News Archives - Page 13 of 47

California’s Prop 22 Mostly Upheld in Loss for Gig Workers, But Loophole Could Lead to Unionization

Apr 08 2023

Proposition 22, California’s voter-approved ballot measure that allowed rideshare and delivery network companies like Uber, Lyft, and DoorDash to classify drivers as independent contractors rather than employees, should remain state law, a divided three-judge appellate panel ruled last month.

The law had been struck down in 2021 by a lower court, but the state appealed. Prop 22, also known as the Protect App-Based Drivers and Services Act, is a 2020 ballot measure that received heavy financial backing from app-based companies. The law passed with 59 percent of the vote.

Prop 22 was an industry response to 2019 state legislation, Assembly Bill 5, which set standards for classifying such workers as employees. In AB 5, the state legislature codified a California Supreme Court decision which put the burden on employers through the so-called “ABC test” to show that someone was an independent contractor and not an employee.

The question of whether a worker is an employee or an independent contractor is important because while employees are entitled to minimum wages, overtime, and work expenses, independent contractors are not.

Prop 22 exempts app-based companies’ drivers from the standards of AB 5 that classified them as employees, offering them alternative benefits instead. According to the Los Angeles Times, labor advocacy group Rideshare Drivers United has said drivers earnings and protections have eroded since voters approved Prop 22. Gig companies say the opposite, that Proposition 22 has boosted drivers earnings.

The Protect App-Based Drivers And Services Coalition celebrated the ruling as a “historic victory for the nearly 1.4 million drivers who rely on the independence and flexibility of app-based work to earn income, and for the integrity of California’s initiative system.”

Meanwhile, SEIU California and SEIU United Service Workers West president David Huerta said: “Every California voter should be concerned about corporations’ growing influence in our democracy and their ability to spend millions of dollars to deceive voters and buy themselves laws.”

The Times reported that app-based ride-sharing and delivery companies spent more than $200 million marketing Prop 22 to Californians.

There is one silver lining for gig workers: the appeals court ruled that one part of Prop 22 should remain invalid, and it’s a section that defined legislation on certain subjects, including unionization, as amendments to the proposition. Prop 22 says amendments need to pass by a seven-eighths majority in the California legislature, so having that section struck down seemingly opens the door for lawmakers to pass a law giving gig workers the right to unionize.

“If the Legislature wanted to enact collective bargaining legislation today, it would be free to do so by a simple majority,” said Stacey Leyton, an attorney with Altshuler Berzon, a law firm representing the drivers and SEIU in challenging the ballot measure, told Cal Matters.

But a lawyer representing the Protect App-Based Drivers And Services Coalition told Cal Matters that a collective-bargaining law passed with less than a supermajority would be challenged in court.

“It would be up to a court to decide at that point if it is an amendment or not,” said Kurt Oneto, an attorney with Nielsen Merksamer, who is representing the coalition.

If you work for an app-based company you believe you’ve been misclassified as an independent contractor, you may be able to challenge your employment status in court.

Keller Grover is here to help workers with their employment-related disputes. If your employer isn’t treating you fairly, we can help you better understand your rights, protections and options. In more than 25 years litigating fraud and employment cases, we have recovered hundreds of millions of dollars for clients and class members.

Annual False Claims Act Report Shows Success of Non-Intervened Whistleblower Cases

Mar 15 2023

The Department of Justice last month reported its False Claims Act report for fiscal year 2022, highlighting more than $2.2 billion in settlements and judgments, and the second-highest number of settlements in history.

But even more revealing were figures that show the importance of non-intervened whistleblower cases. That is, lawsuits filed by whistleblowers under the False Claims Act that federal prosecutors declined to intervene in, leaving the whistleblowers and their attorneys, like those at Keller Grover, to bring the case to trial and hold alleged fraudsters accountable without the help of the government.

According to the DOJ report, whistleblowers filed 652 qui tam suits in fiscal year 2022 resulting in settlements and judgments exceeding $1.9 billion. In FY 2022, 76 percent of recoveries came from intervened FCA qui tam actions but only clawed back $776 million, an 18-year low and well below the average annual recovery over the past decade of $2.5 billion.

Meanwhile, non-intervened whistleblower cases recovered nearly $1.2 billion while only accounting for 24 percent of recoveries, according to the Taxpayers Against Fraud Education Fund (TAF). Keller Grover attorney Kate Scanlan is a member and chair of TAF’s Public Education Committee.

