whistleblowers graphic

Government whistleblowers to receive $29 million reward

Two whistleblowers will be reaping a big reward – a $29 million dollar reward to be exact. This is because settlement has been reached in the case of United States v. Life Care Centers of America. The defendants will be paying a record breaking $145 million dollar settlement for allegedly violating the False Claims Act between January 2003 and February 2013. The False Claims Act (31 U.S.C. §§ 3729–3733, also called the “Lincoln Law”) is an American federal law that imposes liability on persons and companies (typically federal contractors) who defraud governmental programs. It is sometimes called the Lincoln Law because it was initially passed under President Abraham Lincoln during the Civil War.

Life Care Centers of America is a chain of private nursing homes with more than 200 locations across the country. The lawsuit against them was initiated because former employees turned whistleblowers Glenda Martin and Tammie Taylor tipped the government off to the possible fraud, leading to what is called a Qui Tam case. This type of case is when whistleblowers alert the Government that they are being defrauded. The Justice Department alleged that the company purposely entered patients into the highest level of care even when it wasn’t necessary, in order to bill Medicare and TRICARE at the highest rates. The complaint states that “while Life Care punished those facilities and employees that failed to meet its Ultra High targets or that complained about corporate pressure, it rewarded and applauded those that met its targets. As part of its goal to maximize Medicare and TRICARE payments, Life Care also frequently overrode or ignored the recommendations of its own therapists and unnecessarily delayed discharging beneficiaries from its facilities…. As a direct result of Life Care’s corporate pressure to maximize its Ultra High billings, Life Care therapists provided Medicare and TRICARE beneficiaries with excessive amounts of therapy that was not medically reasonable and necessary, and sometimes even 2 harmful. Moreover, instead of providing skilled rehabilitation therapy that was tailored to beneficiaries’ particular needs, Life Care therapists routinely provided generic, non-individualized services that did not (and could not) benefit the beneficiaries and that served primarily to inflate what Life Care billed Medicare and TRICARE for those beneficiaries.”

A statement released by the company vehemently denies any wrongdoing, stating, “Life Care has strongly disagreed with the allegations, and believes that it was entitled to payment for services rendered”. Legal action was also taken against the owner and sole shareholder of the chain, Forrest L. Preston, as the Justice Department claimed he was “unjustly enriched” by the practices. The statement continues, “We deny in the strongest possible terms that Life Care engaged in any illegal or improper conduct. We are, however, pleased to finally put this matter behind us, without any admission of wrongdoing, and we look forward to continuing our efforts to deliver quality care and services to our patients, residents and their families”.

Not only will the company be paying the hefty settlement amount, they have also agreed to their therapy services being monitored for five years, entering into a Corporate Integrity Agreement with the US Department of Health and Human Services. A $45 million down payment will be made this year, with the remainder of the settlement amount to be paid out over the course of the next three years.

This lawsuit is hardly the first legal issue the company has come across. In recent years, several other lawsuits have been initiated. The first lawsuit arose in 1998, alleging that the company negligently allowed a patient to fatally beaten by another patient with a history of violent outbursts. Two years later, an eerily similar case was initiated, alleging that a female patient was also attacked by a violent patient, resulting in her death. In 2003, a $12 million lawsuit claimed that the facilities failed to provide basic care such as proper bedding and ulcer prevention after a patient’s leg had to be amputated due to infection. From 2004 to 2008, three more bed sore cases were initiated which claimed that the facility neglected to provide basic care, nutrients, and medical attention to patients that were suffering from dehydration, thrush, and staph infections. As if all of that wasn’t enough, all patient admissions were suspended for a time in 2011 due to allegations of cooking malfunctions, patient abuse and sexual assault.

Sources:

http://www.thedailytimes.com/news/life-care-center-denies-fraud-allegations/article_ad47686e-48dc-5292-8b1a-e49b1115fb61.html

https://oig.hhs.gov/fraud/enforcement/criminal/2012/Life_Care_Complaint_Intervention_11.28.2012.pdf

http://health.wusf.usf.edu/post/life-care-will-pay-145m-settle-medicare-lawsuit#stream/0

Harassment

Sexual Harassment Bait & Switch – The Cat’s Paw Theory

The Cat’s Paw Theory. A phrase which might seem like a whimsical anecdote. But it’s not so whimsical when you are being sued on the basis of it. Empress Ambulance found out the actual meaning behind this phrase after being sued by a former employee. The plaintiff had been fired after the employers were persuaded to do so by another employee, (wrongful termination). In the case of Vasquez v. Empress Ambulance, the former employee of Empress Ambulance, Andrea Vasquez, filed a lawsuit against Empress Ambulance for retaliation when she was fired after reporting her co-worker for sexual harassment. Instead of taking action against the harasser, the employers let go of Vasquez. Her harasser had turned the situation around to make it look like she was in fact the one committing sexual harassment.

