Prosecuting whistleblower lawsuits brought pursuant to the federal False Claims Act

A qui tam lawsuit, typically called a whistleblower lawsuit, is brought under the False Claims Act, [FCA], 31 U.S.C. §3729, et. seq. The FCA authorizes bringing an action against any person or entity who knowingly submitted a false or fraudulent claim for payment to the federal government. The FCA also provides for rewarding whistleblowers successful in cases where the government recovers funds lost to fraud.

The United States government may bring the FCA action, or a private citizen, known as a “Relator,” may bring a qui tam action “for the person and for the United States Government,” and “in the name of the Government.”

In this action the Relator, proceeding pro se,* brought the qui tam action on behalf of the United States and California, Connecticut, Florida, and New York under color of the FCA.**

The federal district court dismissed the qui tam action because Relator, who was not an attorney, was not represented by counsel. Relator appealed the ruling to the U.S. Circuit Court of Appeals, Second Circuit.

Limiting its review to the dismissal of Realtor's action by the district court for failure to retain counsel, the Circuit Court opined:

1. "The right to appear pro se in civil litigation in federal court is guaranteed by 28 U.S.C. §1654, which provides that 'parties may plead and conduct their own cases personally or by counsel.'

2. "A person who is not an attorney and is not represented by an attorney 'may not appear on another person’s behalf in the other’s cause.'

3. "A non-attorney relator in an FCA qui tam action cannot proceed pro se because 'the United States remains the real party in interest in qui tam actions, the case, albeit controlled and litigated by the relator, is not the relator’s own case as required by 28 U.S.C. §1654, nor one in which he has an interest personal to him.'"

4. "The district court therefore did not err in dismissing this action after Relator failed to retain counsel, despite being granted ample opportunity to do so.

Although Relator argued on appeal that appointment of counsel by the district court was warranted, the Circuit Court of Appeals observed that Relator did not move for the appointment of counsel in the district court, and the district court was not required to sua sponte appoint counsel.

* A person who appears before the Court without an attorney to represent him is appearing pro se.

** The Circuit Court's decision notes that the Relator "did not move for appointment of counsel in the district court, and the court was not required to sua sponte appoint counsel."

The decision is posted on the Internet at:

http://www.ca2.uscourts.gov/decisions/isysquery/d0620e70-22ac-4d62-a18b-4442337ba1ce/1/doc/17-3812_so.pdf#xml=http://www.ca2.uscourts.gov/decisions/isysquery/d0620e70-22ac-4d62-a18b-4442337ba1ce/1/hilite/

Application for renewal of a certification rejected on the grounds that the applicant made material false statements and demonstrated poor moral character

New York City Department of Buildings denied the request submitted by an applicant [Petitioner] to renew his Site Safety Coordinator (SSC) certification on the ground that Petitioner made material false statements and demonstrated poor moral character in his original application for certification.

In his initial application, Petitioner was required to disclose whether any "licenses/certifications/registrations issued to [him]" had ever been revoked.

Petitioner failed to report that he had been authorized as an OSHA outreach trainer and that his authorization had been revoked because he failed to comply with OSHA requirements and falsified safety certificates.

The Appellate Division sustained the Department's determination explaining that although Petitioner's OSHA credentials "may not have been labeled a license, certification, or registration," his OSHA responsibilities were substantially similar to those of an SSC. Accordingly, said the court, the Department rationally concluded that Petitioner was required to disclose the revocation of those credentials.

The Appellate Division further opined that the Department rationally concluded that Petitioner exhibited poor moral character by failing to disclose OSHA's determination that he falsified agency documents.

The decision is posted on the Internet at:

http://www.nycourts.gov/reporter/3dseries/2019/2019_07524.htm

New York State Comptroller Thomas P. DiNapoli issues audits and examinations

On November 6, 2019 New York State Comptroller Thomas P. DiNapoli announced the following audits and examinations had been issued.

Click on the text highlighted in color to access to access the full report

Department of Health (DOH): Medicaid Program: Overpayments for Therapy Services and Prescription Drugs Covered by Medicare (2016-S-73)

The audit identified $20.1 million in Medicaid payments made by DOH for therapy services and drugs that should have been paid for by Medicare.

Department of Health: Improper Medicaid Payments to a Transportation Provider (Follow-Up) (2019-F-28)

An audit issued in September 2018 found that a transportation provider did not maintain the required documentation to support claims prior to 2016, totaling $1.4 million. In a follow-up, auditors found DOH made some progress in addressing the problem identified in the initial report. The Office of the Medicaid Inspector General opened an investigation into the provider; which remained ongoing at the time of the follow-up review.

Department of Health: Medicaid Payments to Medicare Advantage Plan Providers (Follow-Up) (2019-F-29)

An initial audit released in September 2018 identified $770,935 in Medicaid overpayments for Medicare Part C cost-sharing. In a follow-up, auditors found DOH made some progress in addressing the problems identified. However, no action had been taken to recover the inappropriate payments.