“The modern-day success of declined qui tam actions honors the original intent behind the False Claims Act,” said Jeb White, president of Taxpayers Against Fraud. “When Congress passed the Act 160 years ago, it sought to enlist the help of the private citizenry to investigate and hold accountable those who pilfer government funds. Relators and their counsel have answered the call.”

Here are some other revelations from the annual FCA report:

Whistleblower rewards

The False Claims Act imposes triple damages and penalties on those who knowingly and falsely claim money from the federal government and whistleblowers in successful FCA cases typically receive a portion of the recovery ranging between 15% and 30%. In FY 2022, the government paid $488 million to whistleblowers.

Health care fraud

Of the more than $2.2 billion in FCA settlements and judgments, more than $1.7 billion related to the health care industry, including fraud on the Medicare and Medicaid programs for drug pricing, unlawful kickbacks, billing for medically unnecessary services or substandard care. The Justice Department also intervened in cases where organizations participating in the Medicare Advantage (or Medicare Part C) program were alleged to have knowingly submitted inaccurate information about the health status of beneficiaries to increase reimbursement.

COVID-related fraud

The DOJ resolved 35 FCA matters related to improper payments made under the Paycheck Protection Program (PPP), an $813.7 billion program that provided fully guaranteed SBA loans for eligible small businesses, individuals, and nonprofits adversely impacted by the COVID-19 pandemic. Over the last year, the department recovered over $6.8 million in cases where borrowers were alleged to improperly receive funds.

Cybersecurity

FY 2022 marked the DOJ’s first settlement under its Civil Cyber-Fraud Initiative. A medical services contractor in Cape Canaveral, Florida, paid $930,000 to resolve allegations that it falsely represented to the State Department and the Air Force that it had complied with cybersecurity contract requirements relating to the provision of medical services at State Department and Air Force facilities in Iraq and Afghanistan.

As the annual False Claims Act report shows, whistleblowers play a crucial role in exposing fraud in all layers of government programs. If you believe someone has engaged in fraud against the government, the whistleblower lawyers at Keller Grover can help you.

We provide confidential, free consultations to advise those who have observed suspected wrongdoing and can help you determine the best path forward from the very beginning, helping you minimize the impact of reporting, protect your rights and achieve the best possible outcome for your situation.

Supreme Court Will Hear Fraud Loophole Case That Goes to the Heart of the False Claims Act

Mar 10 2023

The Supreme Court will hear arguments this spring about the “biggest threat” the False Claims Act has faced since it was modernized four decades ago.

It’s an issue that could undercut the FCA’s ability to hold bad actors accountable and recover taxpayer money—$72 billion and counting since the statute was revamped in 1986.

The issue arose from the Seventh Circuit’s decision in U.S. ex rel. Schutte v. SuperValu Inc. nearly two years ago. That ruling defines the FCA’s knowledge of fraud requirements in a way that allows companies to use a lawyer-crafted after-the-fact interpretation of the law, even if it’s wrong, as a defense for submitting false claims to the government even when the defendant thought at the time it submitted the claims that it was unlawful.

On one side of the issue: whistleblowers with supporting briefs by the U.S. Department of Justice and Solicitor General; U.S. Sen. Charles Grassley (R-Iowa), who championed the modernization of the FCA in 1986; the Attorneys General of 33 states and supporters of government and taxpayer spending accountability, including the Taxpayers Against Fraud Education Fund (TAF). Keller Grover attorney Kate Scanlan is a member and chair of TAF’s Public Education Committee.

On the other side: SuperValu and Safeway, two government contractors who, according to the whistleblowers’ complaints, defrauded Medicare and Medicaid of millions of dollars by overcharging the government for prescription drugs.

InSuperValu, a whistleblower alleged in a 2011 lawsuit that the supermarket chain violated the FCA by reporting list prices of prescription drugs for Medicare reimbursement that were eight to 15 times higher than what it charged non-insured customers for the same drugs.

But a U.S. District Judge granted summary judgment to SuperValu because even though the court found that the company’s reported prices were false, SuperValu’s after-the fact interpretation of the law was objectively reasonable, even if it was wrong. The Seventh Circuit upheld that ruling and several other federal appellate courts have adopted the objectively reasonable standard of knowledge.

To violate the FCA, defendants must have made a false claim knowing it was false. The law defines knowledge of false information as (1) actual knowledge, (2) deliberate ignorance of the truth or falsity of the information, or (3) reckless disregard of the truth or falsity of the information.

Lawyers for the federal government, Grassley, and taxpayer advocates want the Supreme Court to overturn SuperValu and adopt a subjective knowledge standardjoined the whistleblower in urging the Court to reject the 7th Circuit’s reasoning.

