Nevada Complex Litigation

BLM Whistleblower Wins Lawsuit Over Mismanagement of Nevada Toxic Mine Cleanup

Earle Dixon was hired by the US Bureau of Land Management in October 2005 to oversee the cleanup of the Anaconda Mine in Yerington Nevada.  His employment included a 1 year probationary period. 

On September 9, 2004 Dixon’s immediate supervisor certified that Dixon’s performance, conduct and general traits of character had been satisfactory and recommended Dixon be retained beyond the probationary period.

In October 2006, one week before the end of his probationary period, Dixon was fired.
  
Dixon filed a whistleblower lawsuit.  The complaint outlined violations of numerous federal laws including the Safe Drinking Water Act, the Clean Air Act, Superfund, the Toxic Substances Control Act and the Occupational Health and Safety Act.
 
The complaint also outlines a number of problems which were not addressed by his superiors because they would drive up remediation costs and cause political problems.

In September 2006 an administrative law judge ruled that the U.S. Bureau of Land Management illegally fired Dixon for speaking out about the health and safety dangers at the toxic Anaconda Mine site.  The judge ordered the BLM to pay Earle Dixon two years worth of back pay and benefits totaling over $120,000.

The BLM appealed the decision to the U.S. Labor Department's Administrative Review Board.  The Board upheld the decision.  The board also upheld the judge's order for the BLM to reimburse Dixon for $10,000 in moving expenses after he was fired in October 2005 as well as attorney fees and costs expected to exceed $50,000.  The final ruling may be viewed HERE.

The review board determined that the BLM fired Dixon because he "raised concerns that the contamination at the Yerington site was much greater than previously documented," and "refused to back down from his conclusions about worker health and safety issues."

Dixon had requested punitive damages of up to $1 million.  The board rejected that request stating "Nothing in this record would support an award of any amount of punitive damages…”

Whistleblower to Receive $56 Million from Amerigroup Settlement

Cleveland Tyson, a former Amerigroup employee filed a lawsuit under the federal False Claims Act and the Illinois Whistleblower Reward and Protection Act as a private party (legally known as a relator).  Tyson’s lawsuit alleged that while administering the Illinois Medicaid program, Amerigroup systematically avoided enrolling pregnant women and those with expensive medical conditions.  These actions were contrary to state and federal laws.

Lawyers from the U.S. Attorney’s Office, Illinois Attorney General’s Office, and Justice Department Civil Division joined the lawsuit against Amerigroup.

Amerigroup claimed that its enrollment policies were responsive to state officials who were concerned about the enrollment of too many pregnant women in their third trimester.

In October 2006 the case went to trial.  An Illinois jury found that Amerigroup defrauded the Illinois Department of Public Aid and a $334 Million judgment was entered against them. Amerigroup appealed.

Federal and state prosecutors announced this week that Amerigroup has agreed to pay $225 Million to settle all claims and will drop the appeal. 

Admitting no wrongdoing, Amerigroup Chairman James Carlson stated, “Our responsibility to our shareholders, associates, members, providers and government partners is to close this chapter now and move toward the future."  Amerigroup has ceased all business operations in Illinois.

Cleveland Tyson, the former employee who filed the whistleblower suit stands to collect a 25% share of the settlement, about $56.25 million.

UPS Settles Employee Whistleblower Lawsuit

A confidential settlement between United Parcel Service (UPS) and Daniel B. Peterson is awaiting judicial approval.  Peterson claims he was fired for complaining that trucks were not roadworthy.  He had filed a lawsuit seeking $2 million in damages.

Peterson was hired as a full time mechanic in 1999.  Mr. Peterson had claimed he removed inspection stickers from four trucks in March 2006 against management orders even though the trucks had significant safety problems including cracked frames.

Only 4 days later, Peterson was fired.  UPS alleged "falsification of company and legal documents, poor workmanship in the repairs you made to the vehicles and failure to follow methods and procedures."