The Cat’s Paw Theory originates from a fable in which a monkey tricks a cat into retrieving some chestnuts from a fire for both of them to eat. When the cat does so, he burns his paws and is unable to eat the chestnuts while the monkey enjoys them without any injury. Here the “cat’s paw approach” applies to Empress Ambulance on the basis that they let themselves be coerced into dismissing the claims of sexual harassment that Vasquez made and instead believing Gray, the person who the allegations were against.

When Vasquez first reported Tyrell Gray to her supervisors, she was assured that the behavior was not tolerated by the company, and something would be done to stop it. While she waited for the issue to be investigated, Mr. Gray found out about the complaint and decided to figure out a way to avoid getting in trouble for his harassing behavior. First, he tried to persuade another fellow EMT to lie for him, but when that did not work he manipulated an inappropriate and sexually explicit conversation on his phone to appear as if Vasquez was the replying party. When he was questioned he had the evidence ready and told his supervisors that Vasquez and he were in consensual relationship. This prompted their supervisors to fire Vasquez due to the “evidence” Gray showed. Vasquez tried to dispute his allegations and show her own phone to prove that it was not true, but she was turned down. The subsequent case is based on the fact that their supervisors never fully investigated the initial complaint, or considered the issues with Gray’s quick evidence, and were so willing to blindly believe what he presented.

Even though the case had originally not been accepted by the District Court of New York, the Second Circuit Court of Appeals accepted the case on the basis that “an employee’s retaliatory intent may be imputed to an employer where, as alleged here, the employer’s own negligence gives effect to the employee’s retaliatory animus and causes the victim to suffer an adverse employment decision.” This means that even though the decision was made by a supervisor, the harasser was able to influence the decision with his false accusations and evidence, which the employers did not take the proper precautions to investigate. Nor did they look further into the intent that Gray had – making them negligent in their decision. The court concluded this due to the fact that the supervisors at Empress Ambulance should have given more thought into the evidence that Gray was handing over, as well as how quickly he did it when he was told that a sexual harassment claim had been made against him. Typically, anyone who learns that a negative claim has been made against them would deny it or have a bigger reaction. Empress should have been more diligent and thorough with their investigation. If they had taken the time to properly investigate this and look at the evidence that Vasquez showed, they would have been able to avoid this lawsuit and not made to look as though they are incapable of proper management.

Overtime

Obama “Time Card” overtime rule faces new challenges

A new bill was introduced on September 29th by Republican senators, which would make changes to the overtime bill introduced by the Obama administration back in July. The Regulatory Relief for Small Businesses, Schools, and Nonprofits Act (or H.R. 6094) passed in the House of Representatives 246 to 177 and will delay the Department of Labor final rule until July 2017. The changes to current overtime laws were supposed to go into effect on December 1st , but the updated bill seeks to spread out these changes over the next 5 years, rather than everything going into effect all at one time. Not only would the bill raise the overtime threshold gradually from $23,600 to $47,476 through the 5 years, it would also require an “independent government watchdog study” of the rule after it’s first year in effect. If the rule is found to negatively impact “American workers and our economy, non-profits—including colleges and universities—along with state and local governments and many Medicaid- and Medicare-eligible facilities such as nursing homes or facilities serving individuals with disabilities will be exempt from any further increases under the rule.” Additionally, it would prevent a possible threshold raise in 2017, as well as the automatic increases that were supposed to occur every 3 years.

