corporate accountability Archives | Galiher DeRobertis & Waxman LLP

EPA Ban on Chrysotile Asbestos Will Save Lives, Hold Corporations Accountable

Posted on July 9, 2024November 20, 2024 by Galiher DeRobertis & Waxman

After years of tireless work by advocacy groups on behalf of cancer victims, the Environmental Protection Agency (EPA) is finally taking action against asbestos, a dangerous substance known to cause cancer, severe illness and countless fatalities each year.

In March 2024, the EPA took a major step toward protecting Americans from asbestos exposure with a historic ban on a common type of asbestos known as chrysotile. It was the first substantive move to protect Americans from asbestos exposure in decades.

Do Cash-for-Whistleblower Programs Really Work?

Posted on June 15, 2023November 21, 2024 by Galiher DeRobertis & Waxman

Exchanging cash for information has been done for a long time. Only on July 30, 1778, however, did the practice become protected by law. The Continental Congress enacted the world’s first whistleblower law on that date in response to the pleas of two men jailed for alleging the commander-in-chief of the Continental Navy was corrupt.

The History of Whistleblower Protection Programs

During the American Civil War, fraud in government contracts was pervasive. Corrupt contractors sold the Union Army defective guns and ammunition, feeble horses and mules, and rancid food. To encourage people to come forward to inform on the corrupt contractors as available law enforcement officers were few, Congress passed the False Claims Act (FCA) on March 2, 1863. Whistleblower protection was created.

The False Claims Act has been the federal government’s primary tool for combating fraud in connection with federal programs and expenditures. This is especially true since the FCA was revamped in 1986 primarily due to the abuses in the defense contracting industry. The amendments significantly expanded the role of whistleblowers, increased financial incentives, and reduced barriers to bringing actions against persons or entities alleged to have submitted fraudulent claims against the federal government.

Over time, whistleblower programs have gained momentum as a regulatory tool to combat corporate misconduct in areas such as financial fraud, government procurement fraud, health care fraud and tax fraud.

Do Today’s Cash-for-Information Whistleblower Programs Work?

A recent Harvard University Business School and University of California at San Diego study on the effects of whistleblowing and consequences on whistleblowers used information from more than 5,000 whistleblower lawsuits to determine whether or not cash-for-information programs are actually effective.

The study had access to all FCA whistleblower lawsuits filed with district courts, used decisions by Courts of Appeals, as well as used direct information from approximately 1,600 publicly disclosed whistleblowers to measure the effectiveness of these programs.

Critics argued that cash-for-information programs only motivate employees to file meritless allegations that waste resources of regulators and accused firms alike. They also argue that these programs give employees an incentive to share information directly with regulators rather than report problems internally first.

But proponents of cash-for-information programs point to the large number of tips that regulators receive from whistleblowers and the success in terms of cases and penalties imposed on corporations. They argue that cash-for-information programs help to expose corporate fraud and highlight that these programs simply compensate employee whistleblowers for taking the risk of reporting wrongdoing to the authorities.

In analyzing the data, the researchers found:

Whistleblowers file a greater number (+6.9%) of lawsuits in treated district courts following decisions that increase financial incentives for whistleblowing. They also found no corresponding decrease in the fraction of allegations reported internally before lawsuits are filed.
The U.S. Department of Justice (DOJ) increases the length of an investigation by 36.5% for the average whistleblower allegation filed in treated courts, which suggests that the information brought forward is more valuable, in turn warranting more of the DOJ’s time to build a winnable case versus dismissing cases with outright meritless claims.
The percentage of DOJ-intervened lawsuits and settled lawsuits increased. In particular, an appeals court decision that increases financial incentives for whistleblowing was found to increase the percentage of intervened cases by 3.2% and settled cases by 3%.

Three U.S. Courts of Appeals decisions were most significant to the study. One decision by the 9th Circuit created an incentive for whistleblowers and defendants to trade a wide release of liability for a larger settlement. The decision was that the DOJ may only influence a settlement between a whistleblower and defendant where it had intervened previously.

Another decision by the 8th Circuit allows whistleblowers to revise their claims upward throughout the investigation process and legal proceedings, which increases the total recovery.

The last decision by the 7th Circuit stated that penalties in excess of damages are allowed, which increases the total recovery and financial incentives for whistleblowers to file cases in that circuit.

Who Can File a False Claims Suit?

Private persons, called “relators,” are allowed to file suit for FCA violations on behalf of the government, called qui tam actions. Relators can be employees, customers, shareholders, or suppliers.

The qui tam provisions of the FCA, known as the “Lincoln Law,” were motivated by the recognition that the government lacks sufficient information, as compared to private citizens, to pursue all those who submit fraudulent claims to the government. As such, individuals are encouraged to share their firsthand knowledge of frauds and violations against the government with the appropriate officials.

Why are the FCA and qui tam Provisions Important?

Every citizen is affected when the government is defrauded, or laws are violated for personal gain. These fraudulent actions hurt all taxpayers because the excesses by those taking advantage of the government are paid for in increased costs for services and increased taxes. The federal government has limited resources, and it depends upon private citizens to help.

Marketing Efforts Created the Crisis that led to Opioid Lawsuits

Posted on November 30, 2022November 21, 2024 by Galiher DeRobertis & Waxman

As courtrooms continue to fill with opioid lawsuits across the U.S., researchers provide more insight into the role that pharmaceutical companies played. A recent study revealed a connection between the amount of money spent on opioid-related marketing and the number of overdose deaths in various counties across the U.S. The study showed that pharmaceutical marketing of opioids towards physicians was associated with higher prescription rates and higher amounts of overdose deaths in certain counties.