UPS claims that Peterson was not fired for being a whistleblower.  Court documents state he was fired for failing to complete inspection and maintenance records accurately, demonstrating poor workmanship and violating state motor vehicle regulations by unlawfully removing inspection stickers.

As for terms of the settlement, they usually include a confidentiality agreement, and based on the following quote, this one is no exception.

Steven Bennett Blau, the attorney representing Mr. Peterson, said "Everything's confidential, It was resolved to the satisfaction of all parties."

In addition to the lawsuit, Peterson’s claims led to an investigation by the New York State Attorney General’s office to determine if UPS’s actions violated any state laws or the Federal Whistleblower Act.

A spokesman for the attorney general's office in Albany, said that the office's investigation remains open, but declined further comment.

Whistleblower Earns $47,000 Reward From US Government

The Dallas Independent School District will repay the US Government $336,000 in HIV Education grant money according to settlement terms of a whistleblower lawsuit. 

The whistleblower, Becky Beck had complained to supervisors and filed a grievance stating that the funds paid over a 3 year period were not being used as earmarked, but the district took no action.  

According to her attorney, instead of using funds from a CDC grant to pay for 2 full time employees to provide HIV education in the district, Ms. Beck was doing CPR training and writing curriculum while being paid with CDC funds.

Her attorney also said that the school district took the CDC grant money and "pretty much did whatever they wanted to with it."

School District spokesman Jon Dahlander said the district settled the lawsuit to "avoid delay, uncertainty, inconvenience and expense of protracted litigation."  The district has admitted no wrongdoing.

Ms. Beck has earned a $47,400 reward from the US Government for exposing the school district’s deception.

Preventing Retaliation Lawsuits

Today more than ever, employers need more than just an anti-retaliation policy to reduce exposure in EEOC actions.  First, management needs to understand the EEOC’s definition of Retaliation and the rules as written.

Directly from the EEOC Compliance Manual, Section 8:  Retaliation

There are three essential elements of a retaliation claim:

   1)  protected activity -- opposition to discrimination or participation
       in the statutory complaint process

   2)  adverse action

   3)  causal connection between the protected activity and the adverse
       action

This section of the EEOC Compliance Manual pretty clearly defines the structure of a retaliation claim.  As such, if you do not yet have a stand alone anti-retaliation policy, it is a good place to start to create one.  Do not bury this policy among others.  It must “stand alone”.

Prevention of retaliation and reduction/elimination of liability require much more than a policy.  Today, employers must be proactice in response to any EEOC claim.  Here are a few tips.

• Make sure that your anti-retaliation policy includes a statement that encourages employees to come forward with complaints of unlawful conduct without fear of retaliation.
• Your policy must state that retaliation is illegal and include procedures for redress should retaliation happen.
• When any employee makes a claim of discrimination, harassment or other unlawful conduct, the managers, supervisors and, if appropriate, the claimant’s co-workers should be counseled regarding your policy (a copy of which should be distributed during the meeting) and their non-retaliation obligations. Document this meeting and policy distribution.
• Lastly, schedule and conduct regular (every 2-4 weeks) meetings with the employee. The meetings may be brief as the only question to be asked and answered is this: Does the employee feel that s/he has experienced any retaliation?

These steps not only serve to limit your liability by reducing problems, but also serve to document how seriously your company takes its responsibility to eliminate retaliation.

Retaliation Claims Continue to Rise

First the statistics:  EEOC statistics show that from 1997 to 2006 total charges (claims) for all types of discrimination dropped from 80,680 to 75,768. While that might be viewed as good news, here is the problem. 

During that same period, charges of retaliation increased from 18,198 (22.6 % of total charges) to 22,555 (29.8 % of total charges).  That is an increase of over 4,000 claims per year and a jump of more than 7%!

2007 statistics have not yet been released, but there is no question that the trend will continue.

Why?  Historically jurors tend to disbelieve employers and favor employees.  Recent cases of corporate misdeeds (Worldcom, Enron, etc.) have served to reaffirm the jurors’ perceptions of who the villains are more likely to be.  Next, jurors seem to find retaliation to be human nature, and as such more likely to occur than acts of discrimination.  It is not uncommon for employees to lose their discrimination cases and win their retaliation cases.