Senators Lamar Alexander (R-TN), Susan Collins (R-ME), James Lankford (R-OK), Tim Scott (R-SC), and Jeff Flake (R-AZ) introduced the legislation in fear that the sudden doubling of the salary threshold would be too extreme, and therefore detrimental to various employers. Senate Labor Committee Chairman Alexander states, “the Overtime Reform and Review Act makes urgently needed modifications to the administration’s rule, which will otherwise on December 1 force changes in overtime pay that are too high, too fast and will result in employers, non-profits, colleges and others cutting workers’ hours, limiting their workplace benefits and flexibility, as well as costing students more in tuition….This is a moderate, bipartisan approach that should be able to pass both Houses before December.” Senator Collins adds, “The Department of Labor’s overtime rule will be extremely damaging to small businesses, universities, nonprofit organizations, and service industries, particularly in rural states like Maine…While it is time for a reasonable update in the threshold, doubling the threshold overnight will hurt workers and employers alike and limit the services provided by nonprofits and educational institutions. Our legislation takes a common-sense, bipartisan approach that would phase-in an increase to the overtime threshold over five years, providing businesses with additional time to prepare for this major federal rule change.” Similarly, Senator Lankford states, “This federal overtime rule is devastating for small businesses, colleges and nonprofits all across America, but particularly in states with a low cost-of-living…The economic realities and regional cost of living differences that exist throughout the country were completely ignored in favor of yet another one-size-fits-all approach by this administration. I have been told from small business owners, colleges and nonprofits that this federal overtime rule will quickly lead to job loss, increased tuition, and the reduction of charitable services. I think this rule should be pulled entirely, but at least its implementation should be delayed or slowed.”

A copy of the Overtime Review and Reform Act has not yet been made available to read, but proponents of the bill (i.e. employees) will surely be disappointed by its terms. Meanwhile, letters of support for the revised bill and its originators have been pouring in. The White House issued a Statement of Administration Policy on September 27th, strongly opposing H.R. 6094. The statement gives facts supporting the necessity of the December 1st implementation. Additionally, the statement clearly and in no uncertain terms indicates that if the bill reaches President Obama’s desk, he will veto it. Perhaps the most powerful text in the statement reads, “While this bill seeks to delay implementation, the real goal is clear—delay and then deny overtime pay to workers. With a strong economy and labor market, now is a good time for employers to provide these essential protections for workers, who cannot afford to wait.”

Sources:

https://www.aamc.org/advocacy/washhigh/highlights2016/470736/093016housepassesdolovertimeruledelay.html

http://www.employmentlawdaily.com/index.php/news/new-senate-bill-would-further-delay-ot-rule-implementation-potentially-create-exemptions/

 

 

Domino’s Franchise Wage and Hour Lawsuit Settles

The class action lawsuit against a Georgia Domino’s franchise has settled, awarding class members $995,000 collectively. The lawsuit was initially filed in 2015, and aimed to recover the unpaid wages due delivery drivers for the chain, who were not properly reimbursed for the use of their personal vehicles. Not being paid enough to cover vehicle expenses caused the drivers’ pay to dip below the federal minimum wage at times.

Defendants Cowabunga Inc. and Cowabunga Three LLC are one of the largest Domino’s franchises in the country, with over 100 stores across 3 states (Georgia, South Carolina, and Alabama). According to the company website, they employ over 1,800 people. Ironically enough, the company website also touts their company values to include “respect, responsibility, trust, fairness, and contribution”. A total of 565 drivers opted into the lawsuit, which means the average amount each individual will receive is $1,138. The named plaintiff Chadwick Hines will also receive a $7,500 service award. Chadwick was employed by the company in Savannah, GA from approximately April to October of 2014.

The minimum wage violation occurred because while the company reimbursed their drivers, the amount was too little to compensate for out of pocket costs drivers incurred by using their own personal vehicle to make deliveries. By using their personal vehicles, drivers became responsible financially for upkeep of the car including the cost of gas, insurance, vehicle maintenance, and depreciation. According to the court complaint, drivers were reimbursed only one dollar per delivery. The IRS reimbursement rate for the applicable period of time ranged from $.55-$.57 per mile, while AAA found that the average cost to drivers in the job field (who drive a sedan) was actually $.592-$.608 per mile. Per the complaint, “The driving conditions associated with the pizza delivery business cause more frequent maintenance costs, higher costs due to repairs associated with driving, and more rapid depreciation from driving as much as, and in the manner of, a delivery driver. Cowabunga’s delivery drivers further experience lower gas mileage and higher repair costs than the average driver used to determine the average cost of owning and operating a vehicle described above due to the nature of the delivery business, including frequent starting and stopping of the engine, frequent braking, short routes as opposed to highway driving, and driving under time pressures.” Because Cowabunga only reimbursed drivers $1 per delivery, an average delivery of 5 miles round trip means that drivers were only being reimbursed $.20 per mile. The drivers should have received, at the very least, $2.80 reimbursement per delivery. With all of the out of pocket costs factored in, the drivers received an hourly pay rate of only $3.65-$4.95 per hour – far below the federal minimum wage of $7.25 per hour. The complaint also mentions that several employees brought these pay issues to the attention of the management, but nothing was ever done to address the concerns.