Researchers Link Opioid Deaths to Pharmaceutical Marketing

In a study published by the JAMA Network Open, researchers found that when pharmaceutical companies spent more money on opioid marketing in a particular county, there were higher prescription rates and higher amounts of overdose deaths in that same county. The most common type of opioid marketing to doctors was in the form of incentives such as dinners or meals with company representatives. Dr. Scott Hadland from Boston Medical Center explained that the amount of each marketing payment was not as important as the frequency of visits and company interactions with doctors. The study included suggestions for lawmakers, such as imposing limits on pharmaceutical marketing. But researchers also noted that this may not be an effective solution because meals can be relatively cheap. Opioids attorneys have cited such marketing as a way to increase prescription rates of the drugs.

Millions Spent on Physician-Targeting Likely to Be Citied by Opioid Attorneys

The U.S. exceeds the rest of the developed world regarding opioid prescriptions. From 2013 to 2015, drugmakers spent almost $40 million in opioid marketing, targeting about 67,500 physicians. Researchers discovered that for every three additional payments made to physicians per 100,000 people in a county, the number of opioid overdose deaths went up 18 percent.

Birth Defects Lead to Opioid Lawsuits

Opioid prescriptions are most commonly used for pain management. They are made either from an opium plant or synthesized in a lab. Commonly misspelled as “opiods,” these drugs relax the body, can disrupt the natural release of endorphins, and can be highly addictive even when used for a short amount of time. Opioid treatment was originally limited to traumatic injuries and terminal cancer. However, drug manufacturers decided to capitalize on patients with long-term, chronic pain without informing them of the drug’s highly addictive nature. Opioids have also commonly been prescribed to new mothers recovering from childbirth, putting them at risk of chronic opioid use. There are three major categories of opioid drugs: non-synthetic, synthetic, and semi-synthetic. Within the three broad categories, there are several different opioid prescriptions such as:

Fentanyl (Duragesic®)
Hydrocodone (Vicodin®)
Meperidine (Demerol®)
Oxycodone (Oxycontin®, Percocet®)
Oxymorphone (Opana®)

In pregnant women, opioids can cross the placenta and enter the fetal central nervous system, putting the fetus at risk for birth defects. Since these painkillers relax the body and alter the natural release of the body’s endorphins, they risk the health of the mother and baby. Opioid use either prior to pregnancy or while pregnant can cause various birth defects, including:

Spina bifida (a type of neural tube defect)
Hydrocephaly (buildup of fluid in the brain)
Glaucoma
Gastroschisis (defect in the abdominal wall)
Congenital heart defects

Although opioids can be very effective pain management medications, the impact of opioid exposure is not fully known and can have dangerous long-term effects. The opioid epidemic has impacted not only our health system, but also our legal system. State and local governments have brought thousands of opioid lawsuits as people fight to hold pharmaceutical companies and manufacturers accountable for the part they played in this crisis. This epidemic has put a strain on our courts and on our medical emergency workers and their ability to combat the effects of opioids and overdoses.

Nearly 150 Groups Call Better Whistleblower Protections

Posted on November 19, 2022November 27, 2024 by Galiher DeRobertis & Waxman

Prior to 2009, there were no government protections for whistleblowers who exposed wrongdoing or abuse of power with regard to government contractors and grantees. This changed when President Barack Obama signed the Fraud Enforcement and Recovery Act of 2009, which protects whistleblowers who expose fraud in federal contracting. The new law provided whistleblower protections to those who work for contractors, while also providing new funds for the government to investigate fraud. The Inspectors General credited the whistleblower protections with minimizing fraud and waste.

However, the law has since been gutted after coming under attack. Its safeguards are outdated and no longer match global best practices when it comes to whistleblower protections. As a result, the United States’ ability to fight corruption has been weakened.

Given the recent unprecedented surge in government spending, an amendment to the National Defense Authorization Act for Fiscal Year 2022 has been proposed by Senator Elizabeth Warren, D-Mass.

Why is an Amendment being Proposed?

The proposed amendment arrives in the wake of new government spending to address the effects of COVID-19 as well as domestic priorities such as infrastructure spending, which could exceed trillions of dollars. Much of this new federal spending will go to contractors and grantees. This rise in government spending requires oversight and instituting the right measures to minimize fraud, waste, and abuse, including robust whistleblower protections.

What are the Details of the Proposed Amendment?

Senator Warren’s proposed amendment would modernize outdated whistleblower laws for government contractors and grantee employees. The amendment would apply to all new multi-trillion-dollar spending and all federal coronavirus relief programs. The proposed whistleblower amendment would:

Protect government contractors and grantees from retaliation for blowing the whistle (not just their employees)
Protect public health workers excluded from coverage under the Affordable Care Act
End the international loophole for U.S. contractor whistleblowers working in foreign locations
Strengthen confidentiality protections for whistleblowers

These whistleblower protections would ensure that U.S. whistleblower laws are in line with global best practices.

Coalition Calls on Congress to Support Amendment

A coalition of almost 150 organizations supports Senator Warren’s proposed amendment and is calling on Congress to ensure better protections for contractors and grantees who blow the whistle on misconduct.

The coalition is comprised of groups as diverse as “Beyond Pesticides,” “Center for Policing Equity,” and “National Center for Law and Economic Justice,” among many others.

The coalition sent a letter to Congress expressing support for the proposed amendment, and its desire to act as a co-sponsor. A representative from the National Taxpayers Union noted that whistleblower protections are taxpayer protections because more government spending leads to greater potential for abuse of power and waste of taxpayer funds.

For example, a Boston University assistant professor calculated that based on past spending, five percent of the trillions of dollars in a budget blueprint for a proposed government infrastructure package could be lost to fraud.