The future will likely be even more bleak for employers thanks to a 2006 US Supreme Court Decision in Burlington Northern & Santa Fe Railway Co. v. White (126 S. Ct. 2405).  Essentially the Court lowered the standard of proof required to prove retaliation.  This makes it easier for employees and jurors while making it much more difficult for employers to defend themselves. 

Dark skies ahead? This decision also makes it easier to prove retaliation than to prove discrimination. 

You may read more about Burlington Northern & Santa Fe Railway Co. v. White (126 S. Ct. 2405) in the Harvard Journal of Law & Gender, the Duke Journal of Constitutional Law & Public Policy and even in WikiPedia.

Due to the complexity of the legal issues involved, employers may feel free to contact Bill Cooper at 702-382-5111 or wecooper@lvcm.com.

Whistleblower Lawsuit Claims Pfizer Mislead Doctors About Lipitor

A former Pfizer official, Dr. Jessee Polansky filed suit in 2004 against Pfizer claiming that Lipitor marketing was misleading.  The lawsuit also claims that the strategy "led thousands of physicians to prescribe Lipitor for millions of patients who did not need medication" and could be harmed by overly aggressive treatment.

An interesting aspect is that the case was sealed immediately upon filing in 2004 to allow federal prosecutors time to decide whether or not to intervene in the case.  In August 2007 the government lifted the seal having taken no steps to intervene.  The case is 04CV0704 and was filed in United States District Court, Eastern District of New York.

According to The Wall Street Journal, Pfizer said, "We believe this case has no merit. Furthermore, after reviewing the allegations in this complaint, the government declined to intervene in this action... . Pfizer does not condone the off-label promotion of our products. We believe that our sales and marketing practices are solely based on our prescription information as approved by the U.S. Food and Drug Administration."

From 2001 to 2003 Dr. Polansky was Director of Outcomes Management Strategies for Pfizer.  His duties included reviewing marketing materials for Lipitor.

Lipitor is the largest selling prescription drug in history with sales estimated to be between Ten and Thirteen Billion Dollars.  Dr. Polansky claims that Pfizer used educational programs which included deliberate misinformation promoting "Off Label" uses for Lipitor including use with kidney disease patients. 

Dr. Polansky claims that when he objected to the misleading physician education programs he was fired.  The lawsuit asks for “damages and civil penalties on behalf of the United States of America….” arising from violations of the Federal False Civil Claims Act and “…damages arising from defendant’s wrongful termination of Relator’s employment…” for violating the New York Whistleblower statute.

UNR Target of Whistleblower Lawsuit by Former Soccer Coach Terri Patraw

In a lawsuit filed November 8, 2007 former University of Nevada at Reno (UNR) soccer coach Terri Patraw alleges she was fired for complaints about discrimination and reporting NCAA violations allegedly committed by other UNR coaches.  The lawsuit lists UNR director of athletics Cary Groth (who fired her), UNR president Milton Glick and UNR General Counsel Mary Dugan as defendants.

The lawsuit seeks financial restitution and reinstatement of Patraw’s job.

UNR responded by filing a motion to dismiss Patraw’s lawsuit.  That motion was denied by Nevada State Personnel Commission administrative hearing officer Bill Kockenmeister. 

State hearing officer Kockenmeister also granted a motion by Patraw’s attorney Jeffrey Dickerson that will provide Dickerson an opportunity to further build Patraw’s case by interviewing people involved. The motion also allows the addition of sexual harassment allegations to the original complaint.

A public hearing has been scheduled for January 17, 2008. 

According to the Nevada Sagebrush, in her last season as coach, Patraw led the Wolf Pack to a first ever NCAA Tournament appearance in the program’s seventh year. Administrative evaluations signed by Cindy Fox rated Patraw as “commendable” and described her as a “team player”.  The only higher rating is “excellent”.

