as “Honest Abe” was also extremely quotable, there are a large number of misquotes also floating around out there.
As the very quotable (and very misquoted) Yogi Berra once stated, “I really didn’t say everything I said.”
One such quote is the following:
Worse than traitors in arms are the men who pretend loyalty to the flag, feast and fatten on the misfortunes of the Nation while patriotic blood is crimsoning the plains of the South and their countrymen moldering the dust.
This quote did not come from Lincoln, but rather from a report to Congress published on Mixx Delicious Digg Facebook Twitter
Congressional Oversight of Agencies Now on Display — But Who Has Oversight of State Agencies?
In a recent post, I discussed a study done by the Center for Public Integrity which found State Government agencies at a high risk for fraud, waste, and abuse.
One of the major reasons for such corruption at the state level is, as I said there, the fact that state government agencies operate with more or less no oversight. I contrasted this with the federal model, and the oversight Congress exercises over federal agencies.
And this week Washington is being treated to a great example of such oversight. I am referring to the Congressional hearings on the GSA Scandal that broke very recently.
The extravagance and waste included a mind reader and fortune teller — oops, sorry, the politically correct term is “mentalist” — who, despite being paid an extravagant sum, completely failed to predict the disaster that was about to strike GSA.
Note, the picture above is not the mentalist hired to entertain GSA big-wigs, that is House Transportation Committee Chairman Rep. John Mica (R-Fla.) who is one of the good guys trying to clean this mess up.
To add insult to injury, this video — made with taxpayer dollars, during working hours, by some diligent public servants who correctly named it “American Idle” — surfaced.
So yes, it may well be the case that Congressional oversight of government agencies is better than no oversight, but all of this nonsense occurred even with such oversight.
Now, fellow Americans and state taxpayers, if this sort of nonsense can happen in a federal government agency which is overseen by Congress, think about what happens in your State government agencies, which don’t have to worry about oversight.
And that is why each and every state needs a full false claims act — individual qui tam relators and their lawyers can’t clean up state government agencies, but qui tam cases often shed light on weaknesses in state government programs and expenditures.