In an amicus brief filed at the invitation of the Court, the DOJ and Solicitor General argued that when a defendant has submitted false claims with a culpable state of mind, “it cannot escape liability merely by showing that its claims were consistent with an objectively reasonable (but wrong) understanding of the law.”

The Taxpayers Against Fraud Education Fund , of which Keller Grover attorney Kate Scanlan is a member and chair of its Public Education Committee, also filed an amicus brief, arguing the “FCA’s plain language allows for consideration of a defendant’s subjective knowledge.”

“The Seventh Circuit’s rule (gives) defendants with subjective knowledge of their own wrongdoing a get-out-of-liability-free card, which they or their lawyers can play at any time,” the brief said. “If adopted by this Court, the rule would not only rewrite the FCA’s knowledge standard, but would also severely hamstring the United States’ ability to protect taxpayer dollars from fraud.

“The Court should reverse and reaffirm the FCA’s text, which acknowledges that a defendant’s contemporaneous subjective knowledge matters. In addition, the Court should reject the Seventh Circuit’s narrow view of interpretative guidance and hold that relevant guidance in FCA cases is a context-specific factual question.”

Earlier this year Senator Grassley also asked urged the Supreme Court to hear SuperValu and Safeway because of the important implications the faulty reasoning in the 7th Circuit’s opinions would have on the government’s fraud fighting ability. Three of his attorneys wrote an op-ed for Fortune magazine in which they lay out the stakes, which are stark.

“This case is the biggest threat to an anti-fraud statute that has, since its modernization 40 years ago, allowed the government to recover over $46 billion from companies that have defrauded the American public. It means that a company can get off the hook by saying: ‘I knew what I did was wrong, and I did it on purpose. But I’ve just hired lawyers who say someone else might possibly not have known that.’

“It’s surprising this sort of argument could get any traction in the first place. It makes no sense. If an ordinary criminal tried that excuse for any crime, they would be laughed out of the courtroom. If not overturned, the decision will essentially give corporations license to defraud the government. That’s paid for by all of us taxpayers.

“Government fraud is notoriously difficult to catch without whistleblowers. As Senator Grassley once said, trying to do so without whistleblowers is ‘about as useful as harvesting acres of corn with a pair of rusty old scissors.’ If this case stands, a rusty pair of scissors is all the government will have left to fight fraud—and that will neither punish nor deter wrongdoers.”

Whistleblowers who see fraud being committed and who are willing to speak up about it deserve the support of the government. They also need lawyers who understand the implications of changes to the FCA, and who are willing to fight for changes to the law so that they can right the wrongs they’ve witnessed and return money back to the taxpayers.

The lawyers at Keller Grover have three decades of experience representing whistleblowers and can advise potential whistleblowers about the best path forward from the very beginning, helping minimize the impact of reporting, protect rights and achieve the best possible outcome for their situation. If you have information about government fraud, contact us for a confidential, free consultation.

Here’s What California Law Banning Forced Arbitration Being Struck Down Means for Workers

Mar 06 2023

California employers can require workers to sign mandatory arbitration agreements as a condition of employment following a U.S. Court of Appeals ruling last month.

The Ninth Circuit ruled that California Assembly Bill 51 banning “forced arbitration” clauses is preempted by federal law, the Federal Arbitration Act. The bill attempted to work around the FAA, saying existing arbitration agreements were enforceable but that new employees must be given the choice of signing one.

AB 51 would have been a welcome change for job applicants presented with mandatory arbitration. If workers decline to sign these agreements, they probably won’t be hired. If they do sign, they can’t take their employer to court to seek remedies and compensation for violations of the law. Under forced arbitration, the employees’ only recourse is a secret proceeding often tilted in favor of the employer.

Forced arbitration also hurts lower-wage workers disproportionately. The National Employment Law Center found in 2019 that U.S. workers earning less than $13 an hour who were subject to employee-imposed forced arbitration were owed $9.27 billion in unpaid wages. Aspects of employment law covered by arbitration include minimum wage, off-the-clock duties, and overtime.

The appeals court ruled 2-1 in striking down AB 51 with U.S. Circuit Judge Sandra Ikuta, a George W. Bush appointee, writing in the majority opinion.

“Because the FAA’s purpose is to further Congress’s policy of encouraging arbitration, and AB 51 stands as an obstacle to that purpose, AB 51 was therefore preempted,” she wrote for the majority.