If Patraw’s evaluations were accurate, they will likely be used in court to illustrate that she was not fired for performance issues.  If they were not accurate, they will likely be used in court the same way.  This could be a shining example of why all employee evaluations must be accurate.  Inaccurate evaluations on any level, in any organization are ticking time bombs.

Employee Katy Cameron Sues General Motors & Toyota Over NUMMI Defects

For 23 Years Katy Cameron has worked for New United Motor Manufacturing Inc. (NUMMI) in Fremont California.  Since 1991 Cameron has been a quality control inspector, inspecting vehicles and documenting defects.  Her lawsuit claims that when she reported to management that her reports were being altered to lower the number of “defects per vehicle” management not only ignored her complaints but retaliated.

The suit accuses NUMMI of whistleblower retaliation, wrongful employment  practices and intentional infliction of emotional distress. 

NUMMI is a joint venture between General Motors (GM) and Toyota.  Cameron claims cars were exiting the assembly line with water leaks, mirrors falling off, steering wheel alignment, faulty headlights, missing radiator caps, and defective seat belts.   

Cameron claims that when she spotted defects in Corollas, Tacomas and Pontiac Vibes manufactured at NUMMI, she was demoted twice.  According to her lawyer Kelly Armstrong, her most recent assignment, after working 16 years as a certified auditor was placing plastic bumpers in boxes.

Attorney Armstrong also stated that Cameron has been on medical disability leave since July because "she was subjected to incredible emotional distress."

Unlike many whistleblower lawsuits, in this one the employee was not terminated.  Whether to terminate or just reassign an employee is often a tough question to answer and as illustrated here, a lawsuit can be the result either way. 

Not to overstate the obvious, but whether a complaining employee has a valid complaint or not and whether that employee is retained/reassigned or not, retaliation and harassment will lead to a lawsuit virtually every time.  And juries do not view any negative treatment of employees favorably.  Typical juries have a lot more in common with an employee than they do with corporate management.

Lastly, if an employee files a lawsuit against your company, you need to find guidance from an experienced trial attorney.  Unless you have the financial resources of GM and Toyota, the future of your company could very well depend on whether you choose to take such a lawsuit to trial or choose to make it go away. 

Sarbox Statistics…Good News – Bad News for Publicly Traded Corporations

The Sarbanes-Oxley Act was signed into law in July 2002.  It applies to all publicly traded companies in the United States.  Commonly known as “Sarbox” or “SOX” it provides for more accurate financial accountability than ever before. 

Sarbox also provides for “Whistle-Blower” protection for employees who see and report financial malfeasance.  Early on, corporate attorneys feared that it would lead to frivolous suits by disgruntled workers. 

Five and a half years later, it’s quite a different story.  Approximately 1000 Sarbox related lawsuits have been filed, and here are some statistics from CFO.com:   

• Not one case has resulted in the whistle-blower making it past appeals and winning
• The vast majority (665) of Sarbox cases to date have been dismissed as having no merit
• About 138 have ended in settlements between whistle-blowing employees and their companies
• About 126 were withdrawn by complainants
• Only six have survived the first level of appeal
• Three of those six were reversed by the DOL's Administrative Review Board (ARB)
• Of the remaining three, two have settled and only one remains active: Kalkunte v. DVI Financial Services, Inc.

The most publicized reversal is set to go to the Fourth District Court of Appeals in Richmond, Va. Here is a link to an article about the Welch case.

Now the bad news…COSTS

Not including the costs of defending your company in a Sarbox action, which can be considerable, let’s look at the compliance costs.

Information Week reports that the average cost of compliance for companies with less than $1 billion in annual revenue has risen by over $1.7 million to reach $2.8 million in 2006, a 171% increase since 2003 but about the same as 2005.

For companies with annual revenue over $1 billion, the average cost of compliance increased 54%, rising from $8.1 million in 2003 to $12.4 million in 2006.

The question for 2008 may be this: How many corporate officers will take their public companies private to avoid Sarbanes-Oxley?