The suit alleges a violation of the FLSA (The Fair Labor Standards Act), which is a “federal law that protects employees’ rights in order to ensure workers receive fair wages, are fully compensated for all hours worked, and work in a safe work environment. The law ultimately protects workers from potential exploitation or abuse from employers.”

Many people don’t realize it, but delivery drivers (and others who drive for a living) are often subject to many forms of wage and hour violations. Aside from not being reimbursed for vehicle expenses such as gas and insurance as this lawsuit mentions, they are also typically vulnerable to lost lunches and breaks. Because more often than not they are the sole operator of the vehicle, no one is there to relieve them for breaks and lunches when they are on a time crunch or have a deadline to meet. Additionally, there is no manager there to ensure a break or lunch occurs. Cases such as this one are rampant in the driver work field.

Overtime

Overtime Pay for Farm Workers in California

Last week marked the end of the “80-year-old practice of applying separate labor rules to agricultural laborers” in California, after Governor Jerry Brown passed a law implementing updated overtime wage pay changes for farmworkers. The bill passed with a vote of 44-32 in the State Assembly, which brought an uproarious applause by farm workers present at the time. This is a groundbreaking new law for California, a state which leads the way in efforts to protect the rights of farmworkers. California has the highest number of farmworkers in the country (totaling over 800,000) many of whom work over 60 hours per week. We discuss the issues around the new laws and the impact it will have in relation to overtime for farmworkers in California.

Currently, California law mandates that farmworkers are entitled to overtime pay after their tenth hour work of work per day, whereas other hourly employees are paid an overtime rate after their eighth hour of work. The last time a change was executed to the law governing wages for farmworkers was in 2002. Though the last set of additions were helpful, they still fell short, as farmworkers were kept as an exempt group of employees whose hourly pay rate was different than that of most other hourly employees in California. Surely, “equal pay for equal work” is a right which should be inherent. The current California Assembly bill supports this idea, stating that “the function of the Department of Industrial Relations is to, among other things, foster, promote, and develop the welfare of the wage earners of California, to improve their working conditions, and to advance their opportunities for profitable employment”.

Even though the law will not go into effect until 2019, it gives hope to many of the farmworkers within the state that there will be a shift in the way they are compensated and treated for their rigorous and back-breaking work. Law AB 1066 states that farmworkers will be entitled to receive overtime pay after working an eight hour shift, just like any other hourly worker within the state. Per the assembly bill, the law will be phased in from 2019-2022 for farms with more than twenty-five workers, those who employ less than twenty-five workers will have an additional three years to make the adjustment. These four and seven year phasing periods are meant to ease the burden on farm owners, while allowing employees to start getting some of the compensation they deserve. The bill does include a possible exception, which states that if an economic problem were to arise, the governor can suspend the overtime changes. This shows the degree of separation in the way that farmworkers are perceived amongst all other hourly workers.

Without even adding the possibility of the suspension, not all farm workers are happy about these new changes. Some farm owners claim the law will not be helpful for the workers, as they believe they will not be able to afford the changes. Instead, they will have to make decisions that will negatively affect the farmworkers income, rather than boost it. They anticipate that they will need to hire more workers and reduce the hours of the current workers, or else they will be faced with the decision of having to close down their farms. They claim that they will not only have to adapt to these changes, but also the new minimum wage changes happening within the next few years. It is hard to anticipate how the economy will change and how farmers will have to adapt to the constant changes, but farms now have to adhere to these stricter guidelines about how they should compensate their workers who are essential to the agricultural economy within the country and who should be paid accordingly for the work they do.

California was the first state to give farmworkers collective bargaining rights, workers compensation and unemployment service. The state also requires that employers provide rest breaks and access to water and shade. These requirements have improved the lives of countless farmworkers. Only time will tell, but hopefully these changes will bring a step-up in the way that farm laborers within the state, and perhaps around the country, are compensated for the hard work they do. What do you think this new law for overtime for farmworkers will do to the Californian economy?

Sources:

http://leginfo.legislature.ca.gov/faces/billNavClient.xhtml?bill_id=201520160AB1066

http://www.nytimes.com/aponline/2016/09/12/us/ap-us-xgr-farmworker-overtime.html?_r=1

https://www.unitedag.org/news/governor-brown-passes-ab-1066-ag-overtime-bill/