“AB 51 does not expressly bar arbitration agreements. There is no doubt, though, that AB 51 disfavors the formation of agreements that have the essential terms of an arbitration agreement. Because a person who agrees to arbitrate disputes must necessarily waive the right to bring civil actions regarding those disputes in any other forum, AB 51 burdens the defining feature of arbitration agreements.”

In his dissent, U.S. Circuit Judge Carlos Lucero, a Bill Clinton appointee, said the Supreme Court and the enactors of the FAA always intended that “arbitration is a matter of contract and agreements to arbitrate must be voluntary and consensual.” Clearly, the modern day employment arbitration agreement is neither voluntary nor consensual.

The California Attorney General’s Office could ask the full Ninth Circuit or the U.S. Supreme Court to review the ruling.

Despite the ruling delivering a blow to workers’ rights in California, some recent developments have benefited employees.

Last year, an amendment to the FAA became law that excludes allegations of sexual assault or harassment from forced arbitration agreements. Under the Ending Forced Arbitration of Sexual Assault and Sexual Harassment Act of 2021, victims can refuse arbitration and can pursue their claims in court so that companies can’t hide alleged misconduct in private proceedings.

And earlier this year, the Federal Trade Commission proposed a new rule that would prohibit employers from imposing noncompete clauses on workers, which would give them options to take jobs with better pay and working conditions, potentially raising wages.

Whistleblower 101: How to Report Financial and Securities Fraud

Feb 21 2023

Following the 2008 financial collapse, Congress established incentivized whistleblower programs similar to the qui tam provisions in the False Claims Act, creating powerful new tools for enforcing securities and commodities laws.

The Dodd-Frank Wall Street Reform and Consumer Protection Act created whistleblower programs at the Securities and Exchange Commission (SEC) and at the Commodities Futures Trading Commission (CFTC) that started in 2011, when the new regulations enforcing the law took effect.

Whistleblowers might have stopped Madoff

When the law was passed, headlines about the largest financial fraud in U.S. history were fresh. The SEC had failed to stop Bernie Madoff from running a decades-long Ponzi scheme that cost investors billions. Last month, Netflix released a docuseries that highlighted how the SEC failed to act on substantive evidence presented by Harry Markopolos that a secretive hedge fund run by Madoff promising zero risk and delivering consistent returns was actually a Ponzi scheme.

The SEC and CFTC whistleblower programs under Dodd-Frank were created to stop this kind of fraud. Eligible whistleblowers can receive between 10% to 30% of the monetary sanctions collected in actions brought against violators where the sanction is more than $1 million.

And like the False Claims Act, the SEC and CFTC whistleblower laws prohibit retaliation by employers against employees who provide information about possible violations of the securities or commodities trading laws.

The process of the Dodd-Frank whistleblower programs is different than the False Claims Act. Dodd-Frank whistleblowers, with the assistance of a whistleblower lawyer, provide confidential information to the SEC or the CFTC whistleblower office (depending on the nature of the violations being alleged).

How whistleblowers are protected

Only the whistleblower and their lawyer know that they provided information to the government. Even the federal agency investigating the allegations will not know initially who the whistleblower is.

This added layer of protection for a whistleblower helps reduce the risks for a whistleblower who may be wary of coming forward with information about what an individual or company is doing for fear of retaliation. The SEC announced this month that video game developer Activision Blizzard agreed to pay $35 million to settle allegations that included it violated an SEC whistleblower protection rule by requiring former employees to provide notice to the company if they received a request for information from SEC staff.

The SEC and CFTC programs are getting results

The SEC and CFTC whistleblower programs are working, as evidenced by the $10 billion in sanctions they recovered in fiscal year 2022 — and the rewards passed on to whistleblowers.

The CFTC, which oversees cryptocurrency, reported more than $3 billion in sanctions from all whistleblower-related actions and an increase in whistleblower tips. In its annual report, the CFTC Whistleblower Office said the majority of tips it received involved fraudulent misappropriation and solicitation involving crypto and digital assets.

The SEC recovered a record $6.9 billion in penalties and its Whistleblower Office issued approximately $229 million in 103 awards, making it the SEC’s second-highest year in terms of dollar amounts and number of awards. The SEC Whistleblower Office also received a record number of whistleblower tips.

If you believe someone has knowingly committed financial or securities fraud and you would like to learn more about or would like to be a Dodd-Frank whistleblower, the whistleblower lawyers at Keller Grover can help you. The lawyers at Keller Grover understand whistleblower laws, including provisions to protect the whistleblower, and strive to achieve the best possible results for their clients.