New York City Department of Buildings (DOB) Elevator Safety (Follow-Up) (2019-F-22)

An audit issued in June 2018 concluded that inspectors did not always perform thorough elevator inspections. As a result, hazardous and other unsafe conditions were not always identified and corrected. In a follow-up, auditors found that of the prior recommendations, DOB implemented three, partially implemented four, and did not implement two.

New York State Health Insurance Program: CVS Health: Temporary Holding Account Rebate Revenue (2019-S-27)

CVS Health did not seek rebates from drug manufacturers on claims that were, in fact, rebate-eligible. Auditors identified $428,958 in rebate revenue that is due to the state Department of Civil Service for rebate-eligible claims in the account for the period Jan. 1, 2014through Dec. 31, 2018. 

Metropolitan Transportation Authority: Triborough Bridge and Tunnel Authority (TBTA): Selected Aspects of Collection of Bridge and Tunnel Tolls and Fees (Follow-Up) (2019-F-1)

An earlier report found that, while the TBTA makes efforts to collect unpaid tolls, $11.3 million in tolls were either written off or uncollected. In addition, TBTA had more than $72 million in unpaid fees for the Henry Hudson Bridge from 2013 through 2015. In a follow-up, auditors found TBTA officials have made progress in addressing the issues identified. However, additional improvements are needed.

State Education Department (SED): Oversight of Nurse Licensing (Follow-Up) (2019-F-26)

An audit issued in September 2017 found the SED was not completing investigations, particularly for complaints that pose a substantial danger to public health and safety, in a timely manner. In a follow-up, auditors found SED made some progress in addressing the issues identified in the initial audit.

Department of Taxation and Finance: Controls Over Unclaimed Bottle Deposits (Follow-Up) (2019-F-6)

A report issued in December 2017, determined that the department deposited all funds received into the General Fund, as required. However, it did not assess penalties on 39 deposit initiators that failed to file required quarterly reports, nor did it assess penalties on those who filed late, and took little action to improve compliance. In a follow-up, auditors found the department has made significant progress in addressing the issues identified in the audit.

Employee Organization Leave

Employee organization leave has been an issue since the adoption of the Taylor Law. In response to demands that State employees elected to a leadership position of an employee organization representing state employees be provided with "paid organization leave," the State agreed to provide for “Employee Organization Leave” and enacted §46 of Chapter 283 of the Laws of 1972 to this end.

This law provides that a State employee organization may obtain approval for paid full or part-time leaves of absence of its representatives provided it agrees to fully reimburse the State for the salary and other compensation paid to the individual and, in addition, for all employer contributions for fringe benefits made on behalf of the individual while he or she is on Employee Organization Leave. The individual would continue as a State employee, on the State’s payroll, during this time. 

Another element affecting State employees on Employee Organization Leave: The State Ethics Commission has advised that “State employees on Employee Organization Leave or State employees on leave without pay who serve as employee organization representatives for CSEA … who have terminated their State service and are now employed by CSEA are subject to the "revolving door" provisions of the Public Officers Law and the corresponding restrictions on post-employment activities” [see Advisory Opinion #90-a ].

Presumably this opinion would be applied with respect to State employees on employee organization leave serving with other employee organizations.

Failure to respond to a request for documents sought pursuant New York State's Freedom of Information Law

An individual [Petitioner] had made numerous requests to the County District Attorney's Office [Respondent] pursuant to the Freedom of Information Law [FOIL] for copies from the negatives of crime scene photographs related to his criminal case. Not receiving any response to his FOIL request,* Petitioner eventually commenced a CPLR Article 78 proceeding seeking to compel the Respondent to produce the photographs. Supreme Court dismissed the petition based on the Respondent's certification that the requested records could not be located and Petitioner appealed.

The Appellate Division affirmed the lower court's decision, explaining that in the event the custodian of the record or records sought is unable to locate documents properly requested pursuant FOIL, Public Officers Law §89(3) requires the custodian to certify that it does not have possession of the requested record or the record cannot be found "after diligent search."**

However, said the Appellate Division, "even where an entity properly certifies that it was unable to locate requested documents after performing a diligent search, the person requesting the documents may nevertheless be entitled to a hearing on the issue where he or she can 'articulate a demonstrable factual basis to support the contention that the requested documents existed and were within the entity's control.'"

In this instance Petitioner did not establish his entitlement to a hearing as FOIL only requires the custodian of the record to provide copies of "any information kept, held, filed, produced or reproduced by, with or for the [Respondent]." Although Petitioner submitted a police department property report that listed a roll of film, the court said that nothing in the record indicates that the roll of film or any photographs that may have been developed therefrom were ever in Respondent's possession.

Citing Gould v New York City Police Dept., 89 NY2d at 279, the Appellate Division held that as Respondent had adequately certified that "no requested documents could be found after a diligent search," the Supreme Court had properly dismissed the Petitioner's Article 78 action.

* Public Officers Law §89[4][a] provides that a failure to respond is deemed a constructive denial of a Freedom of Information Law request.

** The statute, however, does not specify the manner in which an agency must certify that documents cannot be located and neither a detailed description of the search nor a personal statement from the person who actually conducted the search is required.

The decision is posted on the Internet at:

http://www.nycourts.gov/reporter/3dseries/2019/2019_07657.htm