Whistleblowing: A Valuable Tool in the Fight Against COVID-19

April 1, 2020

by M&S Staff


As of this writing, the Johns Hopkins University Center for Systems Science and Engineering reports 593,291 confirmed cases of COVID-19 worldwide – resulting in 27,198 deaths. Of those totals, 101,657 of the confirmed cases and 1581 of the deaths have occurred in the United States, which has quickly overtaken China as the country with the most confirmed cases and has declared a national emergency. Sadly, by the time you read this, those numbers will be drastically higher. The world is coming together to implement lockdowns and social distancing directives; mass produce and distribute respirator masks and tests; and develop life-saving drugs and vaccines. Meanwhile, liars, cheats and thieves are looking for opportunities to exploit and defraud. Amid the disorder of this pandemic, whistleblowers are crucially important to protecting a wide variety of interests – as taxpayers, employees, consumers, investors, patients . . . In some cases, whistleblowers can receive financial rewards for their efforts and information, in addition to the satisfaction of doing the right thing.

The Whistleblower Rights team at Mehri & Skalet is here to help you sort through information and determine how best to communicate your concerns or more formally blow the whistle on fraud or wrongdoing.

OSHA and Worker Safety

It is no secret that, due to vast shortages of respirator masks and coronavirus tests, employees who are at increased risk of contracting the novel coronavirus are woefully under-equipped to perform their jobs safely. Recent reports reveal that some healthcare providers have ordered employees to wear rain ponchos, and even garbage bags as substitutes for the appropriate medical equipment. The U.S. Occupational Safety and Health Administration (OSHA) is charged with keeping America’s workforce safe. And OSHA has made clear that its existing safety standards – including standards for respirator masks and other personal protective equipment (29 C.F.R. 1910 Subpart I) “apply to protecting workers from the novel coronavirus, COVID-19.” To be sure, these standards do not only apply to healthcare workers, as employees in the airline and travel; postal and delivery; and border security industries – among many others – are also at increased risk of exposure when they are on the job.

An employer that fails to protect its employees from unnecessary risk of exposure to COVID-19 faces an OSHA inspection and possible sanctions. Importantly, OSHA regulations prohibit employers from retaliating against employees who raise safety concerns – including employees of the federal government itself, such as the Department of Health and Human Services whistleblower who revealed last month that at least a dozen federal employees who first met with quarantined American evacuees from China did not have appropriate protective gear. And OSHA’s Whistleblower Protection Program further empowers private sector employees to protect their own health by prohibiting retaliation against individuals who expose safety issues or engage in other protected whistleblower activity; federal employees are protected under a different set of rules, administered by the U.S. Office of Special Counsel.

It is imperative that we keep our healthcare workforce and other “essential employees” as healthy as possible. Any of us can become the next COVID-19 patient (or the family or friend of a patient) and having access to the best available essential services under those circumstances is critical. Whistleblowers help keep some of our most courageous employees safe during these most trying times – and thereby provide a benefit to us all.

The Department of Justice and Consumer Fraud

Days ago, DOJ announced its first coronavirus-related federal enforcement action – against the operators of a website that purported to sell WHO-approved coronavirus vaccine kits, even though no such vaccine exists. This prosecution coincides with Attorney General William Barr’s recent announcement that investigating and prosecuting coronavirus-related fraud schemes has become a new priority for the Department of Justice. Notably, Barr even appealed to the public to report suspected COVID-19 frauds. Soon after, Barr announced an Executive Order that criminalizes hoarding and price gouging of vital medical supplies, such as masks and ventilators, and again implored “anyone with information” to contact DOJ’s Antitrust Division. The Justice Department rarely solicits whistleblowers in such a direct manner, which underscores the significant role the government knows whistleblowers will play in quickly exposing consumer fraud schemes that target vulnerable communities during the fog of the coronavirus crisis.

If you have information that you think may be evidence of fraud, the Mehri & Skalet Whistleblower Rights team is here to help you assess the situation and choose a course of action that is best for you.

The False Claims Act and Fraud Against the Government

Of course, the federal government is also a major consumer, and has already committed to spending billions upon billions in coronavirus-related purchases. In fact, a few hours ago Congress passed a $2 trillion COVID-19 stimulus package bill that includes billions of government funds earmarked for purchases of personal protective equipment, drugs, and medical supplies. The government’s coronavirus-related spending doesn’t stop there, however. The stimulus package also allocates $100 billion in direct aid to healthcare institutions. Of course, we can also expect a significant amount in Medicare and Medicaid spending in response to the pandemic, covering costs for testing, treatment, and long-term care for eligible patients. If past history is any indication, fraudsters will target these streams of government funds in all manner of ways – including: providing substandard goods and/or failing to give the government the “best price;” falsifying information on applications for direct aid funds and/or misrepresenting how such funds were used; and billing for medical services that were not medically unnecessary or that were not actually provided.

The False Claims Act protects our federal taxpayer dollars from fraud by imposing tough civil penalties and up to three times the government’s actual losses. The law has been extremely successful, having recovered more than $60 billion for the government over the past 30 years – with more than $40 billion coming from healthcare fraud cases.[1] Furthermore, the FCA permits private individuals with knowledge of fraud to sue in the name of the United States; if the lawsuit is successful, the whistleblower receives a share of up to 30% of the government’s recovery. The law also includes strong anti-retaliation measures that protect whistleblowers who question or report fraud on the government. Notably, cases brought by whistleblowers have accounted for more than 70% of recoveries under the FCA – and more than 80% of all recoveries from healthcare fraud cases. More than half of the States have a version of the FCA that protects their portion of Medicaid funds from fraud. Whistleblower lawsuits have been similarly successful under those statutes.

We need whistleblowers to curb fraud against the government and to help ensure that our tax dollars are directed where they are needed most – and not into the hands of unscrupulous profiteers.

The SEC Whistleblower Program and Fraud Against Investors

Soon after the Dodd-Frank Wall Street Reform and Consumer Protection Act was passed in 2010, the U.S. Securities Exchange Commission (SEC) opened its Whistleblower Office and began a program that – similar to the False Claims Act – provides financial rewards of up to 30% to individuals who provide information regarding securities violations that result in sanctions of at least $1 million. In less than 10 years, the SEC whistleblower program has recovered more than $2 billion from companies and individuals who perpetrated frauds on investors – and has awarded more than $300 million in whistleblower rewards. In the aftermath of the COVID-19 crisis, the SEC issued guidance to companies regarding potential increased reporting and disclosure obligations regarding coronavirus risk factors. Along similar lines, the Commission issued a stern warning against insider trading, as multiple U.S. Senators came under fire for dumping millions in stocks just before the market rapidly plummeted. Without question, the SEC Whistleblower Office would welcome whistleblowers with knowledge of misleading disclosures and/or insider trading with open arms. The markets certainly will not recover if investors lose faith in their integrity.

While most of us will not directly fight COVID-19, by treating the sick or developing a vaccine, we all have an important role to play – at a minimum, we must practice social distancing. Whistleblowers have the capacity to go well beyond that minimum role and can significantly impact America’s response to the pandemic – and even save lives. For more information about the whistleblower laws and programs discussed above, please contact Cleveland Lawrence III or Richard E. Condit.

[1] See DOJ Fraud Statistics, Oct. 1, 1987 – Sept. 30, 2019, available at https://www.justice.gov/opa/press-release/file/1233201/download.